Exhibit 10.25
SECURITY AGREEMENT
This AMENDED AND RESTATED SECURITY AGREEMENT (this "AGREEMENT") is
dated as of October 6, 2000 and entered into by and among Autotote Corporation,
a Delaware corporation ("COMPANY"), each of THE UNDERSIGNED SUBSIDIARIES of
Company (each of such undersigned Subsidiaries being a "SUBSIDIARY GRANTOR" and
collectively "SUBSIDIARY GRANTORS") and each ADDITIONAL GRANTOR that may become
a party hereto after the date hereof in accordance with Section 22 (each of the
Company, each Subsidiary Grantor, and each Additional Grantor being a "GRANTOR"
and collectively the "GRANTORS") and DLJ CAPITAL FUNDING, INC., as
Administrative Agent for and representative of (in such capacity herein called
"SECURED PARTY") the financial institutions ("LENDERS") party to the Credit
Agreement referred to below and any Hedge Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Pursuant to the Amended and Restated Credit Agreement dated as of
October 6, 2000 (said Credit Agreement, as it may hereafter be
amended, restated, supplemented or otherwise modified from time to
time, being the "CREDIT AGREEMENT"; the terms defined therein and
not otherwise defined herein being used herein as therein defined),
by and among Company, the financial institutions party thereto as
Lenders, DLJ Capital Funding, Inc., as Administrative Agent,
Syndication Agent, Lead Arranger and Sole Book Running Manager,
▇▇▇▇▇▇ Commercial Paper Inc., as Documentation Agent, and ▇▇▇▇▇▇
Brothers Inc., as Co-Arranger, Lenders have made certain
commitments, subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to Company.
B. Grantors agree that their existing pledge and grant of a security
interest in substantially all of their present and future real and
personal property pursuant to the Security Agreement dated as of
September 6, 2000 ("the "CLOSING DATE SECURITY AGREEMENT") by and
among the Grantors and Secured Party shall be continued without
interruption and shall be amended and restated in its entirety.
C. Company and the Subsidiary Guarantors, as the case may be, may from
time to time enter, or may from time to time have entered, into one
or more Hedge Agreements (collectively, the "LENDER HEDGE
AGREEMENTS") with one or more Persons that are Lenders or Affiliates
of Lenders at the time such Hedge Agreements are entered into (in
such capacity, collectively, "HEDGE EXCHANGERS") in accordance with
the terms of the Credit Agreement, and it is desired that the
obligations of Company and the Subsidiary Guarantors, under the
Lender Hedge Agreements, including
without limitation the obligation of Company and the Subsidiary
Guarantors, as the case may be, to make payments thereunder in the
event of early termination thereof or other termination payments,
together with all obligations of Company under the Credit Agreement
and the other Loan Documents, be secured hereunder.
D. Subsidiary Grantors have executed and delivered that certain Amended
and Restated Subsidiary Guaranty dated the date hereof (said Amended
and Restated Subsidiary Guaranty, as it may hereafter be amended,
restated, supplemented or otherwise modified from time to time,
being the "SUBSIDIARY GUARANTY") in favor of Secured Party for the
benefit of Lenders and any Hedge Exchangers, pursuant to which each
Subsidiary Grantor has guarantied the prompt payment and performance
when due of all obligations of Company under the Credit Agreement
and all obligations of Company under the Lender Hedge Agreements,
including without limitation the obligation of Company to make
payments thereunder in the event of early termination thereof or
other termination payments.
E. As contemplated by the Credit Agreement, the Grantors and the
Secured Party desire to amended and restate the Closing Date
Security Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and agreements
contained the Credit Agreement and the Loan Documents, the Grantors and the
Secured Party agree that the Closing Date Security Agreement shall be amended
and restated, without novation, as follows:
SECTION 1. GRANT OF SECURITY.
Each Grantor hereby assigns to Secured Party for the benefit of
Lenders and any Hedge Exchangers, and hereby grants to Secured Party for the
benefit of Lenders and any Hedge Exchangers a security interest in, all of such
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing, whether tangible or intangible, or in which
such Grantor now has or hereafter acquires an interest and wherever the same may
be located (the "COLLATERAL"):
(a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being
the "EQUIPMENT");
(b) all inventory in all of its forms, including but not limited to
(i) all goods held by such Grantor for sale or lease or to be furnished
under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, and materials used or consumed
in the manufacture, packing, shipping, advertising, selling, leasing,
furnishing or production of such inventory or otherwise used or consumed
in such Grantor's business, (iii) all goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind, and
(iv) all goods which are returned to or repossessed by such
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Grantor and all accessions thereto and products thereof (collectively the
"INVENTORY") and all negotiable and non-negotiable documents of title
(including without limitation warehouse receipts, dock receipts and bills
of lading) issued by any Person covering any Inventory (any such
negotiable document of title being a "NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any
kind owned by or owing to such Grantor and all rights in, to and under all
security agreements, leases and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper, documents,
instruments, general intangibles or other obligations (any and all such
accounts, contract rights, chattel paper, documents, instruments, general
intangibles and other obligations being the "ACCOUNTS", and any and all
such security agreements, leases and other contracts being the "RELATED
CONTRACTS");
(d) all deposit accounts ("DEPOSIT ACCOUNTS") including the
restricted deposit account established and maintained by Secured Party
pursuant to Section 12 (the "COLLATERAL ACCOUNT"), together with (i) all
amounts on deposit from time to time in such deposit accounts and (ii) all
interest, cash, instruments, securities and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing;
(e) the "SECURITIES COLLATERAL", which term means:
(i) the shares of stock, partnership interests, interests in joint
ventures, limited liability company interests and all other equity interests in
a Person that is, or becomes, a direct Subsidiary or direct Joint Venture, as
the case may be, of such Grantor, including all securities convertible into, and
rights, warrants, options and other rights to purchase or otherwise acquire, any
of the foregoing now or hereafter owned by such Grantor, including those owned
on the date hereof and described on Schedule 1(e)(i), and the certificates or
other instruments representing any of the foregoing and any interest of such
Grantor in the entries on the books of any securities intermediary pertaining
thereto (the "PLEDGED SHARES"), and all dividends, distributions, returns of
capital, cash, warrants, options, rights, instruments, rights to vote or manage
the business of such Person pursuant to organizational documents governing the
rights and obligations of the stockholders, partners, members or other owners
thereof and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Pledged Shares; provided, that if the issuer of any of such Pledged Shares is a
controlled foreign corporation (used hereinafter as such term is defined in
Section 975(a) or a successor provision of the Internal Revenue Code), the
Pledged Shares shall not include any shares of stock of such issuer in excess of
the number of shares of such issuer possessing up to but not exceeding 65% (66%
in the case of any issuer organized under the laws of France or any political
subdivision thereof) of the voting power of all classes of capital stock
entitled to vote of such issuer, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from
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time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Pledged Shares;
(ii) the indebtedness from time to time owed to such Grantor by any
obligor that is, or becomes, a direct or indirect Subsidiary or a direct or
indirect Joint Venture, as the case may be, of such Grantor, including the
indebtedness described on Schedule 1(e)(ii) and issued by the obligors named
therein, and the instruments evidencing such indebtedness (the "PLEDGED DEBT"),
and all interest, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Debt; and
(iii) all other investment property, as that term is defined in Article 9
of the Uniform Commercial Code as in effect in the State of New York (the
"UCC"), of such Grantor;
(f) the "INTELLECTUAL PROPERTY COLLATERAL", which term means:
(i) all rights, title and interest (including rights acquired pursuant to
a license or otherwise) in and to all trademarks, service marks, designs, logos,
indicia, tradenames, trade dress, corporate names, company names, business
names, fictitious business names, trade styles, domain names and/or other source
and/or business identifiers and applications pertaining thereto, owned by such
Grantor, or hereafter adopted and used, in its business (including, without
limitation, the trademarks specifically identified in Schedule 1(f)(i), as the
same may be amended pursuant hereto from time to time) (collectively, the
"TRADEMARKS"), all registrations that have been or may hereafter be issued or
applied for thereon in the United States and any state thereof and in foreign
countries (including, without limitation, the registrations and applications
specifically identified in Schedule 1(f)(i), but excluding all applications
which are filed based on an intent to use, until such time as use is established
and the appropriate affidavit filed, as the same may be amended pursuant hereto
from time to time) (the "TRADEMARK REGISTRATIONS"), all common law and other
rights in and to the Trademarks in the United States and any state thereof and
in foreign countries (the "TRADEMARK RIGHTS"), and all goodwill of such
Grantor's business symbolized by the Trademarks and associated therewith (the
"ASSOCIATED GOODWILL");
(ii) all rights, title and interest (including rights acquired pursuant to
a license or otherwise) in and to all patents and patent applications and rights
and interests in patents and patent applications under any domestic or foreign
law that are presently, or in the future may be, owned or held by such Grantor
and all patents and patent applications and rights, title and interests in
patents and patent applications under any domestic or foreign law that are
presently, or in the future may be, owned by such Grantor in whole or in part
(including, without limitation, the patents and patent applications listed in
Schedule 1(f)(ii), as the same may be amended pursuant hereto from time to
time), all rights corresponding thereto (including, without limitation, the
right, exercisable only upon the occurrence and during the continuation of an
Event of Default, to ▇▇▇ for past, present and future infringements in the name
of such Grantor or in the name of Secured Party or Lenders), and all re-issues,
divisions, continuations, renewals,
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extensions and continuations-in-part thereof (all of the foregoing being
collectively referred to as the "PATENTS"); it being understood that the rights
and interests included in the Intellectual Property Collateral hereby shall
include, without limitation, all rights and interests pursuant to licensing or
other contracts in favor of such Grantor pertaining to patent applications and
patents presently or in the future owned or used by third parties but, in the
case of third parties which are not Affiliates of such Grantor, only to the
extent permitted by such licensing or other contracts and, if not so permitted,
only with the consent of such third parties; and
(iii) all rights, title and interest (including rights acquired pursuant
to a license or otherwise) under copyright in various published and unpublished
works of authorship including, without limitation, computer programs, computer
data bases, other computer software, layouts, trade dress, drawings, designs,
writings, and formulas owned by such Grantor (including, without limitation, the
works listed on Schedule 1(f)(iii), as the same may be amended pursuant hereto
from time to time) (collectively, the "COPYRIGHTS"), all copyright registrations
issued to such Grantor and applications for copyright registration that have
been or may hereafter be issued or applied for thereon by such Grantor in the
United States and any state thereof and in foreign countries (including, without
limitation, the registrations listed on Schedule 1(f)(iii), as the same may be
amended pursuant hereto from time to time) (collectively, the "COPYRIGHT
REGISTRATIONS"), all common law and other rights in and to the Copyrights in the
United States and any state thereof and in foreign countries including all
copyright licenses (but with respect to such copyright licenses, only to the
extent permitted by such licensing arrangements) (the "COPYRIGHT RIGHTS"),
including, without limitation, each of the Copyrights, rights, titles and
interests in and to the Copyrights, all derivative works and other works
protectable by copyright, which are presently, or in the future may be, owned,
created (as a work for hire for the benefit of such Grantor), authored (as a
work for hire for the benefit of such Grantor), or acquired by such Grantor, in
whole or in part, and all Copyright Rights with respect thereto and all
Copyright Registrations therefor, heretofore or hereafter granted or applied
for, and all renewals and extensions thereof, throughout the world, including
all proceeds thereof (such as, by way of example and not by limitation, license
royalties and proceeds of infringement suits), the right to renew and extend
such Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right to ▇▇▇ for past, present and future
infringements of the Copyrights and Copyright Rights;
(g) all information used or useful or arising from the business
including all goodwill, trade secrets, trade secret rights, know-how,
customer lists, processes of production, ideas, confidential business
information, techniques, processes, formulas, and all other proprietary
information;
(h) the agreements listed in Schedule 1(h), as each such agreement
may be amended, restated, supplemented or otherwise modified from time to
time (said agreements, as so amended, restated, supplemented or otherwise
modified, being referred to herein individually as an "ASSIGNED AGREEMENT"
and collectively as the "ASSIGNED AGREEMENTS"), including, without
limitation, (i) all rights of such Grantor to receive moneys due or to
become due
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under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to the Assigned Agreements, (iii) all claims of such
Grantor for damages arising out of any breach of or default under the
Assigned Agreements, and (iv) all rights of such Grantor to terminate,
amend, supplement, modify or exercise rights or options under the Assigned
Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder;
(i) to the extent not included in any other paragraph of this
Section 1, all other general intangibles (including without limitation tax
refunds, rights to payment or performance, CHOSES IN ACTION and judgments
taken on any rights or claims included in the Collateral);
(j) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products
thereof;
(k) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that
at any time evidence or contain information relating to any of the
Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(l) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "PROCEEDS" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Notwithstanding anything to the contrary contained herein, the
Collateral shall not include any Margin Stock for so long as it constitutes
Margin Stock.
