[FORM OF SECURITY AGREEMENT]
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of September
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 hereof (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 Interest Rate Exchangers (as hereinafter
defined).
PRELIMINARY STATEMENTS
A. Pursuant to the Credit Agreement dated as of September 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 listed therein as
Lenders, DLJ Capital Funding, Inc., as Administrative Agent, Syndication Agent,
Lead Arranger and Sole Book Running Manager, Xxxxxx Commercial Paper Inc., as
Documentation Agent, and Xxxxxx 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. 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.
C. Subsidiary Grantors have executed and delivered that certain
Subsidiary Guaranty dated the date hereof (said 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.
D. It is a condition precedent to the initial extensions of credit
by Lenders under the Credit Agreement that Grantors listed on the signature
pages hereof shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and to induce Hedge Exchangers to enter into the Lender Hedge
Agreements, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with
Secured Party as follows:
section 1. Grant of Security.
Each Grantor hereby assigns to Secured Party, and hereby grants to
Secured Party 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 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");
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(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 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:
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(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 xxx 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, 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
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"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 xxx 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 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;
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(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 a Grantor has executed a leasehold mortgage or
leasehold deed of trust covering such real property leasehold or (iii) such
Grantor's 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 date hereof, as set
forth in Schedule 7.2C(a) of the Credit Agreement and (y) to the extent such
agreements are entered into after the date hereof, 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.
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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 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 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 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.
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section 4. Representations and Warranties.
Each Grantor represents and warrants as follows:
(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 date of this Agreement) and such as may have been filed in
favor of Secured Party 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 date hereof, 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 date hereof, and have been for the four month period preceding the
date hereof, 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) annexed hereto.
(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
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
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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; and (vi) Schedule 1(e)(ii) sets forth all of the Pledged Debt
in existence on the date hereof.
(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);
(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 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 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
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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 interest 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
foregoing, each Grantor will: (i) at the request of Secured Party, xxxx
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 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 instruments of transfer or assignment, 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,
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(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 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
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
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)
hereof 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 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 renewals 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; and (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 a
security interest to the extent of its
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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 Secured Party of an IP
Supplement, Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii) hereto 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 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 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;
(f) Each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement; and
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
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
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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 to 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 to 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 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 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
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
14
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 66% (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 stock of a controlled foreign
corporation possessing up to but not exceeding 65% 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.
15
(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 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
16
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, 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 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;
17
(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
to 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 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 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 Schedules 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
18
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. 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 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 Affiliate's 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
19
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 and the other terms of this
Agreement.
section 11. Special Provisions With Respect to the Assigned Agreements.
(a) Each Grantor shall at its expense:
(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.
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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 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, xxx 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;
21
(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;
(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 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 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
22
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 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, 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
unless Requisite Obligees (as defined in Section 21(a)) shall otherwise 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 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
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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, that Secured Party has 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 Party, advisable to register such Securities
Collateral under the provisions of the
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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.
(c) Collateral Account. If an Event of Default has occurred and is
continuing and, in accordance with Section 8 of the Credit Agreement, 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
25
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 hereof, 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 Sections 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 purpose agrees to use its commercially reasonable judgement
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
26
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.
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
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 may incur in connection with (i) the
27
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 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 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 and its 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
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 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
28
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 (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 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
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 the Hedge
Exchanger as to the existence and terms of the applicable Lender Hedge
Agreement.
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section 22. Additional Grantors.
The initial Subsidiary Grantors hereunder shall be such of the
wholly-owned Domestic Subsidiaries of Company as are signatories hereto on the
date hereof. From time to time subsequent to the date hereof, additional
wholly-owned Domestic Subsidiaries of Company may become parties hereto as
additional Grantors (each an "Additional Grantor"), by executing a Counterpart
substantially in the form of Exhibit VI annexed hereto. 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 of Company 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 and, in the case of any such 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
30
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 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 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
31
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 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. 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
32
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 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.
