Exhibit 10.2
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GUARANTEE AND COLLATERAL AGREEMENT
made by
SCIENTIFIC GAMES CORPORATION
and certain of its Subsidiaries
in favor of
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
Dated as of December 23, 2004
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINED TERMS.....................................................1
1.1. Definitions..................................................1
1.2. Other Definitional Provisions................................4
SECTION 2. GUARANTEE.........................................................5
2.1. Guarantee....................................................5
2.2. Indemnity and Subrogation....................................5
2.3. Contribution and Subrogation.................................6
2.4. Subordination................................................6
2.5. Amendments, etc. with respect to the Borrower Obligations....6
2.6. Guarantee Absolute and Unconditional.........................7
2.7. Reinstatement................................................7
2.8. Payments.....................................................8
SECTION 3. GRANT OF SECURITY INTEREST........................................8
SECTION 4. REPRESENTATIONS AND WARRANTIES....................................9
4.1. Representations in Credit Agreement..........................9
4.2. Title; No Other Liens........................................9
4.3. Perfected Liens..............................................9
4.4. Jurisdiction of Organization; Chief Executive Office........10
4.5. Inventory and Equipment.....................................10
4.6. Farm Products...............................................10
4.7. Investment Property.........................................10
4.8. Receivables.................................................10
4.9. Intellectual Property.......................................11
SECTION 5. COVENANTS........................................................11
5.1. Covenants in Credit Agreement...............................11
5.2. Delivery of Instruments and Chattel Paper...................11
5.3. Maintenance of Insurance....................................11
5.4. Payment of Obligations......................................12
5.5. Maintenance of Perfected Security Interest; Further
Documentation...............................................12
5.6. Changes in Locations, Name, etc.............................13
5.7. Notices.....................................................13
5.8. Investment Property.........................................13
5.9. Receivables.................................................14
5.10. Intellectual Property.......................................14
SECTION 6. REMEDIAL PROVISIONS..............................................16
6.1. Certain Matters Relating to Receivables.....................16
6.2. Communications with Obligors; Grantors Remain Liable........17
6.3. Pledged Stock...............................................17
6.4. Proceeds to be Turned Over to Administrative Agent..........18
6.5. Application of Proceeds.....................................18
6.6. Code and Other Remedies.....................................19
6.7. Registration Rights.........................................20
6.8. Deficiency..................................................21
SECTION 7. THE ADMINISTRATIVE AGENT.........................................21
7.1. Administrative Agent's Appointment as Attorney-in-Fact,
etc.........................................................21
7.2. Duty of Administrative Agent................................22
7.3. Execution of Financing Statements...........................23
7.4. Authority of Administrative Agent...........................23
SECTION 8. MISCELLANEOUS....................................................23
8.1. Amendments in Writing.......................................23
8.2. Notices.....................................................23
8.3. No Waiver by Course of Conduct; Cumulative Remedies.........23
8.4. Enforcement Expenses; Indemnification.......................24
8.5. Successors and Assigns......................................24
8.6. Set-Off.....................................................24
8.7. Counterparts................................................25
8.8. Severability................................................25
8.9. Section Headings............................................25
8.10. Integration.................................................25
8.11. GOVERNING LAW...............................................25
8.12. Submission To Jurisdiction; Waivers.........................25
8.13. Acknowledgements............................................26
8.14. Additional Grantors.........................................26
8.15. Releases....................................................26
8.16. WAIVER OF JURY TRIAL........................................27
SCHEDULES
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Schedule 1 Guarantors
Schedule 2 Description of Pledged Securities
Schedule 3 Filings and Other Actions Required to Perfect Security Interests
Schedule 4 Location of Jurisdiction of Organization and Chief Executive
Office
Schedule 5 Location of Inventory and Equipment
Schedule 6 Intellectual Property
ANNEXES
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Annex I Form of Assumption Agreement
Annex II Form of Acknowledgment and Consent
Annex III Form of Perfection Certificate
GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 23, 2004,
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of JPMORGAN
CHASE BANK, N.A., as Administrative Agent (in such capacity, the "Administrative
Agent") for the banks, financial institutions and other entities (the "Lenders")
from time to time parties to the Credit Agreement, dated as of December 23, 2004
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among SCIENTIFIC GAMES CORPORATION, a Delaware corporation (the
"Borrower"), the several banks, financial institutions and other entities from
time to time parties to the Credit Agreement (the "Lenders") and the
Administrative Agent.