Notwithstanding anything herein to the contrary, in no event shall
the Collateral include, and no Grantor shall be deemed to have granted a
security interest in (i) any of such Grantor's rights or interests in any
Governmental Authorization, license, contract or agreement to which such Grantor
is a party or any of its rights or interests thereunder to the extent, but only
to the extent, that such a grant would, under the terms of such Governmental
Authorization, license, contract or agreement or otherwise, result in a breach
of the terms of, or constitute a default under, any Governmental Authorization,
license, contract or agreement to which such Grantor is a party (other than to
the extent that any such term would be rendered ineffective pursuant to Section
9-318(4) of the UCC or any other applicable law (including the Bankruptcy Code)
or principles of equity); PROVIDED, that immediately upon the ineffectiveness,
lapse or termination of any such provision, the Collateral shall include, and
such Grantor shall be deemed to have granted a security interest in, all such
rights and interests as if such provision had never been in effect, or (ii) any
real property leasehold, unless such Grantor has executed a leasehold mortgage
or leasehold deed of trust covering such real property leasehold or (iii) such
Grantor's
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rights or interest in any agreements with governmental authorities prohibiting
the creation or assumption of any Lien on assets located in the jurisdiction of
any such governmental authority and utilized pursuant to the applicable
agreement, (x) to the extent existing on the Closing Date, as set forth in
SCHEDULE 7.2C(A) of the Credit Agreement and (y) to the extent such agreements
are entered into after the Closing Date, at the time any such agreement is
entered into, the aggregate value of such assets subject to such prohibitions,
together with the aggregate value of any such assets subject to the encumbrances
and restrictions permitted by subsection 7.2D(a)(ii) of the Credit Agreement, in
each case as set forth on the most recent consolidated balance sheet of Grantor
and its Subsidiaries in accordance with GAAP, shall not exceed 5% of the
aggregate value of all assets set forth on the most recent consolidated balance
sheet of Grantor and its Subsidiaries in accordance with GAAP.
In the event that any asset of Grantor is excluded from the
Collateral by virtue of the foregoing paragraph, such Grantor agrees to use all
reasonable efforts to obtain all requisite consents to enable such Grantor to
provide a security interest in such asset pursuant hereto as promptly as
practicable.
SECTION 2. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral assigned by each Grantor
is collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including without limitation the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code), of all Secured Obligations of such Grantor.
"SECURED OBLIGATIONS" means:
(a) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents
and any Lender Hedge Agreement, and
(b) with respect to each Subsidiary Grantor and Additional Grantor,
all obligations and liabilities of every nature of such Grantor now or
hereafter existing under or arising out of or in connection with the
Subsidiary Guaranty and any Lender Hedge Agreement;
in each case together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company or any other Grantor,
would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Letters of Credit, payments for early
termination of or other termination payments with respect to Lender Hedge
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender or
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Hedge Exchanger as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Grantors now or hereafter existing under this
Agreement.
SECTION 3. GRANTORS REMAIN LIABLE.
Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party and
Lenders shall not have any obligation or liability under any contracts,
licenses, and agreements included in the Collateral by reason of this Agreement,
nor shall Secured Party or any Lender be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each Grantor represents and warrants that except to the extent that the
following statements specifically relate to an earlier date (in which case such
representations and warranties shall have been true, correct and complete in all
material respects as of such earlier date), such statements are true, complete
and correct in all material respects on the date of this Agreement:
(a) OWNERSHIP OF COLLATERAL. Except as expressly permitted by the
Credit Agreement and for the security interest created by this Agreement,
such Grantor owns the Collateral owned by such Grantor free and clear of
any Lien. Except as expressly permitted by the Credit Agreement (including
any financing statements with respect to which Grantors have delivered UCC
termination statements on the Closing Date) and such as may have been
filed in favor of Secured Party for the benefit of Lenders and any Hedge
Exchangers relating to this Agreement, no effective financing statement or
other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office.
(b) LOCATIONS OF EQUIPMENT AND INVENTORY. All of the Equipment and
Inventory is, as of the Closing Date, or in the case of an Additional
Grantor, the date of the applicable counterpart entered into pursuant to
Section 22 (each, a "COUNTERPART") located at the places specified in
Schedule 4(b), except for Inventory which, in the ordinary course of
business, is in transit either (i) from a supplier to a Grantor, (ii)
between the locations specified in Schedule 4(b), or (iii) to customers of
a Grantor.
(c) NEGOTIABLE DOCUMENTS OF TITLE. No Negotiable Documents of Title
are outstanding with respect to any of the Inventory.
(d) OFFICE LOCATIONS. The chief place of business, the chief
executive office and the office where such Grantor keeps its records
regarding the Accounts and all originals of all chattel paper that
evidence Accounts are, as of the Closing Date, and have been for the four
month period preceding the Closing
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Date, or, in the case of an Additional Grantor, the date of the applicable
Counterpart, located at the locations set forth on Schedule 4(d).
(e) NAMES. No Grantor (or predecessor by merger or otherwise of such
Grantor) has, within the four month period preceding the date hereof, or,
in the case of an Additional Grantor, the date of the applicable
Counterpart, had a different name from the name of such Grantor listed or
the signature pages hereof, except the names listed in Schedule 4(e).
(f) DELIVERY OF CERTAIN COLLATERAL. All certificates or instruments
(excluding checks or other instruments of payment for an aggregate amount
of less than $5,000 at any time) evidencing, comprising or representing
the Collateral (including, without limitation, the Securities Collateral)
have been delivered to Secured Party duly endorsed or accompanied by duly
executed undated instruments of transfer or assignment in blank.
(g) SECURITIES COLLATERAL. (i) All of the Pledged Shares described
on Schedule 1(e)(i) have been duly authorized and validly issued and are
fully paid and non-assessable; (ii) all of the Pledged Debt described on
Schedule 1(e)(ii) has been duly authorized, authenticated or issued, and
delivered and is the legal, valid and binding obligation of the issuers
thereof and is not in default; (iii) except as set forth on Schedule
1(e)(i), the Pledged Shares constitute all of the issued and outstanding
shares of stock or other equity interests of each issuer thereof (subject
to the proviso to Section 1(e)(i) with respect to shares of a foreign
controlled corporation), and there are no outstanding warrants, options or
other rights to purchase, or other agreements outstanding with respect to,
or property that is now or hereafter convertible into, or that requires
the issuance or sale of, any Pledged Shares; (iv) the Pledged Debt
constitutes all of the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers thereof owing to
such Grantor; (v) Schedule 1(e)(i) sets forth all of the Pledged Shares
owned by each Grantor on the date hereof; (vi) Schedule 1(e)(ii) sets
forth all of the Pledged Debt in existence on the Closing Date; and (vii)
there does not exist, in favor of any maker of any Pledged Debt, any
defense, offset or counterclaim to payment of any of the Pledged Debt.
(h) INTELLECTUAL PROPERTY COLLATERAL.
(i) a true and complete list of all Trademark Registrations and Trademark
applications owned, held (whether pursuant to a license or otherwise) or used by
such Grantor, in whole or in part, is set forth in Schedule 1(f)(i);
(ii) a true and complete list of all Patents owned, held (whether pursuant
to a license or otherwise) or used by such Grantor, in whole or in part, is set
forth in Schedule 1(f)(ii);
(iii) a true and complete list of all Copyright Registrations and
applications for Copyright Registrations held (whether pursuant to a license or
otherwise) by such Grantor, in whole or in part, is set forth in Schedule
1(f)(iii);
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(iv) after reasonable inquiry, such Grantor is not aware of any pending or
threatened claim by any third party that any of the Intellectual Property
Collateral owned, held or used by such Grantor is invalid or unenforceable; and
(v) no effective security interest or other Lien covering all or any part
of the Intellectual Property Collateral is on file in the United States Patent
and Trademark Office or the United States Copyright Office, other than the Liens
with respect to Intellectual Property Collateral with respect to which Grantors
have delivered releases on the date of this Agreement.
(i) PERFECTION. The security interests in the Collateral granted to
Secured Party for the ratable benefit of the Lenders and Hedge Exchangers
hereunder constitute valid security interests in the Collateral, securing
the payment of the Secured Obligations. Upon (i) the filing of UCC
financing statements naming each Grantor as "debtor", naming Secured Party
for the benefit of the Lenders and any Hedge Exchangers as "secured party"
and describing the Collateral in the filing offices with respect to such
Grantor set forth on Schedule 4(i), (ii) in the case of the Securities
Collateral consisting of certificated securities or evidenced by
instruments, delivery of the certificates representing such certificated
securities and delivery of such instruments to Secured Party, in each case
duly endorsed or accompanied by duly executed undated instruments of
assignment or transfer in blank, (iii) in the case of the Intellectual
Property Collateral, in addition to the filing of such UCC financing
statements, the filing of a Grant of Trademark Security Interest,
substantially in the form of Exhibit I, and a Grant of Patent Security
Interest, substantially in the form of Exhibit II, with the United States
Patent and Trademark Office and the filing of a Grant of Copyright
Security Interest, substantially in the form of Exhibit III, with the
United States Copyright Office (each such Grant of Trademark Security
Interest, Grant of Patent Security Interest and Grant of Copyright
Security Interest being referred to herein as a "GRANT"), and (iv) in the
case of Equipment that is covered by a certificate of title, the filing
with the registrar of motor vehicles or other appropriate authority in the
applicable jurisdiction of an application requesting the notation of the
security interest created hereunder on such certificate of title, the
security interests in the Collateral granted to Secured Party for the
ratable benefit of the Lenders and Hedge Exchangers will constitute
perfected security interests therein prior to all other Liens (except for
Permitted Encumbrances), and all filings and other actions necessary or
desirable to perfect and protect such security interests will have been
duly made or taken.
SECTION 5. FURTHER ASSURANCES.
(a) GENERALLY. Each Grantor agrees that from time to time, at the
expense of Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action that may be
necessary or desirable, or that Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to
be granted hereby or to enable Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the
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foregoing, each Grantor will: (i) at the request of Secured Party, ▇▇▇▇
conspicuously each item of chattel paper included in the Accounts, each
Related Contract and, at the request of Secured Party, each of its records
pertaining to the Collateral, with a legend, in form and substance
reasonably satisfactory to Secured Party, indicating that such Collateral
is subject to the security interest granted hereby, (ii) at the reasonable
request of Secured Party, deliver and pledge to Secured Party for the
benefit of Lenders and any Hedge Exchangers hereunder all promissory notes
and other instruments (and, upon an Event of Default, including checks)
and all original counterparts of chattel paper constituting Collateral,
duly endorsed and accompanied by duly executed undated instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party, (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices,
as may be necessary or desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests granted
or purported to be granted hereby, (iv) furnish to Secured Party from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail, (v)
promptly after the acquisition by such Grantor of any item of Equipment
that is covered by a certificate of title under a statute of any
jurisdiction under the law of which indication of a security interest on
such certificate is required as a condition of perfection thereof, execute
and file with the registrar of motor vehicles or other appropriate
authority in such jurisdiction an application or other document requesting
the notation or other indication of the security interest created
hereunder on such certificate of title, (vi) within 30 days after the end
of each calendar quarter, deliver to Secured Party copies of all such
applications or other documents filed during such calendar quarter and
copies of all such certificates of title issued during such calendar
quarter indicating the security interest created hereunder in the items of
Equipment covered thereby, (vii) at any reasonable time, upon request by
Secured Party, exhibit the Collateral to and allow inspection of the
Collateral by Secured Party, or persons designated by Secured Party,
(viii) at Secured Party's request, appear in and defend any action or
proceeding that may affect such Grantor's title to or Secured Party's
security interest for the benefit of Lenders and any Hedge Exchangers in
all or any part of the Collateral, and (ix) upon any Event of Default, use
commercially reasonable efforts to obtain any necessary consents of third
parties to the assignment and perfection of a security interest to Secured
Party for the benefit of Lenders and any Hedge Exchangers with respect to
any Collateral. Each Grantor hereby authorizes Secured Party to file one
or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of any
Grantor. Each Grantor agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement signed by such
Grantor shall be sufficient as a financing statement and may be filed as a
financing statement in any and all jurisdictions.