33
(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 disability or
other defense of Company 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 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
34
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 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 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,
35
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.
[Remainder of page intentionally left blank]
36
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:
000 Xxxxxxxx Xxxx
Xxxxxx , XX 00000
AUTOTOTE SYSTEMS, INC.
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxxxx Xxxx
Xxxxxx , XX 00000
A-1
AUTOTOTE INTERNATIONAL, INC.
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxxxx Xxxx
Xxxxxx , XX 00000
AUTOTOTE ENTERPRISES, INC.
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
AUTOTOTE KENO CORPORATION
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxxxx Xxxx
Xxxxxx , XX 00000
A-2
AUTOTOTE LOTTERY CORPORATION
By:
----------------------------------------
Name:
Title:
Address:
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
ACRA ACQUISITION CORP.
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxxxx Xxxx
Xxxxxx , XX 00000
XXXXXX X. XXXXXXXX PRODUCTIONS, INC.
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
A-3
AUTOTOTE GAMING, INC.
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxxxx Xxxx
Xxxxxx , XX 00000
AUTOTOTE DOMINICANA, INC.
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxxxx Xxxx
Xxxxxx , XX 00000
SCIENTIFIC GAMES HOLDING CORP.
By:
----------------------------------------
Name:
Title:
Address:
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
A-4
SCIENTIFIC GAMES INC.
By:
----------------------------------------
Name:
Title:
Address:
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
SCIENTIFIC GAMES (GREECE), INC.
By:
----------------------------------------
Name:
Title:
Address:
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
SCIENTIFIC ACQUISITION INC.
By:
----------------------------------------
Name:
Title:
Address:
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
A-5
SCIENTIFIC GAMES FINANCE CORPORATION
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
SCIENTIFIC GAMES ROYALTY CORPORATION
By:
----------------------------------------
Name:
Title:
Address:
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
SCIGAMES FRANCE INC.
By:
----------------------------------------
Name:
Title:
Address:
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
X-0
XXX XXXXXXX XXXXXXX, XXX.,
as Secured Party
By:
----------------------------------------
Name:
Title:
SCHEDULE 1(e)(i) TO
SECURITY AGREEMENT
--------------------------------------------------------------------------------
Class Percentage
of Stock Par Number of of
Stock Issuer Stock Certificate Nos. Value Shares Outstanding
Shares Pledged
================================================================================
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1(e)(i)-1
SCHEDULE 1(e)(ii) TO
SECURITY AGREEMENT
--------------------------------------------------------------------------------
Amount of
Debt Issuer Indebtedness
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
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
------- --------------
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 a Credit Agreement dated as of September 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 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"), Xxxxxx Commercial Paper Inc., as Documentation Agent
and Xxxxxx 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 its 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 Subsidiary Guaranty dated as of September 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 a Security Agreement dated as of
September 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 a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Trademark Collateral;
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 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 such 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 such 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
I-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 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 a Credit Agreement dated as of September 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 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"), Xxxxxx Commercial Paper Inc., as Documentation Agent
and Xxxxxx 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 its 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 Subsidiary Guaranty dated as of September 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 a Security Agreement dated as of
September 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 a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Patent Collateral;
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 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 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 A), all rights (but
not obligations) corresponding thereto to xxx 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 a Credit Agreement dated as of September 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 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"), Xxxxxx Commercial Paper Inc., as Documentation Agent
and Xxxxxx 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 its 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 [Subsidiary] Guaranty dated as of September 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 a Security Agreement dated as of
September 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 a
secured and protected interest in, and Secured Party has agreed to become a
secured creditor with respect to, the Copyright Collateral;
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 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 xxx in the name of such 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.
III-2
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 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
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 Security Agreement, dated September 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 Amendment 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 may
be from time to time amended, modified or supplemented, the "Security
Agreement"), among Autotote Corporation, [Insert Name of 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-1
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 Security
Agreement, dated as of September 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 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(1);
(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:
----------------
VI-1