W I T N E S S E T H:
WHEREAS, the Lenders have agreed to extend credit to the Borrower
subject to the terms and conditions set forth in the Credit Agreement.
WHEREAS, the obligations of the Lenders to extend such credit are
conditioned upon, among other things, the execution and delivery of this
Agreement.
WHEREAS, the Guarantors are affiliates of the Borrower, will derive
substantial benefits from the extension of credit to the Borrower pursuant to
the Credit Agreement and are willing to execute and deliver this Agreement in
order to induce the Lenders to extend such credit.
NOW, THEREFORE, in consideration of the premises, each Grantor
hereby agrees with the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1. Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms are used herein as defined in the
New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort
Claims, Documents, Equipment, Farm Products, General Intangibles, Goods,
Instruments, Inventory, Letter-of-Credit Rights and Supporting Obligations.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"Borrower Credit Agreement Obligations": the collective reference to the
unpaid principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the Credit
Agreement after the maturity of the Loans and Reimbursement Obligations and
interest accruing at the then applicable rate provided in the Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether
or not a claim
for post-filing or post-petition interest is allowed in such proceeding) to any
Agent or any Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, this Agreement, the other Loan
Documents or any Letter of Credit, or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Agents or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
"Borrower Hedge Agreement Obligations": the collective reference to all
obligations and liabilities of the Borrower or any Subsidiary (including,
without limitation, interest accruing at the then applicable rate provided in
any Specified Hedge Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower or any such Subsidiary, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) to any counterparty to
a Specified Hedge Agreement, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, any Specified Hedge Agreement or any other
document made, delivered or given in connection therewith, in each case, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the relevant counterparty to a Specified Hedge
Agreement that are required to be paid by the Borrower or any such Subsidiary
pursuant to the terms of any Specified Hedge Agreement).
"Borrower Obligations": the collective reference to (i) the Borrower
Credit Agreement Obligations and (ii) the Borrower Hedge Agreement Obligations,
but only to the extent that, and only so long as, the Borrower Credit Agreement
Obligations are secured and guaranteed pursuant hereto.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed on Schedule 6), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed on Schedule
6), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.
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"Deposit Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution.
"Financial Officer": the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
Foreign Subsidiary.
"Guarantor Obligations": with respect to any Guarantor, all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement (including, without limitation, Section 2) or any other Loan
Document to which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Agents or to the Lenders that are required to be paid by such
Guarantor pursuant to the terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than the
Borrower. The initial Guarantors are identified on Schedule 1 hereto.
"Intercompany Note": any promissory note evidencing loans made by any
Grantor to any other Group Member.
"Investment Property": the collective reference to (i) all "investment
property" as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Foreign Subsidiary Voting Stock excluded from the definition of
"Pledged Stock") and (ii) whether or not constituting "investment property" as
so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
Property.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) all letters patent of the United States, any other country
or any political subdivision thereof, all reissues and extensions thereof and
all goodwill associated therewith, including, without limitation, any of the
foregoing referred to on Schedule 6, (ii) all applications for letters patent of
the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to on Schedule 6, and (iii) all rights to obtain any reissues
or extensions of the foregoing.
"Patent License": all agreements, whether written or oral, providing for
the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to on Schedule 6.
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"Perfection Certificate": a certificate substantially in the form of
Annex III, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer and the chief
legal officer of the Borrower.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options, interests or rights
of any nature whatsoever in respect of the Capital Stock of any Person that may
be issued or granted to, or held by, any Grantor while this Agreement is in
effect; provided that in no event shall more than 65% of the total outstanding
Foreign Subsidiary Voting Stock of any Foreign Subsidiary directly owned by a
Grantor be required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to on Schedule 6,
and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to on Schedule 6.
"Vehicles": all cars, trucks, trailers, construction, special purpose and
other vehicles and equipment covered by a certificate of title of any state or
of the United States of America and all appurtenants to any of the foregoing.
1.2. Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
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(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
(d) Where the context requires, any affiliate of a Lender which is a
party to a Specified Hedge Agreement and any counterparty to a Specified Hedge
Agreement set forth on Schedule 1.1(b) to the Credit Agreement, in each case
shall be deemed to be a "Lender" for purposes of this Agreement.
SECTION 2. GUARANTEE
2.1. Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Agents and the Lenders and their
respective permitted successors, indorsees, transferees and assigns, the prompt
and complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) [Reserved.]