(b) SECURITIES COLLATERAL. Without limiting the generality of the
foregoing Section 5(a), each Grantor agrees that it will, upon obtaining
any
11
additional shares of stock or other securities required to be pledged
hereunder, promptly (and in any event within five Business Days for the
pledge of all shares of stock or other securities of any domestic Person,
and as soon as possible, but in any event within twenty (20) Business Days
for the pledge of all shares of stock or other securities of any foreign
controlled corporation) deliver to Secured Party a Pledge Supplement, duly
executed by such Grantor, in substantially the form of Exhibit IV (a
"PLEDGE SUPPLEMENT"), in respect of the additional Pledged Shares or
Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery
of a Pledge Supplement to Secured Party, the representations and
warranties contained in clauses (i)-(iv) of Section 4(g) shall be deemed
to have been made by such Grantor as to the Securities Collateral
described in such Pledge Supplement as of the date thereof. Each Grantor
hereby authorizes Secured Party to attach each Pledge Supplement to this
Agreement and agrees that all Pledged Shares or Pledged Debt of such
Grantor listed on any Pledge Supplement shall for all purposes hereunder
be considered Collateral of such Grantor; provided, the failure of any
Grantor to execute a Pledge Supplement with respect to any additional
Pledged Shares or Pledged Debt pledged pursuant to this Agreement shall
not impair the security interest of Secured Party for the benefit of
Lenders and any Hedge Exchangers therein or otherwise adversely affect the
rights and remedies of Secured Party hereunder with respect thereto.
(c) INTELLECTUAL PROPERTY COLLATERAL. Without limiting the
generality of the foregoing Section 5(a), if any Grantor shall hereafter
obtain rights to any new Intellectual Property Collateral or become
entitled to the benefit of (i) any patent application or patent or any
reissue, division, continuation, renewal, extension or
continuation-in-part of any Patent or any improvement of any Patent or
(ii) any Copyright Registration, application for Copyright Registration or
renewal or extension of any Copyright, then in any such case, the
provisions of this Agreement shall automatically apply thereto. Each
Grantor shall promptly notify Secured Party in writing of any of the
foregoing rights acquired by such Grantor after the date hereof and of (i)
any Trademark Registrations issued or application for a Trademark
Registration or application for a Patent made, and (ii) any Copyright
Registrations issued or applications for Copyright Registration made, in
any such case, after the date hereof. Promptly after the filing of an
application for any (1) Trademark Registration; (2) Patent; or (3)
Copyright Registration, each Grantor shall execute and deliver to Secured
Party and record in all places where a Grant is recorded an IP Supplement,
substantially in the form of Exhibit V (an "IP SUPPLEMENT"), pursuant to
which such Grantor shall grant to Secured Party for the benefit of Lenders
and any Hedge Exchangers a security interest to the extent of its interest
in such Intellectual Property Collateral; provided, if, in the reasonable
judgment of such Grantor, after due inquiry, granting such interest would
result in the grant of a Trademark Registration or Copyright Registration
in the name of Secured Party, such Grantor shall give written notice to
Secured Party as soon as reasonably practicable and the filing shall
instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the applicable Trademark Registration
or Copyright Registration, as the case may be. Upon delivery to
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Secured Party of an IP Supplement, Schedules 1(f)(i), 1(f)(ii), and
1(f)(iii) and Schedule A to each Grant, as applicable, shall be deemed
modified to include reference to any right, title or interest in any
existing Intellectual Property Collateral or any Intellectual Property
Collateral included on Schedule A to such IP Supplement. Each Grantor
hereby authorizes Secured Party to modify this Agreement without the
signature or consent of any Grantor by attaching Schedules 1(f)(i),
1(f)(ii), and 1(f)(iii), as applicable, that have been modified to include
such Intellectual Property Collateral or to delete any reference to any
right, title or interest in any Intellectual Property Collateral in which
any Grantor no longer has or claims any right, title or interest;
provided, the failure of any Grantor to execute an IP Supplement with
respect to any additional Intellectual Property Collateral pledged
pursuant to this Agreement shall not impair the security interest of
Secured Party for the benefit of Lenders and any Hedge Exchangers therein
or otherwise adversely affect the rights and remedies of Secured Party
hereunder with respect thereto.
SECTION 6. CERTAIN COVENANTS OF GRANTORS.
Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or material ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any change
in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
(d) if Secured Party or any Lender gives value to enable such
Grantor to acquire rights in or the use of any Collateral, use such value
for such purposes; and
(e) except as expressly permitted by the Credit Agreement, pay
promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including
claims for labor, services, materials and supplies) against, the
Collateral, except to the extent the validity thereof is being contested
in good faith; provided that such Grantor shall in any event pay such
taxes, assessments, charges, levies or claims not later than five days
prior to the date of any proposed sale under any judgment, writ or warrant
of attachment entered or filed against such Grantor or any of the
Collateral as a result of the failure to make such payment.
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SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Each Grantor shall:
(a) keep the Equipment and Inventory owned by such Grantor at the
places therefor specified on Schedule 4(b) or, upon 30 days' prior written
notice to Secured Party, at such other places in jurisdictions where all
action that may be necessary or desirable, or that Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder, with respect to such Equipment
and Inventory shall have been taken;
(b) cause the Equipment owned by such Grantor to be maintained and
preserved in the same condition, repair and working order as when new,
ordinary wear and tear excepted, and in accordance with such Grantor's
past practices, and shall forthwith make or cause to be made all repairs,
replacements and other improvements in connection therewith that are
necessary or desirable to such end. Each Grantor shall promptly furnish to
Secured Party a statement respecting any material loss or damage to any of
the Equipment owned by such Grantor;
(c) keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such
Inventory, such Grantor's cost therefor and (where applicable) the current
list prices for such Inventory;
(d) if any Inventory is in possession or control of any of such
Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $100,000, and in any event, if so requested by the
Secured Party by written notice given upon or after the occurrence of an
Event of Default (as defined in Section 16(a)), instruct such agent or
processor to hold all such Inventory for the account of Secured Party and
subject to the instructions of Secured Party;
(e) promptly upon the issuance and delivery to such Grantor of any
Negotiable Document of Title, deliver such Negotiable Document of Title to
Secured Party; and
(f) at its own expense, maintain insurance with respect to the
Equipment and Inventory in accordance with the terms of the Credit
Agreement.
SECTION 8. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.
(a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper
that evidence Accounts, at the locations therefor set forth on Schedule
4(d), upon 30
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days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Secured
Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and chattel paper and will
permit representatives of Secured Party at any time during normal business
hours to inspect and make abstracts from such records and chattel paper,
and each Grantor agrees to render to Secured Party, at Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested
with regard thereto. Promptly upon the request of Secured Party, each
Grantor shall deliver to Secured Party complete and correct copies of each
Related Contract.
(b) Each Grantor shall, for not less than three (3) years from the
date on which each Account of such Grantor arose, maintain (i) records
complete in all material respects of such Account, including records of
all payments received, credits granted and merchandise returned, and (ii)
all material documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or
to become due such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Secured
Party's direction, shall take) such action as such Grantor or Secured
Party may deem necessary or advisable to enforce collection of amounts due
or to become due under the Accounts; provided, however, that Secured Party
shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to Secured
Party and to direct such account debtors or obligors to make payment of
all amounts due or to become due such Grantor thereunder directly to
Secured Party, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Accounts have
been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Secured Party
and, upon such notification and at the expense of Grantors, to enforce
collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as
such Grantor might have done. After receipt by such Grantor of the notice
from Secured Party referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including checks and other instruments)
received by such Grantor in respect of the Accounts and the Related
Contracts shall be received in trust for the benefit of Secured Party,
Lenders and Hedge Exhchangers hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over or delivered to
Secured Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and
15
applied as provided by Section 18, and (ii) such Grantor shall not adjust,
settle or compromise the amount or payment of any Account, or release
wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO THE SECURITIES COLLATERAL.
(a) DELIVERY. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and
shall be in suitable form for transfer by delivery or, as applicable,
shall be accompanied by such Grantor's endorsement, where necessary, or
duly executed undated instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party. Secured Party shall
have the right at any time to exchange certificates or instruments
representing or evidencing Securities Collateral for certificates or
instruments of smaller or larger denominations.
(b) COVENANTS. Each Grantor shall (i) not, except as expressly
permitted by the Credit Agreement, permit any issuer of Pledged Shares to
merge or consolidate unless all the outstanding capital stock or other
equity interests of the surviving or resulting Person is, upon such merger
or consolidation, pledged hereunder and no cash, securities or other
property is distributed in respect of the outstanding shares of any other
constituent corporation; provided, if the surviving or resulting Person
upon any such merger or consolidation involving an issuer of Pledged
Shares which is a controlled foreign corporation is a controlled foreign
corporation, then such Grantor shall only be required to pledge
outstanding capital stock of such surviving or resulting Person possessing
up to but not exceeding 65% (66% in the case of any issuer organized under
the laws of France or any political subdivision thereof) of the voting
power of all classes of capital stock of such issuer entitled to vote;
(ii) cause each issuer of Pledged Shares not to issue any stock, other
equity interests or other securities in addition to or in substitution for
the Pledged Shares issued by such issuer, except to such Grantor; (iii)
pledge hereunder, promptly upon its acquisition (directly or indirectly)
thereof (and in any event within five Business Days for the pledge of all
shares of stock, other equity interests or other securities of any
domestic issuer, and as soon as possible, but in any event within twenty
(20) Business Days for the pledge of all shares of stock, other equity
interests or other securities of any foreign controlled corporation) any
and all additional shares of stock, other equity interests or other
securities of each issuer of Pledged Shares; (iv) pledge hereunder,
promptly upon its acquisition (directly or indirectly) thereof (and in any
event within five Business Days for the pledge of all shares of stock,
other equity interests or other securities of any domestic Person, and as
soon as possible, but in any event within twenty (20) Business Days for
the pledge of all shares of stock, other equity interests or other
securities of any foreign controlled corporation), any and all shares of
stock or other equity interests of any Person that, after the date of this
Agreement, becomes, as a result of any occurrence, a direct Subsidiary of
such Grantor; provided, notwithstanding anything contained in this clause
(iv) to the contrary, such Grantor shall only be required to pledge the
outstanding capital
16
stock of a controlled foreign corporation possessing up to but not
exceeding 65% (66% in the case of any issuer organized under the laws of
France or any political subdivision thereof) of the voting power of all
classes of capital stock of such controlled foreign corporation entitled
to vote; (v) pledge hereunder, immediately upon their issuance, any and
all instruments or other evidences of additional indebtedness from time to
time owed to such Grantor by any obligor on the Pledged Debt; (vi) pledge
hereunder, immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to such Grantor by
any Person that after the date of this Agreement becomes, as a result of
any occurrence, a direct or indirect Subsidiary or Joint Venture, as the
case may be, of such Grantor; (vii) upon an Event of Default, promptly
notify Secured Party of any event of which such Grantor becomes aware
causing loss or depreciation in the value of the Securities Collateral;
(viii) upon an Event of Default, promptly deliver to Secured Party all
written notices received by it with respect to the Securities Collateral;
and (ix), at the request of Secured Party, promptly execute and deliver to
Secured Party an agreement providing for the control, as that term is
defined in the UCC, by Secured Party of all securities entitlements and
securities accounts of such Grantor.
(c) VOTING AND DISTRIBUTIONS. So long as no Event of Default shall
have occurred and be continuing, (i) each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement or the Credit Agreement; provided, no
Grantor shall exercise or refrain from exercising any such right if
Secured Party shall have notified such Grantor in writing that, in Secured
Party's judgment, such action would have a material adverse effect on the
value of the Securities Collateral or any part thereof; and provided
further, such Grantor shall give Secured Party at least five Business
Days' prior written notice of the manner in which it intends to exercise,
or the reasons for refraining from exercising, any such right (it being
understood, however, that neither (A) the voting by such Grantor of any
Pledged Shares for or such Grantor's consent to the election of directors
or other members of a governing body of an issuer of Pledged Shares at a
regularly scheduled annual or other meeting of stockholders or holders of
equity interests or with respect to incidental matters at any such
meeting, nor (B) Grantor's consent to or approval of any action otherwise
permitted under this Agreement and the Credit Agreement shall be deemed
inconsistent with the terms of this Agreement or the Credit Agreement
within the meaning of this Section, and no notice of any such voting or
consent need be given to Secured Party); (ii) each Grantor shall be
entitled to receive and retain, and to utilize free and clear of the lien
of this Agreement, any and all dividends, other distributions and interest
paid in respect of the Securities Collateral; PROVIDED, -------- any and
all (A) dividends, distributions and interest paid or payable other than
in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Securities Collateral, (B) during the continuance of an Event of Default,
dividends and other distributions paid or payable in cash in respect of
any Securities Collateral in connection with a partial or total
liquidation or dissolution or in
17
connection with a reduction of capital, capital surplus or
paid-in-surplus, and (C) during the continuance of an Event of Default,
cash paid, payable or otherwise distributed in respect of principal or in
redemption of or in exchange for any Securities Collateral, shall be, and
shall forthwith be delivered to Secured Party to hold as, Securities
Collateral and shall, if received by such Grantor, be received in trust
for the benefit of Secured Party, be segregated from the other property or
funds of such Grantor and be forthwith delivered to Secured Party as
Securities Collateral in the same form as so received (with all necessary
endorsements); provided that, if no Event of Default shall have occurred,
to the extent any of the property described in the foregoing clause (B) or
(C) shall constitute Net Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds (or proceeds thereof), it shall be applied as required by the
Credit Agreement; and (iii) Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to such Grantor all such
proxies, dividend payment orders and other instruments as Grantor may from
time to time reasonably request for the purpose of enabling Grantor to
exercise the voting and other consensual rights which it is entitled to
exercise pursuant to clause (i) above and to receive the dividends,
distributions, principal or interest payments which it is authorized to
receive and retain pursuant to clause (ii) above.
Upon the occurrence and during the continuation of an Event of
Default, (x) upon written notice from Secured Party to any Grantor, all rights
of such Grantor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall cease, and all
such rights shall thereupon become vested in Secured Party who shall thereupon
have the sole right to exercise such voting and other consensual rights; (y) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (z) all dividends, principal, interest payments and other distributions
which are received by Grantor contrary to the provisions of clause (ii) of the
immediately preceding paragraph or clause (y) above shall be received in trust
for the benefit of Secured Party and Lenders, shall be segregated from other
funds of Grantor and shall forthwith be paid over to Secured Party as Securities
Collateral in the same form as so received (with any necessary endorsements).
In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions which it may be entitled to
receive hereunder, (I) each Grantor shall promptly execute and deliver (or cause
to be executed and delivered) to Secured Party all such proxies, dividend
payment orders and other instruments as Secured Party may from time to time
reasonably request, and (II) without limiting the effect of clause (I) above,
each Grantor hereby grants to Secured Party an irrevocable proxy to vote the
Pledged Shares and to exercise all other rights, powers, privileges and remedies
to which a holder of the Pledged Shares would be entitled (including giving or
withholding written consents of shareholders or other holders of equity
interests, calling special meetings of shareholders or other holders of equity
interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Shares on the record books of the issuer thereof) by
18
any other Person (including the issuer of the Pledged Shares or any officer or
agent thereof), upon the occurrence of an Event of Default and which proxy shall
only terminate upon the payment in full of the Secured Obligations.
SECTION 10. SPECIAL COVENANTS WITH RESPECT TO THE INTELLECTUAL PROPERTY
COLLATERAL.
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the Intellectual
Property Collateral and at all times keep at least one complete set of its
records concerning such Collateral at its chief executive office or principal
place of business;
(ii) use commercially reasonable efforts so as not to permit the inclusion
in any contract to which it hereafter becomes a party of any provision that
could or might in any way impair or prevent the creation of a security interest
in, or the assignment of, such Grantor's rights and interests in any property
included within the definitions of any Intellectual Property Collateral acquired
under such contracts;
(iii) take any and all reasonable steps to protect the secrecy of all
trade secrets relating to the products and services sold or delivered under or
in connection with the Intellectual Property Collateral, including, without
limitation, where appropriate entering into confidentiality agreements with
employees and labeling and restricting access to secret information and
documents;
(iv) use proper statutory notice in connection with its use of any of the
Intellectual Property Collateral;
(v) use a commercially appropriate standard of quality (consistent with
such Grantor's past practices) in the manufacture, sale and delivery of products
and services sold or delivered under or in connection with the Trademarks; and
(vi) furnish to Secured Party from time to time at Secured Party's
reasonable written request statements and schedules further identifying and
describing any Intellectual Property Collateral and such other reports in
connection with such Collateral, all in reasonable detail.
(b) Except as otherwise provided in this Section 10, each Grantor
shall continue to collect, at its own expense, all amounts due or to
become due such Grantor in respect of the Intellectual Property Collateral
or any portion thereof. In connection with such collections, each Grantor
may take (and, after the occurrence and during the continuance of any
Event of Default, at Secured Party's reasonable direction, shall take)
such action as such Grantor or Secured Party may deem reasonably necessary
or advisable to enforce collection of such amounts; provided, Secured
Party shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the obligors with respect to
any such amounts of the existence of the security interest created
19
hereby and to direct such obligors to make payment of all such amounts
directly to Secured Party, and, upon such notification and at the expense
of such Grantor, to enforce collection of any such amounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and
to the same extent as such Grantor might have done. After receipt by any
Grantor of the notice from Secured Party referred to in the proviso to the
preceding sentence and during the continuation of any Event of Default,
(i) all amounts and proceeds (including checks and other instruments)
received by each Grantor in respect of amounts due to such Grantor in
respect of the Intellectual Property Collateral or any portion thereof
shall be received in trust for the benefit of Secured Party, Lenders and
Hedge Exchangers hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over or delivered to Secured Party in
the same form as so received (with any necessary endorsement) to be held
as cash Collateral and applied as provided by Section 18, and (ii) such
Grantor shall not adjust, settle or compromise the amount or payment of
any such amount or release wholly or partly any obligor with respect
thereto or allow any credit or discount thereon.
(c) Each Grantor shall have the duty diligently, through appropriate
counsel, to prosecute, file and/or make, unless and until such Grantor, in
its commercially reasonable judgment, decides otherwise, (i) any
application relating to any of the Intellectual Property Collateral owned,
held or used by such Grantor and identified on Schedule 1(f)(i), 1(f)(ii)
or 1(f)(iii), as applicable, that is pending as of the date of this
Agreement, (ii) any Copyright Registration on any existing or future
unregistered but copyrightable works (except for works of nominal
commercial value or with respect to which such Grantor has determined in
the exercise of its commercially reasonable judgment that it shall not
seek registration), (iii) any application on any future patentable but
unpatented innovation or invention comprising Intellectual Property
Collateral (except where, in its commercially reasonable judgment, such
Grantor decides to attempt to maintain the information as know-how or a
trade secret), and (iv) any Trademark opposition and cancellation
proceedings, renew Trademark Registrations and Copyright Registrations and
do any and all acts which are necessary or desirable to preserve and
maintain all rights in all Intellectual Property Collateral. Any expenses
incurred in connection therewith shall be borne solely by Grantors.
Subject to the foregoing, each Grantor shall give Secured Party prior
written notice of any abandonment of any Intellectual Property Collateral
or any pending patent application or any Patent.
(d) Except as provided herein, each Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its
own benefit and at its own expense, such suits, proceedings or other
actions for infringement, unfair competition, dilution, misappropriation
or other damage, or reexamination or reissue proceedings as are necessary
to protect the Intellectual Property Collateral. Secured Party shall
provide, at such Grantor's expense, all reasonable and necessary
cooperation in connection with any such suit, proceeding or action
including, without limitation, joining as a necessary party.
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Each Grantor shall promptly, following its becoming aware thereof, notify
Secured Party of the institution of, or of any adverse determination in,
any proceeding (whether in the United States Patent and Trademark Office,
the United States Copyright Office or any federal, state, local or foreign
court) or regarding such Grantor's ownership, right to use, or interest in
any Intellectual Property Collateral. Each Grantor shall provide to
Secured Party any information with respect thereto reasonably requested by
Secured Party.
(e) In addition to, and not by way of limitation of, the granting of
a security interest in the Collateral pursuant hereto, each Grantor,
effective upon the occurrence and during the continuation of an Event of
Default, hereby assigns, transfers and conveys to Secured Party the
nonexclusive right and license to use all trademarks, tradenames,
copyrights, patents or technical processes (including, without limitation,
the Intellectual Property Collateral) owned or used by such Grantor that
relate to the Collateral and any other collateral granted by such Grantor
as security for the Secured Obligations, together with any goodwill
associated therewith, all to the extent necessary to enable Secured Party
to realize on the Collateral in accordance with this Agreement and to
enable any transferee or assignee of the Collateral to enjoy the benefits
of the Collateral. This right shall inure to the benefit of Secured Party
and its respective successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure,
deed in lieu of foreclosure or otherwise. Such right and license shall be
granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor. In addition, each Grantor hereby
grants to Secured Party and its employees, representatives and agents the
right to visit such Grantor's and any of its Affiliates' or
subcontractor's plants, facilities and other places of business that are
utilized in connection with the manufacture, production, inspection,
storage or sale of products and services sold or delivered under any of
the Intellectual Property Collateral (or which were so utilized during the
prior six month period), and to inspect the quality control and all other
records relating thereto upon reasonable advance written notice to such
Grantor and at reasonable dates and times and as often as may be
reasonably requested. If and to the extent that any Grantor is permitted
to license the Intellectual Property Collateral, Secured Party shall
promptly enter into a non-disturbance agreement or other similar
arrangement, at such Grantor's request and expense, with such Grantor and
any licensee of any Intellectual Property Collateral permitted hereunder
in form and substance reasonably satisfactory to Secured Party pursuant to
which (i) Secured Party shall agree not to disturb or interfere with such
licensee's rights under its license agreement with such Grantor so long as
such licensee is not in default thereunder, and (ii) such licensee shall
acknowledge and agree that the Intellectual Property Collateral licensed
to it is subject to the security interest created in favor of Secured
Party for the benefit of the Lenders and any Hedge Exchangers and the
other terms of this Agreement.
SECTION 11. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED AGREEMENTS.
(a) Each Grantor shall at its expense:
21
(i) if consistent with sound business practices, perform and observe all
material terms and provisions of the Assigned Agreements to be performed or
observed by it, maintain the Assigned Agreements in full force and effect,
enforce the Assigned Agreements in accordance with their terms, and take all
such action to such end as may be from time to time reasonably requested by
Secured Party; and
(ii) upon the reasonable request of Secured Party, furnish to Secured
Party, promptly upon receipt thereof, copies of all notices, requests and other
documents received by such Grantor under or pursuant to the Assigned Agreements,
and from time to time (A) furnish to Secured Party such information and reports
regarding the Assigned Agreements as Secured Party may reasonably request and
(B) upon request of Secured Party make to the parties to such Assigned
Agreements such demands and requests for information and reports or for action
as such Grantor is entitled to make under the Assigned Agreements.
(b) Upon the occurrence and during the continuance of an Event of
Default, no Grantor shall:
(i) cancel or terminate any of the Assigned Agreements or consent to or
accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give any
consent, waiver or approval thereunder that would, in any case, be material or
adverse to Lenders;
(iii) waive any default under or breach of the Assigned Agreements;
(iv) consent to or permit or accept any prepayment of amounts to become
due under or in connection with the Assigned Agreements, except as expressly
provided therein; or
(v) take any other action in connection with the Assigned Agreements that
could reasonably be expected to materially impair the value of the interest or
rights of such Grantor thereunder or that could reasonably be expected to
materially impair the interest or rights of Secured Party.
SECTION 12. COLLATERAL ACCOUNT.
Secured Party is hereby authorized to establish and maintain at or
at the direction of Secured Party as a blocked account in the name of Company
and under the sole dominion and control of Secured Party, a restricted deposit
account designated as "Autotote Corporation Collateral Account". All amounts at
any time held in the Collateral Account shall be beneficially owned by Grantors
but shall be held in the name of Secured Party hereunder, for the benefit of
Lenders, as collateral security for the Secured Obligations upon the terms and
conditions set forth herein. Grantors shall have no right to withdraw, transfer
or, except as expressly set forth herein, otherwise receive any funds deposited
into the Collateral Account. Anything contained herein to the contrary
notwithstanding, the Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System
22
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect. All deposits of funds in the Collateral Account shall be
made by wire transfer (or, if applicable, by intra-bank transfer from another
account of a Grantor) of immediately available funds, in each case addressed in
accordance with instructions of Secured Party. Each Grantor shall, promptly
after initiating a transfer of funds to the Collateral Account, give notice to
Secured Party by telefacsimile of the date, amount and method of delivery of
such deposit. Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement. To the extent permitted under Regulation Q of the Board of Governors
of the Federal Reserve System, any cash held in the Collateral Account shall
bear interest at the standard rate paid by Secured Party to its customers for
deposits of like amounts and terms. Subject to Secured Party's rights hereunder,
any interest earned on deposits of cash in the Collateral Account shall be
deposited directly in, and held in, the Collateral Account.
SECTION 13. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, Secured Party or otherwise, from time
to time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(a) upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Secured Party pursuant to Section 7;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, ▇▇▇ for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and
the amounts necessary to discharge the same to be determined by Secured
Party in its sole discretion, any such payments made by Secured Party to
become obligations of such Grantor to Secured Party, due and payable
immediately without demand;
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(f) upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Grantors' expense, at
any time or from time to time, all acts and things that Secured Party
deems necessary to protect, preserve or realize upon the Collateral and
Secured Party's security interest therein for the benefit of Lenders and
Hedge Exchangers in order to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.