(c) [Reserved.]
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by any Agent or any
Lender from the Borrower, any of the Guarantors, any other guarantor or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Borrower Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such
Guarantor in respect of the Borrower Obligations or any payment received or
collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations until the Borrower Obligations are paid in
full, no Letter of Credit shall be outstanding and the Commitments are
terminated.
2.2. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 2.4), the Borrower agrees that (a) in the event a payment of
an obligation shall be made by any Guarantor under this Agreement, the Borrower
shall indemnify such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the Person to
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whom such payment shall have been made to the extent of such payment and (b) in
the event any assets of any Grantor shall be sold pursuant to this Agreement or
any other Security Document to satisfy in whole or in part an obligation owed to
any Lender, the Borrower shall indemnify such Grantor in an amount equal to the
greater of the book value or the fair market value of the assets so sold.
2.3. Contribution and Subrogation. Each Guarantor and Grantor (a
"Contributing Party") agrees (subject to Section 2.4) that, in the event a
payment shall be made by any other Guarantor hereunder in respect of any
Borrower Obligation or assets of any other Grantor shall be sold pursuant to any
Security Document to satisfy any Borrower Obligation owed to any Lender and such
other Guarantor or Grantor (the "Claiming Party") shall not have been fully
indemnified by the Borrower as provided in Section 2.2, the Contributing Party
shall indemnify the Claiming Party in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which the
numerator shall be the net worth of the Contributing Party on the date hereof
and the denominator shall be the aggregate net worth of all the Guarantors and
Grantors on the date hereof (or, in the case of any Guarantor or Grantor
becoming a party hereto pursuant to Section 8.14, the date of the Assumption
Agreement executed and delivered by such Guarantor or Grantor). Any Contributing
Party making any payment to a Claiming Party pursuant to this Section 2.3 shall
be subrogated to the rights of such Claiming Party under Section 2.2 to the
extent of such payment.
2.4. Subordination. (a) Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors and Grantors under
Sections 2.2 and 2.3 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Borrower Obligations. No failure on
the part of the Borrower or any Guarantor or Grantor to make the payments
required by Sections 2.2 and 2.3 (or any other payments required under
applicable law or otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor or Grantor with respect to its obligations
hereunder, and each Guarantor and Grantor shall remain liable for the full
amount of the obligations of such Guarantor or Grantor hereunder.
(b) Each Guarantor and Grantor hereby agrees that all Indebtedness
and other monetary obligations owed by it to any other Guarantor, Grantor or any
other Subsidiary shall be fully subordinated to the indefeasible payment in full
in cash of the Borrower Obligations.
2.5. Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by any Agent or any Lender may be rescinded by such Agent or
such Lender and any of the Borrower Obligations continued, and the Borrower
Obligations, or the liability of any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Agent or any Lender, and the Credit Agreement and the other Loan Documents
and any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, and any
collateral
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security, guarantee or right of offset at any time held by any Agent or any
Lender for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released. No Agent or Lender shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Borrower Obligations or for the guarantee contained in this Section 2 or
any property subject thereto.
2.6. Guarantee Absolute and Unconditional. Each Guarantor to the
extent permitted by applicable law, waives any and all notice of the creation,
renewal, extension or accrual of any of the Borrower Obligations and notice of
or proof of reliance by any Agent or any Lender upon the guarantee contained in
this Section 2 or acceptance of the guarantee contained in this Section 2; the
Borrower Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and any of the Guarantors, on the one hand, and the Agents
and the Lenders, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 2. Each Guarantor, to the extent permitted by applicable law, waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or any of the Guarantors with respect to the
Borrower Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
any Agent or any Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Borrower or any other Person against any Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, any
Agent or any Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by any Agent or any Lender to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Borrower, any other Guarantor or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Agent or any Lender against any Guarantor. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
2.7. Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by any Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization
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of the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.8. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the Funding Office.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Agents and the Lenders (and any affiliates of any Lender to which Borrower
Hedge Agreement Obligations are owing), a security interest in, all of the
following property now owned or at any time hereafter acquired by such Grantor
or in which such Grantor now has or at any time in the future may acquire any
right, title or interest (collectively, the "Collateral"), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Equipment, other than Vehicles;
(f) all General Intangibles;
(g) all Instruments (except with regard to licenses of Intellectual
Property by a third party to a Grantor, if the assignment, transfer or
grant of the security interest would breach, limit the rights of the
Grantor under or give rise to a right to terminate such license);
(h) all Intellectual Property;
(i) all Inventory;
(j) all Investment Property;
(k) all Letter-of-Credit Rights;
(l) all Goods and other property not otherwise described above;
(m) all books and records pertaining to the Collateral; and
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(n) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in any property to the extent that such grant of a security interest is
prohibited by any Requirements of Law of a Governmental Authority, requires a
consent not obtained of any Governmental Authority pursuant to such Requirement
of Law or is prohibited by, or constitutes a breach or default under or results
in the termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Stock or
Pledged Note, any applicable shareholder or similar agreement, except to the
extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document or shareholder or similar agreement
providing for such prohibition, breach, default or termination or requiring such
consent is ineffective under applicable law; and provided, further, that the
parties hereto acknowledge that the security interest is granted as security
only and shall not subject the Administrative Agent or any Lender to, or in any
way alter or modify, any obligation or liability of any Grantor with respect to
or arising out of the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to each Agent and each Lender that:
4.1. Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Section 5 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and each Agent and each Lender shall be
entitled to rely on each of them as if they were fully set forth herein,
provided that each reference in each such representation and warranty to the
Borrower's knowledge shall, for the purposes of this Section 4.1, be deemed to
be a reference to such Guarantor's knowledge.
4.2. Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Agents and the
Lenders pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, pursuant to this Agreement or as are permitted by the
Credit Agreement.
4.3. Perfected Liens. The security interests granted pursuant to
this Agreement (a) upon completion of the filings and other actions specified on
Schedule 3 (which, in the case of all filings and other documents referred to on
said Schedule, have been delivered to the Administrative Agent in completed and
duly executed form) will constitute valid perfected
9
security interests in all of the Collateral in favor of the Administrative
Agent, for the ratable benefit of the Agents and the Lenders, as collateral
security for such Grantor's Obligations, enforceable in accordance with the
terms hereof against all creditors of such Grantor and any Persons purporting to
purchase any Collateral from such Grantor and (b) are prior to all other Liens
on the Collateral in existence on the date hereof except for Liens permitted by
the Credit Agreement.
4.4. Jurisdiction of Organization; Chief Executive Office. On the
date hereof, such Grantor's jurisdiction of organization, identification number
from the jurisdiction of organization (if any), and the location of such
Grantor's chief executive office or sole place of business, are specified on
Schedule 4. Such Grantor has furnished to the Administrative Agent a certified
charter, certificate of incorporation or other organization document and
long-form good standing certificate as of a date which is recent to the date
hereof.
4.5. Inventory and Equipment. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
4.6. Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7. Investment Property. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each relevant Issuer owned by such Grantor or,
in the case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding
Foreign Subsidiary Voting Stock of each relevant Issuer owned by such Grantor.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of any other Person,
except the security interest created by this Agreement.
4.8. Receivables. (a) Each Grantor shall deliver to the
Administrative Agent each Instrument or Chattel Paper in an amount in excess of
$100,000 payable to such Grantor under or in connection with any Receivable.
(b) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
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4.9. Intellectual Property. (a) Schedule 6 lists all registered
Copyrights, registered Trademarks, Patents and applications to register any of
the foregoing owned by such Grantor in its own name on the date hereof, and all
Copyright Licenses, Trademark Licenses and Patent Licenses.
(b) On the date hereof, all material Intellectual Property of such
Grantor, including without limitation the Intellectual Property described on
Schedule 6, is valid, subsisting, unexpired and enforceable, has not been
abandoned and does not infringe the intellectual property rights of any other
Person.
(c) Except as set forth on Schedule 6, on the date hereof, none of
the Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) Except as set forth on Schedule 6, no action or proceeding is
pending, or, to the knowledge of such Grantor, threatened, on the date hereof
(i) seeking to limit, cancel or question the validity of any Intellectual
Property or such Grantor's ownership interest therein or (ii) which, if
adversely determined, would have a material adverse effect on the value of any
Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Agents and the Lenders
that, from and after the date of this Agreement until the Obligations shall have
been paid in full, no Letter of Credit shall be outstanding and the Commitments
shall have terminated:
5.1. Covenants in Credit Agreement. In the case of each Guarantor,
such Guarantor shall take, or shall refrain from taking, as the case may be,
each action that is necessary to be taken or not taken under Sections 6, 7 and 8
of the Credit Agreement, as the case may be, so that no Default or Event of
Default is caused by the failure to take such action or to refrain from taking
such action by such Guarantor or any of its Subsidiaries.