SECTION 14. SECURED PARTY MAY PERFORM.
If any Grantor fails to perform any agreement contained herein,
Secured Party, upon notice to Grantor, may itself perform, or cause performance
of, such agreement, and the expenses of Secured Party incurred in connection
therewith shall be payable by Grantors under Section 19(b).
SECTION 15. STANDARD OF CARE.
The powers conferred on Secured Party hereunder are solely to
protect its, Lenders' and Hedge Exchangers' interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 16. REMEDIES.
(a) GENERALLY. If any Event of Default (as defined in the Credit
Agreement), or the occurrence of an Early Termination Date (as defined in
a Master Agreement in the form prepared by the International Swap and
Derivatives Association, Inc. or a similar event under any similar swap
agreement or Currency Agreement) under any Lender Hedge Agreement which is
not immediately paid (either such occurrence being an "EVENT OF DEFAULT"
for purposes of this Agreement) shall have occurred and be continuing,
Secured Party may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
UCC (whether or not the UCC applies to the affected Collateral), and also
may (i) require each Grantor to, and
24
each Grantor hereby agrees that it will at its expense and upon request of
Secured Party, forthwith assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured Party at a
place to be designated by Secured Party that is reasonably convenient to
both parties, (ii) enter onto the property where any Collateral is located
and take possession thereof with or without judicial process, (iii) prior
to the disposition of the Collateral, store, process, repair or
recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems appropriate,
(iv) take possession of any Grantor's premises or place custodians in
exclusive control thereof, remain on such premises and use the same and
any of such Grantor's equipment for the purpose of completing any work in
process, taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, (v) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of Secured Party's offices or elsewhere,
for cash, on credit or for future delivery (without assumption of any
credit risk), at such time or times and at such price or prices and upon
such other terms as Secured Party may deem commercially reasonable, (vi)
exercise dominion and control over and refuse to permit further
withdrawals from any Deposit Account maintained with Secured Party or any
Lender constituting a part of the Collateral and (vii) without notice to
any Grantor, transfer to or register in the name of Secured Party or any
of its nominees any or all of the Securities Collateral. Secured Party or
any Lender or Hedge Exchanger may be the purchaser of any or all of the
Collateral at any such sale and Secured Party, as agent for and
representative of Lenders and Hedge Exchangers (but not any Lender or
Hedge Exchanger in its individual capacity if Requisite Obligees (as
defined in Section 21(a)) agree in writing, shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of the
purchase price for any Collateral payable by Secured Party at such sale.
Each purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of any Grantor, and each Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned. Each Grantor hereby waives any claims
against Secured Party, Lenders and Hedge Exchangers arising by reason of
the fact that the price at which any Collateral may have been sold at such
a private sale was less than the price which might have been obtained at a
public sale, even if Secured Party accepts the first offer received and
does not offer such Collateral to more than one offeree. If the proceeds
of any sale or other disposition of the
25
Collateral are insufficient to pay all the Secured Obligations, Grantors
shall be jointly and severally liable for the deficiency and the fees of
any attorneys employed by Secured Party to collect such deficiency. Each
Grantor further agrees that a breach of any of the covenants contained in
this Section will cause irreparable injury to Secured Party, Lenders and
Hedge Exchangers, that Secured Party have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section shall be specifically enforceable against such
Grantor, and each Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated
maturities.
(b) SECURITIES COLLATERAL.
(i) Each Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Securities Collateral conducted without prior registration or qualification of
such Securities Collateral under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Securities Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges
that any such private sales may be at prices and on terms less favorable than
those obtainable through a public sale without such restrictions (including a
public offering made pursuant to a registration statement under the Securities
Act) and, notwithstanding such circumstances and the registration rights granted
to Secured Party by such Grantor pursuant hereto, each Grantor agrees that any
such private sale shall be deemed to have been made in a commercially reasonable
manner and that Secured Party shall have no obligation to engage in public sales
and no obligation to delay the sale of any Securities Collateral for the period
of time necessary to permit the issuer thereof to register it for a form of
public sale requiring registration under the Securities Act or under applicable
state securities laws, even if such issuer would, or should, agree to so
register it. If Secured Party determines to exercise its right to sell any or
all of the Securities Collateral, upon written request, each Grantor shall and
shall cause each issuer of any Pledged Shares to be sold hereunder from time to
time to furnish to Secured Party all such information as Secured Party may
request in order to determine the number of shares and other instruments
included in the Securities Collateral which may be sold by Secured Party in
exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
(ii) If Secured Party shall determine to exercise its right to sell all or
any of the Securities Collateral pursuant to this Section, each Grantor agrees
that, upon request of Secured Party (which request may be made by Secured Party
in its sole discretion), Grantor will, at its own expense (A) execute and
deliver, and cause each issuer of the Securities Collateral contemplated to be
sold and the directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts and
things, as may be necessary or, in the opinion of Secured
26
Party, advisable to register such Securities Collateral under the provisions of
the Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of Secured Party,
are necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto; (B) use its best efforts to qualify the
Securities Collateral under all applicable state securities or "Blue Sky" laws
and to obtain all necessary governmental approvals for the sale of the
Securities Collateral, as requested by Secured Party; (C) cause each such issuer
to make available to its security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a) of the Securities
Act; (D) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Securities Collateral or any part thereof
valid and binding and in compliance with applicable law; and (E) bear all costs
and expenses, including reasonable attorneys' fees, of carrying out its
obligations under this Section.
(iii) Without limiting the generality of subsections 10.2 and 10.3 of the
Credit Agreement, in the event of any public sale described herein, each Grantor
agrees to indemnify and hold harmless Secured Party, and each Lender and each
Hedge Exchanger and each of their respective directors, officers, employees and
agents from and against any loss, fee, cost, expense, damage, liability or
claim, joint or several, to which any such Persons may become subject or for
which any of them may be liable, under the Securities Act or otherwise, insofar
as such losses, fees, costs, expenses, damages, liabilities or claims (or any
litigation commenced or threatened in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, registration statement, prospectus or
other such document published or filed in connection with such public sale, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse Secured Party and such other Persons for any legal or other
expenses reasonably incurred by Secured Party and such other Persons in
connection with any litigation, of any nature whatsoever, commenced or
threatened in respect thereof (including any and all fees, costs and expenses
whatsoever reasonably incurred by Secured Party and such other Persons and
counsel for Secured Party and such other Persons in investigating, preparing
for, defending against or providing evidence, producing documents or taking any
other action in respect of, any such commenced or threatened litigation or any
claims asserted). This indemnity shall be in addition to any liability which any
Grantor may otherwise have and shall extend upon the same terms and conditions
to each Person, if any, that controls Secured Party or such Persons within the
meaning of the Securities Act. Notwithstanding anything in this Agreement to the
contrary, the obligations of each party set forth in this Section 16(b)(iii)
shall survive the payment of the Secured Obligations and the termination of this
Agreement.
(c) COLLATERAL ACCOUNT. If an Event of Default has occurred and is
continuing and, in accordance with Section 8 of the Credit Agreement,
27
Company is required to pay to Secured Party an amount (the "AGGREGATE
AVAILABLE AMOUNT") equal to the maximum amount that may at any time be
drawn under all Letters of Credit then outstanding under the Credit
Agreement, Company shall deliver funds in such an amount for deposit in
the Collateral Account. If for any reason the aggregate amount delivered
by Company for deposit in the Collateral Account as aforesaid is less than
the Aggregate Available Amount, the aggregate amount so delivered by
Company shall be apportioned among all outstanding Letters of Credit for
purposes of this Section in accordance with the ratio of the maximum
amount available for drawing under each such Letter of Credit (as to such
Letter of Credit, the "MAXIMUM AVAILABLE AMOUNT") to the Aggregate
Available Amount. Upon any drawing under any outstanding Letter of Credit
in respect of which Company has deposited in the Collateral Account any
amounts described above, Secured Party shall apply such amounts to
reimburse the Issuing Lender for the amount of such drawing. In the event
of cancellation or expiration of any Letter of Credit in respect of which
Company has deposited in the Collateral Account any amounts described
above, or in the event of any reduction in the Maximum Available Amount
under such Letter of Credit, Secured Party shall apply the amount then on
deposit in the Collateral Account in respect of such Letter of Credit
(less, in the case of such a reduction, the Maximum Available Amount under
such Letter of Credit immediately after such reduction) first, to the
payment of any amounts payable to Secured Party pursuant to Section 18,
second, to the extent of any excess, to the cash collateralization
pursuant to the terms of this Agreement of any outstanding Letters of
Credit in respect of which Company has failed to pay all or a portion of
the amounts described above (such cash collateralization to be apportioned
among all such Letters of Credit in the manner described above), third, to
the extent of any further excess, to the payment of any other outstanding
Secured Obligations in such order as Secured Party shall elect, and
fourth, to the extent of any further excess, to the payment to whomsoever
shall be lawfully entitled to receive such funds.
SECTION 17. ADDITIONAL REMEDIES FOR INTELLECTUAL PROPERTY COLLATERAL.
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i)
Secured Party shall have the right (but not the obligation) to bring suit,
in the name of any Grantor, Secured Party or otherwise, to enforce any
Intellectual Property Collateral, in which event each Grantor shall, at
the request of Secured Party, do any and all lawful acts and execute any
and all documents required by Secured Party in aid of such enforcement and
each Grantor shall promptly, upon demand, reimburse and indemnify Secured
Party as provided in subsections 10.2 and 10.3 of the Credit Agreement and
Section 19 hereof, as applicable, in connection with the exercise of its
rights under this Section, and, to the extent that Secured Party shall
elect not to bring suit to enforce any Intellectual Property Collateral as
provided in this Section, each Grantor agrees to use all reasonable
measures, whether by action, suit, proceeding or otherwise, to prevent the
infringement of any of the Intellectual Property Collateral by others and
for that
28
purpose agrees to use its commercially reasonable judgment in maintaining
any action, suit or proceeding against any Person so infringing reasonably
necessary to prevent such infringement; (ii) upon written demand from
Secured Party, each Grantor shall execute and deliver to Secured Party an
assignment or assignments of the Intellectual Property Collateral and such
other documents as are necessary or appropriate to carry out the intent
and purposes of this Agreement; (iii) each Grantor agrees that such an
assignment and/or recording shall be applied to reduce the Secured
Obligations outstanding only to the extent that Secured Party (or any
Lender) receives cash proceeds in respect of the sale of, or other
realization upon, the Intellectual Property Collateral; and (iv) within
five Business Days after written notice from Secured Party, each Grantor
shall make available to Secured Party, to the extent within such Grantor's
power and authority, such personnel in such Grantor's employ on the date
of such Event of Default as Secured Party may reasonably designate, by
name, title or job responsibility, to permit such Grantor to continue,
directly or indirectly, to produce, advertise and sell the products and
services sold or delivered by such Grantor under or in connection with the
Trademarks, Trademark Registrations and Trademark Rights, such persons to
be available to perform their prior functions on Secured Party's behalf
and to be compensated by Secured Party at such Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure
applicable to each as of the date of such Event of Default.
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment to Secured Party of any rights, title and
interests in and to the Intellectual Property Collateral shall have been
previously made, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor,
Secured Party shall promptly execute and deliver to such Grantor such
assignments as may be necessary or desirable to reassign to such Grantor
any such rights, title and interests as may have been assigned to Secured
Party as aforesaid, subject to any disposition thereof that may have been
made by Secured Party; provided, after giving effect to such reassignment,
Secured Party's security interest granted pursuant hereto, as well as all
other rights and remedies of Secured Party granted hereunder, shall
continue to be in full force and effect; and provided further, the rights,
title and interests so reassigned shall be free and clear of all Liens
other than Liens (if any) encumbering such rights, title and interest at
the time of their assignment to Secured Party and Permitted Encumbrances.
SECTION 18. APPLICATION OF PROCEEDS.
Except as expressly provided elsewhere in this Agreement, all
proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral shall be applied as
provided in the Credit Agreement.
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SECTION 19. INDEMNITY AND EXPENSES.
(a) Grantors jointly and severally agree to indemnify Secured Party,
each Lender and each Hedge Exchanger from and against any and all claims,
losses and liabilities in any way relating to, growing out of or resulting
from this Agreement and the transactions contemplated hereby (including
without limitation enforcement of this Agreement), except to the extent
such claims, losses or liabilities result solely from Secured Party's or
such Lender's or Hedge Exchanger's gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured Party and
Lenders upon demand the amount of any and all costs and expenses,
including the reasonable fees and expenses of its counsel and of any
experts and agents, that Secured Party or any Lender may incur in
connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of Secured Party or Lenders hereunder,
or (iv) the failure by any Grantor to perform or observe any of the
provisions hereof.
(c) The obligations of Grantors in this Section 19 shall survive the
termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, the Lender Hedge Agreements, the Credit
Agreement and the other Loan Documents.
SECTION 20. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the indefeasible
payment in full of the Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Grantors and their respective successors and
assigns, and (c) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party, Lenders, Hedge Exchangers and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), (i) but subject to the provisions of subsection
10.1 of the Credit Agreement, any Lender may assign or otherwise transfer any
Loans held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Lenders herein
or otherwise and (ii) any Hedge Exchanger may assign or otherwise transfer any
Lender Hedge Agreement to which it is a party to any other Person in accordance
with the terms of such Lender Hedge Agreement, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Hedge Exchangers herein or otherwise. Upon the indefeasible payment in full of
all Secured Obligations, the cancellation or termination of the Commitments and
the cancellation or expiration of all outstanding Letters of Credit, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantors. Upon any such termination
Secured Party will, at Grantors' expense, execute and deliver to Grantors such
documents as Grantors shall reasonably request to evidence such termination. In
addition, upon the proposed sale, transfer or other disposition of any
Collateral
30
by a Grantor in accordance with the Credit Agreement for which such Grantor
desires to obtain a security interest release from Secured Party, such Grantor
shall deliver an Officer's Certificate (x) stating that the Collateral subject
to such disposition is being sold, transferred or otherwise disposed of in
compliance with the terms of the Credit Agreement and (y) specifying the
Collateral being sold, transferred or otherwise disposed of in the proposed
transaction. Upon the receipt of such Officer's Certificate, Secured Party
shall, at Grantor's expense, so long as Secured Party has no reason to believe
that the Officer's Certificate delivered by such Grantor with respect to such
sale is not true and correct, execute and deliver such releases of its security
interest in such Collateral which is to be so sold, transferred or disposed of,
as may be reasonably requested by such Grantor.
SECTION 21. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders and, by their acceptance of the benefits hereof,
Hedge Exchangers. Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including without limitation the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement;
provided that Secured Party shall exercise, or refrain from exercising,
any remedies provided for in Section 16 in accordance with the
instructions of (i) Requisite Lenders or all Lenders, as provided in the
Credit Agreement or (ii) after payment in full of all Obligations under
the Credit Agreement and the other Loan Documents, the cancellation or
expiration of all Letters of Credit and the termination of the
Commitments, (A) the holders of a majority of the aggregate notional
amount under all Lender Hedge Agreements (including Lender Hedge
Agreements that have been terminated) or (B) if all Lender Hedge
Agreements have been terminated in accordance with their terms, the
aggregate amount then due and payable (exclusive of expenses and similar
payments but including any early termination payments then due) under such
Lender Hedge Agreements (Requisite Lenders, all Lenders or, if applicable,
such holders being referred to herein as "REQUISITE OBLIGEES"). In
furtherance of the foregoing provisions of this Section 21(a), each Hedge
Exchanger, by its acceptance of the benefits hereof, agrees that it shall
have no right individually to realize upon any of the Collateral
hereunder, it being understood and agreed by such Hedge Exchanger that all
rights and remedies hereunder may be exercised solely by Secured Party for
the benefit of Lenders and Hedge Exchangers in accordance with the terms
of this Section 21(a).
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of
resignation by Administrative Agent pursuant to subsection 9.5 of the
Credit Agreement shall also constitute notice of resignation as Secured
Party under this Agreement; removal of Administrative Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as
Secured Party under this Agreement; and appointment of a successor
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute appointment of a successor Secured
31
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a
successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Secured Party under this
Agreement, and the retiring or removed Secured Party under this Agreement
shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party
such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder,
whereupon such retiring or removed Secured Party shall be discharged from
its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while
it was Secured Party hereunder.
(c) Secured Party shall not be deemed to have any duty whatsoever
with respect to any Hedge Exchanger until it shall have received written
notice in form and substance satisfactory to Secured Party from a Grantor
or such Hedge Exchanger as to the existence and terms of the applicable
Lender Hedge Agreement.
SECTION 22. ADDITIONAL GRANTORS.
The initial Subsidiary Grantors hereunder shall be such of the
wholly-owned Domestic Subsidiaries as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional wholly-owned
Domestic Subsidiaries may become parties hereto as additional Grantors (each an
"ADDITIONAL GRANTOR"), by executing a Counterpart substantially in the form of
EXHIBIT VI. Upon delivery of any such Counterpart to Secured Party, notice of
which is hereby waived by Grantors, each such Additional Grantor shall be a
Grantor and shall be as fully a party hereto as if such Additional Grantor were
an original signatory hereto. Each Grantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any other Grantor hereunder, nor by any election of Administrative Agent not
to cause any wholly-owned Domestic Subsidiary to become an Additional Grantor
hereunder. This Agreement shall be fully effective as to any Grantor that is or
becomes a party hereto regardless of whether any other Person becomes or fails
to become or ceases to be a Grantor hereunder.
SECTION 23. AMENDMENTS; ETC.
No amendment, modification, termination or waiver of any provision
of this Agreement, and no consent to any departure by any Grantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Secured Party (acting with the requisite consent of Lenders as provided in
the Credit Agreement) and, in the case of any such
32
amendment or modification, by Grantors; PROVIDED this Agreement may be modified
by the execution of a Counterpart by an Additional Grantor in accordance with
Section 22 and Grantors hereby waive any requirement of notice of or consent to
any such amendment. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
SECTION 24. NOTICES.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; PROVIDED that notices to
Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as provided in subsection 10.8 of the
Credit Agreement or as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.
SECTION 25. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 26. SEVERABILITY.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 27. HEADINGS.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 28. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
THE UCC
33
PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Articles 8 and 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined. The
rules of construction set forth in subsection 1.3 of the Credit Agreement shall
be applicable to this Agreement MUTATIS MUTANDIS.
SECTION 29. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE , COUNTY AND
CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY OBJECTIONS TO VENUE AND ANY DEFENSE OF FORUM NON CONVENIENS; (III)
AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH
GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 24; (IV) AGREES THAT
SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES
THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF
ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 29
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
SECTION 30. WAIVER OF JURY TRIAL.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Each Grantor and Secured Party acknowledge that this waiver is
a material inducement for Grantors and Secured Party to enter into a business
relationship, that Grantors and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Each Grantor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN
34
WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SECTION 30 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 31. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
SECTION 32. SCHEDULES.
Notwithstanding anything to the contrary stated or implied in this
Agreement, no Schedule to the Closing Date Security Agreement delivered to the
Administrative Agent on the Closing Date shall be amended and restated as of the
date hereof and such Schedules shall be attached to this Agreement in the form
thereof delivered to the Administrative Agent on such Closing Date.
SECTION 33. SURETYSHIP WAIVERS BY GRANTORS, ETC.
(a) Each Grantor agrees that its obligations hereunder are
irrevocable, absolute, independent and unconditional and shall not be
affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the
Secured Obligations. In furtherance of the foregoing and without limiting
the generality thereof, each Grantor agrees as follows: (i) Secured Party
or any Lender or any Hedge Exchanger may from time to time, without notice
or demand and without affecting the validity or enforceability of this
Agreement or giving rise to any limitation, impairment or discharge of
such Grantor's liability hereunder, (A) renew, extend, accelerate or
otherwise change the time, place, manner or terms of payment of the
Secured Obligations, (B) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to, or
substitutions for, the Secured Obligations or any agreement relating
thereto and/or subordinate the payment of the same to the payment of any
other obligations, (C) request and accept guaranties of the Secured
Obligations and take and hold other security for the payment of the
Secured Obligations, (D) release, exchange, compromise, subordinate or
modify, with or without consideration, any other security for payment of
the Secured Obligations, any guaranties of the Secured Obligations, or any
other obligation of any Person with respect to the Secured Obligations,
(E) enforce and apply any other security now or hereafter held by or for
the benefit of Secured Party, any Lender or any Hedge Exchanger in respect
of the Secured Obligations and direct the order or manner of sale thereof,
or exercise any other right or remedy that Secured Party, Lenders or Hedge
Exchangers, or any of them, may have against any such security, as Secured
Party in its discretion may determine consistent
35
with the Credit Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and (F) exercise any other rights available to
Secured Party, Lenders or Hedge Exchangers, or any of them, under the Loan
Documents and the Lender Hedge Agreements, at law or in equity; and (ii)
this Agreement and the obligations of each Grantor hereunder shall be
valid and enforceable and shall not be subject to any limitation,
impairment or discharge for any reason (other than payment in full of the
Secured Obligations), including without limitation the occurrence of any
of the following, whether or not such Grantor shall have had notice or
knowledge of any of them: (A) any failure to assert or enforce or
agreement not to assert or enforce, or the stay or enjoining, by order of
court, by operation of law or otherwise, of the exercise or enforcement
of, any claim or demand or any right, power or remedy with respect to the
Secured Obligations or any agreement relating thereto, or with respect to
any guaranty of or other security for the payment of the Secured
Obligations, (B) any waiver, amendment or modification of, or any consent
to departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of the Credit
Agreement, any of the other Loan Documents, any of the Lender Hedge
Agreements or any agreement or instrument executed pursuant thereto, or of
any guaranty or other security for the Secured Obligations, (C) the
Secured Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect, (D) the
application of payments received from any source to the payment of
indebtedness other than the Secured Obligations, even though Secured
Party, Lenders or Hedge Exchangers or any of them, might have elected to
apply such payment to any part or all of the Secured Obligations, (E) any
failure to perfect or continue perfection of a security interest in any
other collateral which secures any of the Secured Obligations, (F) any
defenses, set-offs or counterclaims which Company may allege or assert
against Secured Party, any Lender or any Hedge Exchanger in respect of the
Secured Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury, and (G) any other act or
thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of any Grantor as an
obligor in respect of the Secured Obligations.
(b) Each Grantor hereby waives, for the benefit of Lenders, Hedge
Exchangers and Secured Party: (i) any right to require Secured Party,
Lenders or Hedge Exchangers, as a condition of payment or performance by
such Grantor, to (A) proceed against Company, any guarantor of the Secured
Obligations or any other Person, (B) proceed against or exhaust any other
security held from Company, any guarantor of the Secured Obligations or
any other Person, (C) proceed against or have resort to any balance of any
deposit account or credit on the books of Secured Party, any Lender or any
Hedge Exchanger in favor of Company or any other Person, or (D) pursue any
other remedy in the power of Secured Party or any Lender or any Hedge
Exchanger whatsoever; (ii) any defense arising by reason of the
incapacity, lack of authority or any
36
disability or other defense of Company or any other Grantor including,
without limitation, any defense based on or arising out of the lack of
validity or the unenforceability of the Secured Obligations or any
agreement or instrument relating thereto or by reason of the cessation of
the liability of Company or any other Grantor from any cause other than
payment in full of the Secured Obligations; (iii) any defense based upon
any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome
than that of the principal; (iv) any defense based upon Secured Party's,
any Lender's or any Hedge Exchanger's errors or omissions in the
administration of the Secured Obligations, except behavior which amounts
to bad faith; (v) (A) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Agreement and any legal or equitable discharge of such Grantor's
obligations hereunder, (B) the benefit of any statute of limitations
affecting such Grantor's liability hereunder or the enforcement hereof,
(C) any rights to set-offs, recoupments and counterclaims, and (D)
promptness, diligence and any requirement that Secured Party, any Lender
or any Hedge Exchanger protect, secure, perfect or insure any other
security interest or lien or any property subject thereto; (vi) notices,
demands, presentments, protests, notices of protest, notices of dishonor
and notices of any action or inaction, notices of default under the Credit
Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Secured Obligations or any
agreement related thereto, notices of any extension of credit to Company
and notices of any of the matters referred to in the preceding paragraph
and any right to consent to any thereof; and (vii) to the fullest extent
permitted by law, any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Agreement.
(c) As used in this Section 32(c), any reference to "the principal"
includes Company, and any reference to "the creditor" includes Secured
Party, each Lender and each Hedge Exchanger. In accordance with Section
2856 of the California Civil Code (a) each Grantor waives any and all
rights and defenses available to Grantor by reason of Sections 2787 to
2855, inclusive, 2899 and 3433 of the California Civil Code, including
without limitation any and all rights or defenses such Grantor may have by
reason of protection afforded to the principal with respect to any of the
Secured Obligations, or to any guarantor of any of the Secured Obligations
with respect to any of such guarantor's obligations under its guaranty, in
either case pursuant to the antideficiency or other laws of the State of
California limiting or discharging the principal's indebtedness or such
guarantor's obligations, including without limitation Section 580a, 580b,
580d, or 726 of the California Code of Civil Procedure; and (b) each
Grantor waives all rights and defenses arising out of an election of
remedies by the creditor, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for any of the Secured
Obligations, has destroyed such Grantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of
the Code of Civil Procedure or otherwise; and even though that election of
remedies by the
37
creditor, such as nonjudicial foreclosure with respect to security for an
obligation of any guarantor of any of the Secured Obligations, has
destroyed such Grantor's rights of contribution against such guarantor. No
other provision of this Agreement shall be construed as limiting the
generality of any of the covenants and waivers set forth in this Section
32(c). As provided in Section 28, this Agreement shall be governed by, and
shall be construed and enforced in accordance with, the internal laws of
the State of New York, without regard to conflicts of laws principles.