5.2. Delivery of Instruments and Chattel Paper. If any amount in
excess of $100,000 payable under or in connection with any of the Collateral
shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper shall be promptly
delivered to the Administrative Agent, duly indorsed in a manner reasonably
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
5.3. Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies in accordance with
Section 7.5 of the Credit Agreement.
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(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.
(c) Upon the reasonable request of the Administrative Agent, the
Borrower shall deliver to the Administrative Agent a report of a reputable
insurance broker with respect to such insurance substantially concurrently with
the delivery by the Borrower to the Administrative Agent of its audited
financial statements for each fiscal year and such supplemental reports with
respect thereto as the Administrative Agent may from time to time reasonably
request.
5.4. Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all material taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all material claims of any kind (including, without limitation, claims
for labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
such Grantor.
5.5. Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever, subject to the rights of such
Grantor under the Loan Documents to Dispose of the Collateral.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection therewith, in each case as the Administrative Agent may reasonably
request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts, Letter-of-Credit
Rights and any other relevant Collateral, taking any actions necessary to enable
the Administrative Agent to obtain "control" (within the meaning of the
applicable Uniform Commercial Code) with respect thereto.
12
5.6. Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional financing statements and other
documents reasonably requested by the Administrative Agent as necessary to
maintain the validity, perfection and priority of the security interests
provided for herein and (b) if applicable, a written supplement to Schedule 5
showing any additional location at which Inventory or Equipment shall be kept:
(i) change its jurisdiction of organization or the location of its
chief executive office or sole place of business or principal residence
from that referred to in Section 4.4; or
(ii) change its name.
5.7. Notices. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
materially adversely affect the ability of the Administrative Agent to
exercise any of its remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8. Investment Property. (a) If such Grantor shall become entitled
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Agents and the Lenders, hold the same for the benefit
of the Agents and the Lenders and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor to be held by
the Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Investment
Property upon the liquidation or dissolution of any Issuer shall be paid over to
the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Investment Property or any property shall be
distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Administrative
13
Agent, hold such money or property for the benefit of the Agents and the
Lenders, segregated from other funds of such Grantor, as additional collateral
security for the Obligations. Notwithstanding the foregoing, the Grantors shall
not be required to pay over to the Administrative Agent or deliver to the
Administrative Agent as Collateral any proceeds of any liquidation or
dissolution of any Issuer, or any distribution of capital or property in respect
of any Investment Property, to the extent that (i) such liquidation, dissolution
or distribution, if treated as a Disposition of the relevant Issuer, would be
permitted by the Credit Agreement and (ii) the proceeds thereof are applied
toward prepayment of Loans and reduction of Commitments to the extent required
by the Credit Agreement.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Investment Property or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof (except pursuant to
a transaction expressly permitted by the Credit Agreement).
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Investment Property issued by it and (iii) the terms
of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Investment Property issued by it.
5.9. Receivables. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify in any material respect any Receivable in any manner that could adversely
affect the value thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material written demand, notice or document received by it that questions
the validity or enforceability of more than 5% of the aggregate amount of the
then outstanding Receivables.
5.10. Intellectual Property. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on and with
respect to each and every product and service applicable to its then current
line in order to maintain such Trademark in full force free from any claim of
abandonment for non-use, provided that if a product or service line is
14
discontinued, use of a Trademark with respect to such product or service line
may be discontinued, (ii) maintain at least the current quality of products and
services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Agents and the Lenders,
shall obtain a perfected security interest in such xxxx pursuant to this
Agreement, and (v) not knowingly (and not knowingly permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way, except as provided in
Section 5.10(a)(i) above.
(b) Such Grantor (either itself or through licensees) will not
knowingly do any act, or knowingly omit to do any act, whereby any material
Patent may become forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) will not
knowingly (and will not knowingly permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby any material portion of the
Copyrights may become invalidated or otherwise impaired. Such Grantor will not
knowingly (either itself or through licensees) do any act whereby any material
portion of the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the
Lenders promptly if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within thirty Business Days after the last
day of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, for recordation by
the Administrative Agent (at such Grantor's cost and expense), any and all
agreements, instruments, documents, and papers as the Administrative Agent may
request to evidence the Agents' and the Lenders' security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.
15
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and take all commercially
reasonable actions necessary to protect such Intellectual Property and to
recover any and all damages for such infringement, misappropriation or dilution.