This Section 32(c) is included solely out of an abundance of caution, and
shall not be construed to mean that any of the above-referenced provisions
of California law are in any way applicable to this Agreement or to any of
the Secured Obligations.
(d) Until the Secured Obligations shall have been indefeasibly paid
in full and the Commitments shall have terminated and all Letters of Credit
shall have expired or been cancelled, each Grantor shall withhold exercise of
(i) any claim, right or remedy, direct or indirect, that such Grantor now has or
may hereafter have against Company or any of its assets in connection with this
Agreement or the performance by such Grantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract,
by statute (including without limitation under California Civil Code Section
2847, 2848 or 2849), under common law or otherwise and including without
limitation (A) any right of subrogation, reimbursement or indemnification that
Grantor now has or may hereafter have against Company, (B) any right to enforce,
or to participate in, any claim, right or remedy that Secured Party, any Lender
or any Hedge Exchanger now has or may hereafter have against Company, and (C)
any benefit of, and any right to participate in, any other collateral or
security now or hereafter held by Secured Party, any Lender or any Hedge
Exchanger, and (ii) any right of contribution such Grantor may have against any
guarantor of the Secured Obligations. Each Grantor further agrees that, to the
extent the waiver of its rights of subrogation, reimbursement, indemnification
and contribution as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any rights of subrogation,
reimbursement or indemnification such Grantor may have against Company or
against any other collateral or security, and any rights of contribution such
Grantor may have against any such guarantor, shall be junior and subordinate to
any rights Secured Party, Lenders or Hedge Exchangers may have against Company,
to all right, title and interest Secured Party, Lenders or Hedge Exchangers may
have in any such other collateral or security, and to any right Secured Party,
Lenders or Hedge Exchangers may have against any such guarantor.
(e) Lenders, Hedge Exchangers and Secured Party shall have no
obligation to disclose or discuss with any Grantor their assessment, or such
Grantor's assessment, of the financial condition of Company. Each Grantor has
adequate means to obtain information from Company on a continuing basis
concerning the financial condition of Company and its ability to perform its
obligations under the Loan Documents and Lender Hedge Agreements, and such
Grantor assumes the responsibility for being and keeping informed of the
financial condition of Company and of all circumstances bearing upon the risk of
nonpayment of the Secured Obligations. Each Grantor hereby waives and
relinquishes any duty on the part of Secured Party, any Lender or any Hedge
Exchanger to disclose any matter, fact or thing relating to the business,
operations or condition of Company now known or hereafter known by Secured
Party, any Lender or any Hedge Exchanger.
38
[Remainder of page intentionally left blank]
39
IN WITNESS WHEREOF, Grantors and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY: AUTOTOTE CORPORATION
By:
--------------------------------------
Name:
Title:
SUBSIDIARY GRANTORS:
AUTOTOTE MANAGEMENT CORPORATION
By:
--------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
AUTOTOTE SYSTEMS, INC.
By:
--------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
S-1
AUTOTOTE INTERNATIONAL, INC.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
AUTOTOTE ENTERPRISES, INC.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AUTOTOTE KENO CORPORATION
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
AUTOTOTE LOTTERY CORPORATION
S-2
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ACRA ACQUISITION CORP.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ PRODUCTIONS, INC.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
AUTOTOTE GAMING, INC.
By:
-----------------------------------------
Name:
Title:
Address:
S-3
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
AUTOTOTE DOMINICANA, INC.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ , ▇▇ ▇▇▇▇▇
SCIENTIFIC GAMES HOLDING CORP.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCIENTIFIC GAMES INC.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCIENTIFIC GAMES (GREECE), INC.
S-4
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCIENTIFIC GAMES ACQUISITION INC.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCIENTIFIC GAMES FINANCE CORPORATION
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCIENTIFIC GAMES ROYALTY CORPORATION
By:
-----------------------------------------
Name:
Title:
Address:
S-5
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCIGAMES FRANCE INC.
By:
-----------------------------------------
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
S-6
DLJ CAPITAL FUNDING, INC.,
as Secured Party
By:
-----------------------------------------
Name:
Title:
S-7
SCHEDULE 1(E)(I) TO
SECURITY AGREEMENT
--------------------------------------------------------------------------------
PERCENTAGE OF
CLASS OUTSTANDING
OF STOCK PAR NUMBER OF SHARES
STOCK ISSUER STOCK CERTIFICATE NOS. VALUE SHARES PLEDGED
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1(e)(i)-1
SCHEDULE 1(E)(II) TO
SECURITY AGREEMENT
--------------------------------------------------------------------------------
AMOUNT OF
DEBT ISSUER INDEBTEDNESS
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1(e)(ii)-1
SCHEDULE 1(F)(I) TO
SECURITY AGREEMENT
U.S. TRADEMARKS:
----------------
TRADEMARK REGISTRATION REGISTRATION
REGISTERED OWNER DESCRIPTION NUMBER DATE
---------------- ----------- ------ ----
FOREIGN TRADEMARKS:
-------------------
TRADEMARK REGISTRATION REGISTRATION
REGISTERED OWNER DESCRIPTION NUMBER DATE
---------------- ----------- ------ ----
1(f)(i)-1
SCHEDULE 1(F)(II) TO
SECURITY AGREEMENT
U.S. PATENTS ISSUED:
--------------------
PATENT NO. ISSUE DATE INVENTION INVENTOR
---------- ---------- --------- --------
U.S. PATENTS PENDING:
---------------------
APPLICANT'S DATE APPLICATION
NAME FILED NUMBER INVENTION INVENTOR
---- ----- ------ --------- --------
FOREIGN PATENTS ISSUED:
-----------------------
PATENT NO. ISSUE DATE INVENTION INVENTOR
---------- ---------- --------- --------
1(f)(ii)-1
FOREIGN PATENTS PENDING:
-----------------------
APPLICANT'S DATE APPLICATION
NAME FILED NUMBER INVENTION INVENTOR
---- ----- ------ --------- --------
1(f)(ii)-2
SCHEDULE 1(F)(III) TO
SECURITY AGREEMENT
U.S. COPYRIGHTS:
----------------
TITLE REGISTRATION NO. DATE OF ISSUE REGISTERED OWNER
----- ---------------- ------------- ----------------
FOREIGN COPYRIGHT REGISTRATIONS:
--------------------------------
COUNTRY TITLE REGISTRATION NO. DATE OF ISSUE
------- ---------------------- -------------
PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:
---------------------------------------------------
TITLE REFERENCE NO. DATE OF APPLICATION COPYRIGHT CLAIMANT
----- ------------- ------------------- --------- ---------
PENDING FOREIGN COPYRIGHT REGISTRATIONS & APPLICATIONS:
-------------------------------------------------------
COUNTRY TITLE REGISTRATION NO. DATE OF ISSUE
------- ---------------------- -------------
1(f)(iii)-1
SCHEDULE 1(H) TO
SECURITY AGREEMENT
ASSIGNED AGREEMENTS
-------------------
1(h)-1
SCHEDULE 1(M) TO
SECURITY AGREEMENT
1(m)-1
SCHEDULE 4(B)
TO
SECURITY AGREEMENT
LOCATIONS OF EQUIPMENT AND INVENTORY
------------------------------------
NAME OF GRANTOR LOCATIONS OF EQUIPMENT AND INVENTORY
--------------- ------------------------------------
4(b)-1
SCHEDULE 4(D)
TO
SECURITY AGREEMENT
OFFICE LOCATIONS
----------------
NAME OF GRANTOR OFFICE LOCATIONS
--------------- ----------------
4(d)-1
SCHEDULE 4(E)
TO
SECURITY AGREEMENT
OTHER NAMES
-----------
NAME OF GRANTOR OTHER NAMES
--------------- -----------
4(e)-1
SCHEDULE 4(I)
TO
SECURITY AGREEMENT
FILING OFFICES
--------------
GRANTOR FILING OFFICES
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4(i)-1
EXHIBIT I TO
SECURITY AGREEMENT
[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]
GRANT OF TRADEMARK SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Trademark Collateral (as defined below); and
WHEREAS, Autotote Corporation, a Delaware corporation ("COMPANY"),
has entered into an Amended and Restated Credit Agreement dated as of October 6,
2000 (said Credit Agreement, as it may heretofore have been and as it may
hereafter be amended, supplemented, restated or otherwise modified from time to
time, being the "CREDIT AGREEMENT", with capitalized terms used herein and not
defined herein being used herein as defined therein) with the financial
institutions named therein (collectively, together with their respective
successors and assigns party to the Credit Agreement from time to time, the
"LENDERS"), DLJ Capital Funding, Inc., as Administrative Agent, Syndication
Agent, Lead Arranger and Sole Book Running Manager ("SECURED PARTY"), ▇▇▇▇▇▇
Commercial Paper Inc., as Documentation Agent, and ▇▇▇▇▇▇ Brothers Inc., as
Co-Arranger, pursuant to which Lenders have made certain commitments, subject to
the terms and conditions set forth in the Credit Agreement, to extend certain
credit facilities to Company; and
WHEREAS, Company [and Subsidiary Guarantors, as the case may be,]
may from time to time enter, or may from time to time have entered, into one or
more Hedge Agreements (collectively, the "LENDER HEDGE AGREEMENTS") with one or
more Persons that are Lenders or Affiliates of Lenders at the time such Lender
Hedge Agreements are entered into (in such capacity, collectively, "HEDGE
EXCHANGERS"); and
[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed
and delivered that certain Amended and Restated Subsidiary Guaranty dated as of
October 6, 2000 (said Subsidiary Guaranty, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "GUARANTY") in
favor of Secured Party for the benefit of Lenders and any Hedge Exchangers,
pursuant to which Grantor has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company under the Lender Hedge Agreements,
including without limitation the obligation of Company to make payments
thereunder in the event of early termination thereof; and]
WHEREAS, pursuant to the terms of an Amended and Restated Security
Agreement dated as of October 6, 2000 (as amended, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT"), among Grantor, Secured
Party and the other grantors named therein, Grantor has agreed to create in
favor of Secured Party for the benefit of Lenders and any Hedge Exchangers a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Trademark Collateral (as hereinafter
defined);
I-1
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party for the
benefit of Lenders and any Hedge Exchangers a security interest in all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "TRADEMARK
COLLATERAL"):
(i) all rights, title and interest (including rights acquired
pursuant to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all trademarks,
service marks, designs, logos, indicia, tradenames, trade dress, corporate
names, company names, business names, fictitious business names, trade
styles and/or other source and/or business identifiers and applications
pertaining thereto, owned by Grantor, or hereafter adopted and used, in
its business (including, without limitation, the trademarks specifically
identified in Schedule A) (collectively, the "TRADEMARKS"), all
registrations that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in foreign
countries (including, without limitation, the registrations and
applications specifically identified in Schedule A) (the "TRADEMARK
REGISTRATIONS"), all common law and other rights (but in no event any of
the obligations) in and to the Trademarks in the United States and any
state thereof and in foreign countries (the "TRADEMARK RIGHTS"), and all
goodwill of Grantor's business symbolized by the Trademarks and associated
therewith (the "ASSOCIATED GOODWILL"); and
(ii) all proceeds, products, rents and profits of or from any and
all of the foregoing Trademark Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is
the loss payee thereof), or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect to any of the
foregoing Trademark Collateral. For purposes of this Grant of Trademark
Security Interest, the term "PROCEEDS" includes whatever is receivable or
received when Trademark Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary
or involuntary.
Notwithstanding anything herein to the contrary, in no event shall
the Trademark Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under, any license,
contract or agreement to which Grantor is a party; PROVIDED, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Trademark Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.
Grantor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in the
Trademark Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
I-2
[The remainder of this page is intentionally left blank.]
I-3
IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the __ day of _______, _____.