SECTION 6. REMEDIAL PROVISIONS
6.1. Certain Matters Relating to Receivables. (a) The Administrative
Agent shall have the right to make test verifications of the Receivables in any
manner and through any medium that the Administrative Agent (in consultation
with the Borrower) reasonably considers advisable, and each Grantor shall
furnish all such assistance and information as the Administrative Agent may
reasonably require in connection with such test verifications. At any time upon
the occurrence and during the continuance of an Event of Default, upon the
Administrative Agent's reasonable request and at the expense of the relevant
Grantor, such Grantor shall cause independent public accountants reasonably
satisfactory to the Administrative Agent to furnish to the Administrative Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor on
behalf of the Administrative Agent and the Lenders, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
(c) Upon the occurrence and during the continuance of an Event of
Default, at the Administrative Agent's request, each Grantor shall deliver to
the Administrative Agent all original (where practicable, otherwise copies will
be delivered) and other documents evidencing,
16
and relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders, invoices and
shipping receipts.
6.2. Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any Receivables.
(b) Upon the reasonable request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of Default,
each Grantor shall notify obligors on the Receivables that the Receivables have
been assigned to the Administrative Agent for the ratable benefit of the Agents
and the Lenders and that payments in respect thereof shall be made directly to
the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each Receivables to observe and perform in all
material respects all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. No Agent or Lender shall have any obligation or liability
under any Receivable (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by any Agent or any Lender of any
payment relating thereto, nor shall any Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3. Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes and to exercise all voting and
corporate or other organizational rights with respect to the Investment
Property; provided, however, that no vote shall be cast or corporate or other
organizational right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Investment Property shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such
Investment Property at any meeting of shareholders
17
of the relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate or
other organizational structure of any Issuer, or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option pertaining
to such Investment Property, and in connection therewith, the right to deposit
and deliver any and all of the Investment Property with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Administrative Agent.
6.4. Proceeds to be Turned Over to Administrative Agent. In addition
to the rights of the Agents and the Lenders specified in Section 6.1 with
respect to payments of Receivables, if an Event of Default shall occur and be
continuing, all Proceeds received by any Grantor consisting of cash, checks and
other near-cash items shall be held by such Grantor on behalf of the Agents and
the Lenders, segregated from other funds of such Grantor, and shall, forthwith
upon receipt by such Grantor, be turned over to the Administrative Agent in the
exact form received by such Grantor (duly indorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by such Grantor on
behalf of the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5. Application of Proceeds. At such intervals as may be agreed
upon by the Borrower and the Administrative Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2, in payment of the Obligations
in the following order:
First, to pay incurred and unpaid fees, costs and expenses of the
Administrative Agent under the Loan Documents, including, without
limitation, the reasonable fees and expenses of counsel to the
Administrative Agent;
18
Second, to the Administrative Agent, for application by it towards
payment of amounts remaining unpaid in respect of the Obligations, pro
rata among the Agents and the Lenders according to the amounts of the
Obligations remaining unpaid to the Agents and the Lenders (including
depositing in a cash collateral account opened by the Administrative
Agent, an amount equal to the aggregate amount of L/C Obligations at the
time of application of Proceeds pursuant to this Section 6.5 and with
respect to which the Borrower has not previously made a deposit into a
cash collateral account pursuant to Section 9 of the Credit Agreement);
and
Third, any balance of such Proceeds remaining after the then
outstanding Obligations shall have been paid in full, no Letters of Credit
shall be outstanding and the Commitments shall have been terminated shall
be paid over to the Borrower or to whomsoever may be lawfully entitled to
receive the same.
6.6. Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived to the extent permitted by applicable law), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
any Agent or any Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may reasonably deem best, for cash or on
credit or for future delivery without assumption of any credit risk. Any Agent
or any Lender shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Administrative Agent's request, to assemble
the Collateral and make it available to the Administrative Agent at places which
the Administrative Agent shall reasonably select, whether at such Grantor's
premises or elsewhere. The Administrative Agent shall apply the net proceeds of
any action taken by it pursuant to this Section 6.6, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Administrative Agent account for the surplus, if any, to
any Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against any Agent or any Lender
arising out of the exercise by them
19
of any rights hereunder. If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other disposition.
6.7. Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.6, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, 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. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Agents and the Lenders,
that the Agents and the Lenders have no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained in
this Section 6.7 shall be specifically enforceable against such Grantor, and
such 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
Event of Default has occurred under the Credit Agreement.
20
6.8. Deficiency. Each Grantor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1. Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Receivable or with
respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the
Agents' and the Lenders' security interest in such Intellectual Property
and the goodwill and general intangibles of such Grantor relating thereto
or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section
6.6 or 6.7, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to
21
collect the Collateral or any portion thereof and to enforce any other
right in respect of any Collateral; (5) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral;
(6) settle, compromise or adjust any such suit, action or proceeding and,
in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which any
such Copyright, Patent or Trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent's and the Lenders' security
interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 7.1 (a) to the contrary notwithstanding,
the Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event of Default
shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Loans that are Base Rate Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2. Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof, except if such
failure or delay
22
results from their own gross negligence or willful misconduct. The powers
conferred on the Agents and the Lenders hereunder are solely to protect the
Agents' and the Lenders' interests in the Collateral and shall not impose any
duty upon any Agent or any Lender to exercise any such powers. The Agents and
the Lenders shall be accountable only for amounts that they actually receive as
a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
7.3. Execution of Financing Statements. Pursuant to any applicable
law, each Grantor authorizes the Administrative Agent to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the Administrative Agent determines appropriate to perfect
the security interests of the Administrative Agent under this Agreement. Each
Grantor authorizes the Administrative Agent to use the collateral description
"all assets" in any such financing statements. Each Grantor hereby ratifies and
authorizes the filing by the Administrative Agent of any financing statement
with respect to the Collateral made prior to the date hereof.
7.4. Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Agents and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Agents and the Lenders with
full and valid authority so to act or refrain from acting, and no Grantor shall
be under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 8. MISCELLANEOUS
8.1. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 11.1 of the Credit Agreement.
8.2. Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3. No Waiver by Course of Conduct; Cumulative Remedies. No Agent
or Lender shall by any act (except by a written instrument pursuant to Section
8.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of any
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right,
23
power or privilege. A waiver by any Agent or any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Administrative Agent or such Lender would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
8.4. Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay, or reimburse each Lender and Agent for all its costs and expenses
incurred in collecting against such Guarantor under the guarantee contained in
Section 2 or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents to which such Guarantor is a party, including,
without limitation, the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 11.5 of the Credit Agreement.
(d) The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5. Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Agents and the Lenders and their successors and assigns; provided that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent
unless permitted by the Credit Agreement.
8.6. Set-Off. Each Grantor hereby irrevocably authorizes each Agent
and each Lender at any time and from time to time while an Event of Default
shall have occurred and be continuing, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor to the
extent permitted by applicable law, to set-off and appropriate and apply any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Agent or such Lender to or for the
credit or the account of such Grantor, or any part thereof in such amounts as
such Agent or such Lender may elect, against and on account of the obligations
and liabilities of such Grantor to such Agent or such Lender hereunder and
claims of every nature and description of such Agent or such Lender against such
Grantor, in any currency,
24
arising hereunder, under the Credit Agreement or any other Loan Document to
which it is a party, as such Agent or such Lender may elect, whether or not any
Agent or any Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. Each Agent
and each Lender shall notify such Grantor promptly of any such set-off and the
application made by such Agent or such Lender of the proceeds thereof, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Agent and each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Agent or such Lender may have.
8.7. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9. Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10. Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Agents and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by any Agent or any Lender relative
to subject matter hereof and thereof not expressly set forth or referred to
herein or in the other Loan Documents.
8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12. Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
25
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to on Schedule 1 or at such other address
of which the Administrative Agent shall have been notified pursuant
hereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
8.13. Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) no Agent or Lender has any fiduciary relationship with or duty
to any Grantor arising out of or in connection with this Agreement or any
of the other Loan Documents, and the relationship between the Grantors, on
the one hand, and the Agents and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Grantors and the Lenders.
8.14. Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 7.9 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex I hereto.
8.15. Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations (other than Borrower Hedge Agreement
Obligations) shall have been paid in full, the Commitments have been terminated
and no Letters of Credit shall be outstanding, the Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Administrative
Agent and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Administrative Agent shall promptly
deliver to such Grantor any Collateral held by the Administrative Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination, without recourse
or warranty.
26
(b) If any of the Collateral shall be sold, transferred or otherwise
Disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral, it being understood that any such execution and delivery of
releases or other documents shall be without recourse to or warranty by the
Administrative Agent. At the request and sole expense of the Borrower, a
Guarantor shall be released from its obligations hereunder upon the consummation
of any transaction permitted by the Credit Agreement as a result of which such
Guarantor ceases to be a Subsidiary of the Borrower; provided that the Borrower
shall have delivered to the Administrative Agent at least five Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Guarantor and the terms of the sale or other
disposition in reasonable detail, including the price thereof, together with a
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Loan Documents.
8.16. WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH AGENT AND EACH LENDER, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
27
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
SCIENTIFIC GAMES CORPORATION,
By: _____________________________
Name:
Title:
EACH OF THE GUARANTORS LISTED ON
SCHEDULE 1 HERETO,
By: _____________________________
Name:
Title:
Schedule 1
----------
GUARANTORS
----------
Name Address
---- -------
Autotote Dominicana Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Autotote Enterprises, Inc. 000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
Autotote Gaming, Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Autotote Interactive, Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Autotote International, Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Autotote Keno Corporation 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
MDI Entertainment, LLC 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games Acquisition, Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games Finance Corporation 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games (Greece), Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games Holdings Corp. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games International, Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games Management Corporation 000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Scientific Games Online Entertainment Systems, Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games Racing, LLC 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Scientific Games Royalty Corporation 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
SG Racing, Inc. 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Schedule 2
DESCRIPTION OF INVESTMENT PROPERTY
----------------------------------
Pledged Stock:
--------------
Number of
Issuer Class of Stock Stock Certificate No. Shares
--------------------------------------------------------------------------------
Pledged Notes:
--------------
Issuer Payee Principal Amount
--------------------------------------------------------------------------------
Schedule 3
----------
FILINGS AND OTHER ACTIONS
-------------------------
REQUIRED TO PERFECT SECURITY INTERESTS
--------------------------------------
At Closing:
-----------
Uniform Commercial Code Filings
-------------------------------
[List each office where a financing statement is to be filed]*
Patent and Trademark Filings
----------------------------
[List all filings]
Actions with Regard to Pledged Stock**
--------------------------------------
Other Actions
-------------
[Describe other actions to be taken]
Post-Closing:
-------------
-------------------------
* Note that perfection of security interests in patents and trademarks
requires filings under the UCC in the jurisdictions where filings would be
made for general intangibles, as well as filings in the U.S Copyright Office
and the U.S. Patent & Trademark Office.
** If the interest of a Grantor in Pledged Stock appears on the books of a
financial intermediary, a control agreement as described in Section 8-106 of
the New York UCC will be required.
Schedule 4
----------
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
-------------------------------------------------------------------
Jurisdiction of Identification Location of Chief
Grantor Organization Number Executive Office
------- ------------ ------ ----------------
Schedule 5
----------
LOCATIONS OF INVENTORY AND EQUIPMENT
------------------------------------
Grantor Locations
------- ---------
Schedule 6
----------
INTELLECTUAL PROPERTY
---------------------
I. Copyrights and Copyright Licenses:
II. Patents and Patent Licenses:
III. Trademarks and Trademark Licenses:
Annex I
to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 200_, made by
______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of JPMorgan Chase Bank, N.A., as administrative agent (in
such capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, Scientific Games Corporation (the "Borrower"), the Lenders,
the Administrative Agent and other entities party thereto have entered into a
Credit Agreement, dated as of December 23, 2004 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Grantor) have entered into
the Guarantee and Collateral Agreement, dated as of December 23, 2004 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
and Collateral Agreement") in favor of the Administrative Agent for the benefit
of the Agents and the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
this Assumption Agreement, the Additional Grantor, as provided in Section 8.14
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth on Schedules ____________*
to the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 4 of the Guarantee and Collateral Agreement is true and
correct on and as of the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
----------------------
* Refer to each Schedule which needs to be supplemented.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:_________________________
Name:
Title:
2
Annex II
to
Guarantee and Collateral Agreement
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
Guarantee and Collateral Agreement dated as of December 23, 2004 (the
"Agreement"), made by the Grantors parties thereto for the benefit of JPMorgan
Chase Bank, N.A., as Administrative Agent. The undersigned agrees for the
benefit of the Agents and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and
will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) of
the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply
to the undersigned, mutatis mutandis, with respect to all actions that may be
required of the undersigned pursuant to Section 6.3(a) or 6.7 of the Agreement.
[NAME OF ISSUER]
By ___________________________________
Title ________________________________
Address for Notices:
______________________________________
______________________________________
Fax: _________________________________