[NAME OF GRANTOR]
By:
--------------------------------
Name:
----------------------------
Title:
---------------------------
I-4
SCHEDULE A
TO
GRANT OF TRADEMARK SECURITY INTEREST
UNITED STATES
TRADEMARK REGISTRATION REGISTRATION
REGISTERED OWNER DESCRIPTION NUMBER DATE
---------------- ----------- ------ ----
I-A-1
EXHIBIT II TO
SECURITY AGREEMENT
[FORM OF GRANT OF PATENT SECURITY INTEREST]
GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, Autotote Corporation, a Delaware corporation ("Company"),
has entered into an Amended and Restated Credit Agreement dated as of October 6,
2000 (said Credit Agreement, as it may heretofore have been and as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", with capitalized terms used herein and defined
herein being used herein as defined therein) with the financial institutions
named therein (collectively, together with their respective successors and
assigns party to the Credit Agreement from time to time, the "LENDERS"), DLJ
Capital Funding, Inc., as Administrative Agent, Syndication Agent, Lead Arranger
and Sole Book Running Manager ("SECURED PARTY"), ▇▇▇▇▇▇ Commercial Paper Inc.,
as Documentation Agent, and ▇▇▇▇▇▇ Brothers Inc., as Co-Arranger, pursuant to
which Lenders have made certain commitments, subject to the terms and conditions
set forth in the Credit Agreement, to extend certain credit facilities to
Company; and
WHEREAS, Company [and Subsidiary Guarantors, as the case may be,]
may from time to time enter, or may from time to time have entered, into one or
more Hedge Agreements (collectively, the "LENDER HEDGE AGREEMENTS") with one or
more Persons that are Lenders or Affiliates of Lenders at the time such Lender
Hedge Agreements are entered into (in such capacity, collectively, "HEDGE
EXCHANGERS"); and
[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed
and delivered that certain Amended and Restated Subsidiary Guaranty dated as of
October 6, 2000 (said Subsidiary Guaranty, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "GUARANTY") in
favor of Secured Party for the benefit of Lenders and any Hedge Exchangers,
pursuant to which Grantor has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company under the Lender Hedge Agreements,
including without limitation the obligation of Company to make payments
thereunder in the event of early termination thereof; and]
WHEREAS, pursuant to the terms of an Amended and Restated Security
Agreement dated as of October 6, 2000 (as amended, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT"), among Grantor, Secured
Party and the other grantors named therein, Grantor has agreed to create in
favor of Secured Party for the benefit of Lenders and any Hedge Exchangers a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Patent Collateral (as hereinafter
defined);
II-1
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party for the
benefit of Lenders and any Hedge Exchangers a security interest in all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "PATENT
COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant to
a license or otherwise but only to the extent permitted by agreements
governing such license or other use) in and to all patents and patent
applications and rights and interests in patents and patent applications
under any domestic or foreign law that are presently, or in the future may
be, owned or held by Grantor and all patents and patent applications and
rights, title and interests in patents and patent applications under any
domestic or foreign law that are presently, or in the future may be, owned
by Grantor in whole or in part (including, without limitation, the patents
and patent applications listed in SCHEDULE A), all rights (but not
obligations) corresponding thereto to ▇▇▇ for past, present and future
infringements and all re-issues, divisions, continuations, renewals,
extensions and continuations-in-part thereof (all of the foregoing being
collectively referred to as the "PATENTS"); and
(ii) all proceeds, products, rents and profits of or from any and all of
the foregoing Patent Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Patent Collateral. For purposes of this Grant of Patent Security Interest,
the term "PROCEEDS" includes whatever is receivable or received when
Patent Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall
the Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under, any license,
contract or agreement to which Grantor is a party; PROVIDED, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the Patent
Collateral shall include, and Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.
Grantor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in the
Patent Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
[The remainder of this page intentionally left blank.]
II-2
IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the ___ day of ____________, _____.
[NAME OF GRANTOR]
By:
------------------------------------
Name:
--------------------------------
Title:
-------------------------------
II-3
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
PATENTS ISSUED:
---------------
PATENT NO. ISSUE DATE INVENTION INVENTOR
---------- ---------- --------- --------
PATENTS PENDING:
----------------
APPLICANT'S DATE APPLICATION
NAME FILED NUMBER INVENTION INVENTOR
---- ----- ------ --------- --------
II-A-1
EXHIBIT III TO
SECURITY AGREEMENT
[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]
GRANT OF COPYRIGHT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Copyright Collateral (as defined below); and
WHEREAS, Autotote Corporation, a Delaware corporation ("Company"),
has entered into an Amended and Restated Credit Agreement dated as of October 6,
2000 (said Credit Agreement, as it may heretofore have been and as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", with capitalized terms used herein and not defined
herein being used herein as defined therein) with the financial institutions
named therein (collectively, together with their respective successors and
assigns party to the Credit Agreement from time to time, the "LENDERS"), DLJ
Capital Funding, Inc., as Administrative Agent, Syndication Agent, Lead Arranger
and Sole Book Running Manager ("SECURED PARTY"), ▇▇▇▇▇▇ Commercial Paper Inc.,
as Documentation Agent, and ▇▇▇▇▇▇ Brothers Inc., as Co-Arranger, pursuant to
which Lenders have made certain commitments, subject to the terms and conditions
set forth in the Credit Agreement, to extend certain credit facilities to
Company; and
WHEREAS, Company [and Subsidiary Guarantors, as the case may be,]
may from time to time enter, or may from time to time have entered, into one or
more Hedge Agreements (collectively, the "LENDER HEDGE AGREEMENTS") with one or
more Persons that are Lenders or Affiliates of Lenders at the time such Lender
Hedge Agreements are entered into (in such capacity, collectively, "HEDGE
EXCHANGERS"); and
[Insert if Grantor is a Subsidiary:] [WHEREAS, Grantor has executed
and delivered that certain Amended and Restated Subsidiary Guaranty dated as of
October 6, 2000 (said Subsidiary Guaranty, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "GUARANTY") in
favor of Secured Party for the benefit of Lenders and any Hedge Exchangers,
pursuant to which Grantor has guarantied the prompt payment and performance when
due of all obligations of Company under the Credit Agreement and the other Loan
Documents and all obligations of Company under the Lender Hedge Agreements,
including without limitation the obligation of Company to make payments
thereunder in the event of early termination thereof; and]
WHEREAS, pursuant to the terms of an Amended and Restated Security
Agreement dated as of October 6, 2000 (as amended, supplemented or otherwise
modified from time to time, the "SECURITY AGREEMENT"), among Grantor, Secured
Party and the other grantors named therein, Grantor has agreed to create in
favor of Secured Party for the benefit of Lenders and any Hedge Exchangers a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Copyright Collateral (as hereinafter
defined);
III-1
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party for the
benefit of Lenders and any Hedge Exchangers a security interest in all of
Grantor's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Grantor now has or hereafter
acquires an interest and wherever the same may be located (the "COPYRIGHT
COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant to
a license or otherwise but only to the extent permitted by agreements
governing such license or other use) under copyright in various published
and unpublished works of authorship including, without limitation,
computer programs, computer data bases, other computer software layouts,
trade dress, drawings, designs, writings, and formulas (including, without
limitation, the works listed on SCHEDULE A, as the same may be amended
pursuant hereto from time to time) (collectively, the "COPYRIGHTS"), all
copyright registrations issued to Grantor and applications for copyright
registration that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in foreign
countries (including, without limitation, the registrations listed on
SCHEDULE A, as the same may be amended pursuant hereto from time to time)
(collectively, the "COPYRIGHT REGISTRATIONS"), all common law and other
rights in and to the Copyrights in the United States and any state thereof
and in foreign countries including all copyright licenses (but with
respect to such copyright licenses, only to the extent permitted by such
licensing arrangements) (the "COPYRIGHT RIGHTS"), including, without
limitation, each of the Copyrights, rights, titles and interests in and to
the Copyrights, all derivative works and other works protectable by
copyright, which are presently, or in the future may be, owned, created
(as a work for hire for the benefit of Grantor), authored (as a work for
hire for the benefit of Grantor), or acquired by Grantor, in whole or in
part, and all Copyright Rights with respect thereto and all Copyright
Registrations therefor, heretofore or hereafter granted or applied for,
and all renewals and extensions thereof, throughout the world, including
all proceeds thereof (such as, by way of example and not by limitation,
license royalties and proceeds of infringement suits), the right (but not
the obligation) to renew and extend such Copyright Registrations and
Copyright Rights and to register works protectable by copyright and the
right (but not the obligation) to ▇▇▇ in the name of Grantor or in the
name of Secured Party or Lenders for past, present and future
infringements of the Copyrights and Copyright Rights; and
(ii) all proceeds, products, rents and profits of or from any and all of
the foregoing Copyright Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party is
the loss payee thereof), or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect to any of the
foregoing Copyright Collateral. For purposes of this Grant of Copyright
Security Interest, the term "PROCEEDS" includes whatever is receivable or
received when Copyright Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary
or involuntary.
Notwithstanding anything herein to the contrary, in no event shall
the Copyright Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under, any license,
contract or agreement to which Grantor is a party; PROVIDED, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Copyright Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.
Grantor does hereby further acknowledge and affirm that the rights
and remedies of Secured Party with respect to the security interest in the
Copyright Collateral granted hereby
III-2
are more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
[The remainder of this page intentionally left blank.]
III-3
IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the ___ day of ___________, _____.
[NAME OF GRANTOR]
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
III-4
EXECUTION
SECURITY AGREEMENT
SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST
U.S. COPYRIGHTS:
----------------
TITLE REGISTRATION NO. DATE OF ISSUE REGISTERED OWNER
----- ---------------- ------------- ----------------
PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:
---------------------------------------------------
TITLE REFERENCE NO. DATE OF APPLICATION COPYRIGHT CLAIMANT
----- ------------- ------------------- --------- ---------
III-A-1
EXHIBIT IV TO
SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This Pledge Supplement, dated __________________, is delivered
pursuant to the Amended and Restated Security Agreement, dated October 6, 2000,
between ____________________, a _______________ ("GRANTOR"), the other Grantors
named therein, and __________________ (as it may be from time to time amended,
modified or supplemented, the "SECURITY AGREEMENT"). Capitalized terms used
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt]
listed on the schedule attached hereto shall be deemed to be part of the
[Pledged Shares] [Pledged Debt] and shall become part of the Securities
Collateral and shall secure all Secured Obligations.
IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be
duly executed and delivered by its duly authorized officer as of ______________.
[GRANTOR]
By:
-----------------------------------------
Title:
IV-1
EXHIBIT V TO
SECURITY AGREEMENT
IP SUPPLEMENT
This IP SUPPLEMENT, dated _______, is delivered pursuant to and
supplements (i) the Security Agreement, dated as of September 6, 2000 (as it has
been or it may be from time to time amended, modified or supplemented, the
"SECURITY AGREEMENT"), among Autotote Corporation, [Insert Name of Grantor] (the
"GRANTOR"), the other Grantors named therein, and DLJ Capital Funding, Inc., as
Secured Party, and (ii) the [Grant of Trademark Security Interest] [Grant of
Patent Security Interest] [Grant of Copyright Security Interest] dated as of
___________, _____ (the "GRANT") executed by Grantor. Capitalized terms used
herein not otherwise defined herein shall have the meanings ascribed thereto in
the Grant.
Grantor grants to Secured Party a security interest in all of
Grantor's right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed on Schedule A attached hereto. All
such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be
deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] and shall be hereafter subject to each of the terms and conditions
of the Security Agreement and the Grant.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of ______________.
[GRANTOR]
By:
------------------------------------
Name:
Title:
V-
EXHIBIT VI TO
SECURITY AGREEMENT
[FORM OF COUNTERPART]
COUNTERPART (this "COUNTERPART"), dated _______, is delivered pursuant to
Section 22 of the Security Agreement referred to below. The undersigned hereby
agrees that this Counterpart may be attached to the Amended and Restated
Security Agreement, dated as of October 6, 2000 (as it may be from time to time
amended, modified or supplemented, the "SECURITY AGREEMENT"; capitalized terms
used herein not otherwise defined herein shall have the meanings ascribed
therein), among Autotote Corporation, the other Grantors named therein, and DLJ
Capital Funding, Inc., as Secured Party. The undersigned by executing and
delivering this Counterpart hereby becomes a Grantor under the Security
Agreement in accordance with Section 22 thereof and assumes and agrees to be
bound by all of the terms thereof. Without limiting the generality of the
foregoing, the undersigned hereby:
(i) authorizes the Secured Party to add the information set forth on
the Schedules to this Agreement to the correlative Schedules attached to
the Security Agreement;
(ii) agrees that all Collateral of the undersigned, including the
items of property described on the Schedules hereto, shall become part of
the Collateral and shall secure all Secured Obligations; and
(iii) makes the representations and warranties set forth in the
Security Agreement, as amended hereby, to the extent relating to the
undersigned.
[NAME OF ADDITIONAL GRANTOR]
By:
--------------------------------
Name:
Title: