PATENT SECURITY AGREEMENT
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THIS AGREEMENT (PATENT), dated as of October 24, 1997 (herein, as the same
from time to time may be amended, modified, restated or supplemented and in
effect, called this "AGREEMENT"), is by and among MIKOHN GAMING CORPORATION, a
Nevada corporation ("BORROWER"), MIKOHN NEVADA, a Nevada corporation ("MIKOHN
NEVADA"), MGC, INC., a Nevada corporation ("MGC"), CASINO EXCITEMENT, INC., a
Nevada corporation ("CEI"), (Mikohn Nevada, MGC and CEI sometimes hereinafter
are referred to individually as each "Guarantor" and collectively as
"Guarantors," and Borrower and Guarantors sometimes hereinafter are referred to
individually as each "Debtor" and collectively as "Debtor"), and FIRST SOURCE
FINANCIAL LLP, an Illinois registered limited liability partnership ("FSFP"), as
"AGENT" for all "LENDERS."
W I T N E S S E T H:
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WHEREAS, pursuant to a Credit Agreement dated as of October 24, 1997
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "CREDIT AGREEMENT"), among Borrower, FSFP, for
itself, as a Lender, and as Agent for all Lenders, and the financial
institutions parties thereto, Lenders have extended Commitments to make Loans to
Borrower; and
WHEREAS, Guarantors have guaranteed the payment and performance of the
Obligations pursuant to a certain Guaranty of even date herewith (herein, as the
same from time to time may be amended, modified, supplemented or restated and in
effect, called the "Guaranty") made by Guarantors in favor of Agent; and
WHEREAS, in connection with the Credit Agreement and the Guaranty, Debtors
have executed and delivered to Lenders a Security Agreement, dated as of October
24, 1997 (together with all amendments and other modifications, if any, from
time to time thereafter made thereto, the "SECURITY AGREEMENT"); and
WHEREAS, as a condition precedent to the making of the initial Loans under
the Credit Agreement, Debtors are required to execute and deliver this Agreement
and to grant to Agent a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Liabilities; and
WHEREAS, Debtors have duly authorized the execution, delivery and
performance of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and in order to induce Lenders to make Loans (including
the initial Loans) to Borrower pursuant to the Credit Agreement, Debtors agree,
for the benefit of Lenders, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
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otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided or provided by reference in the Security
Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
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consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Obligations of Borrower and all of the obligations of each
Guarantor arising under the Guaranty (collectively, the "LIABILITIES"), Debtors
hereby mortgage, pledge and grant to Agent for the benefit of Lenders a
continuing security interest in, all of the following property (the "PATENT
COLLATERAL"), whether now or hereafter owned, acquired or existing:
(a) all letters patent and applications for letters patent throughout
the world, including all patent applications in preparation for filing
anywhere in the world and including each patent and patent application
referred to in Item A of Attachment 1 hereto;
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(b) all patent licenses, including each patent license referred to in
Item B of Attachment 1 hereto;
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(c) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
the foregoing clauses (a) and b; and
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(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the right
to xxx third parties for past, present or future infringements of any
patent or patent application, including any patent or patent application
referred to in Item A of Attachment 1 hereto, and for breach or enforcement
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of any patent license, including any patent license referred to in Item B
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of Attachment 1 hereto, and all rights corresponding thereto throughout the
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world.
SECTION 3. Security Agreement. This Agreement has been executed and
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delivered by Debtors for the purpose of registering the security interest of
Agent in the Patent Collateral with the United States Patent and Trademark
Office and corresponding offices in other countries of the world. The security
interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to Agent under the Security
Agreement. The Security Agreement (and all rights and remedies of Agent
thereunder) shall remain in full force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full of all
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Liabilities and the termination of all Commitments, Lenders shall, at Debtors'
expense, execute and deliver to Debtors all instruments and other documents as
may be necessary or proper to release the lien on and security interest in the
Patent Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. Each Debtor does hereby further acknowledge
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and affirm that the rights and remedies of Lenders with respect to the security
interest in the Patent Collateral granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which (including the remedies
provided for therein) are incorporated by reference herein as if fully set forth
herein.
SECTION 6. Credit Document, etc. This Agreement is a Credit Document
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executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
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hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.
MIKOHN GAMING CORPORATION, a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxx X. Xxxxxxxx
______________________________
Title: Chairman of the Board & CEO
______________________________
MIKOHN NEVADA, a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxx X. Xxxxxxxx
______________________________
Title: Chairman of the Board & CEO
______________________________
MGC, INC., a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxx X. Xxxxxxxx
______________________________
Title: Chairman of the Board & CEO
______________________________
CASINO EXCITEMENT, INC., a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxx X. Xxxxxxxx
______________________________
Title: Chairman of the Board & CEO
______________________________
FIRST SOURCE FINANCIAL LLP, individually and in
its capacity as Agent
By: First Source Financial, Inc.,
its Agent/Manager
By: /s/ Xxxxxx X. Xxxxxxxxxx
______________________________
Xxxxxx X. Xxxxxxxxxx
Vice President
STATE OF NEVADA )
) SS.
COUNTY OF XXXXX )
I, Xxxxx X. Xxxxxxxx, a notary public in and for said County, in the
State of aforesaid, DO HEREBY CERTIFY that Xxxxx X. Xxxxxxxx, personally known
to me to be the Chairman/CEO of MIKOHN GAMING CORPORATION, a Nevada
corporation, and personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged that he/she signed and delivered the said instrument as such
officer of said corporation, pursuant to authority given by the Board of
Directors of said corporation as such person's free and voluntary act, and as
the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 23rd day of October, 1997.
/s/Xxxxx X. Xxxxxxxx
[notary seal] -----------------------------
Notary Public
My Commission Expires:
____________________________________
STATE OF NEVADA )
) SS.
COUNTY OF XXXXX )
I, Xxxxx X. Xxxxxxxx, a notary public in and for said County, in the
State of aforesaid, DO HEREBY CERTIFY that Xxxxx X. Xxxxxxxx, personally known
to me to be the Chairman/CEO of MIKOHN NEVADA, a Nevada corporation, and
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that he/she signed and delivered the said instrument as such officer of said
corporation, pursuant to authority given by the Board of Directors of said
corporation as such person's free and voluntary act, and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 23rd day of October, 1997.
/s/Xxxxx X. Xxxxxxxx
[notary seal] ------------------------------
Notary Public
My Commission Expires:
____________________________________
STATE OF NEVADA )
) SS.
COUNTY OF XXXXX )
I, Xxxxx X. Xxxxxxxx, a notary public in and for said County, in the
State of aforesaid, DO HEREBY CERTIFY that Xxxxx X. Xxxxxxxx, personally known
to me to be the Chairman/CEO of MGC, INC., a Nevada corporation, and
personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that he/she signed and delivered the said instrument as such officer of said
corporation, pursuant to authority given by the Board of Directors of said
corporation as such person's free and voluntary act, and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 23rd day of October, 1997.
/s/Xxxxx X. Xxxxxxxx
[notary seal] ----------------------------
Notary Public
My Commission Expires:
____________________________________
STATE OF NEVADA )
) SS.
COUNTY OF XXXXX )
I, Xxxxx X. Xxxxxxxx, a notary public in and for said County, in the
State of aforesaid, DO HEREBY CERTIFY that Xxxxx X. Xxxxxxxx, personally known
to me to be the Chairman/CEO of CASINO EXCITEMENT, INC., a Nevada
corporation, and personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged that he/she signed and delivered the said instrument as such
officer of said corporation, pursuant to authority given by the Board of
Directors of said corporation as such person's free and voluntary act, and as
the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 23rd day of October, 1997.
/s/Xxxxx X. Xxxxxxxx
[notary seal] ------------------------------
Notary Public
My Commission Expires:
____________________________________
STATE OF ILLINOIS )
) SS.
COUNTY OF XXXX )
I, O. Xxxx Xxxxxxxx, a notary public in and for said County, in the State
of aforesaid, DO HEREBY CERTIFY that Xxxxxx X. Xxxxxxxxxx personally known to me
to be a VP of FIRST SOURCE FINANCIAL, INC., a Delaware corporation, the
Agent/Manager of First Source Financial LLP, an Illinois registered limited
liability partnership, and personally known to me to be the same person whose
name is subscribed to the foregoing instrument, appeared before me this day in
person and acknowledged that he/she signed and delivered the said instrument as
such officer of said corporation, pursuant to authority, given by the Board of
Directors of said corporation as such person's free and voluntary act, and as
the free and voluntary act and deed of said corporation, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 29th day of October, 1997.
/s/O. Xxxx Xxxxxxxx
________________________
Notary Public
My Commission Expires:
____________________________________
[notary seal]
SCHEDULE II
to
Security Agreement
ITEM A. PATENTS
PATENTS
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COUNTRY PATENT NO. ISSUE DATE INVENTOR(S) TITLE
------- ---------- ---------- ----------- -----
USA 5,096,196 03/17/92 Gutknechtt & Gaming Apparatus
Wichinsky
USA 4,496,160 01/29/85 Wichinsky & Coin Projector and
Xxxxxxxxx Target Game Apparatus-
Flip-It
USA Des 272,920 03/06/84 Wichinsky & Gaming Machine
Xxxxxxxxx
USA Des 278,069 03/19/85 Wichinsky Slot machine
USA 5,103,081 04/07/92 Xxxxxx, Vedeen Apparatus and Method
& Xxxxxxxxx for Reading Data
Encoded on Circular
Objects, such as
Gaming Chips
USA 5,342,049 08/30/94 Wichinsky, Gaming Machine with
Xxxxxxxxx & Skill Feature
Xxxxxxxxx
USA 5,482,289 01/09/96 Xxxxxxxxx Method of Playing a
Bingo Game with
Progressive Jackpot
USA 5,642,160 06/24/97 Xxxxxxx Digital Image Capture
System for Photo
Identification Cards
USA 5,550,359 08/27/96 Xxxxxxx Time and Attendance
System and Method
Therefor
USA 5,536,016 07/16/96 Xxxxxxxx Progressive System for
a Match Number Game
and Method Therefor
1
SCHEDULE II
to
Security Agreement
ITEM A. (CON'T.) PATENTS
USA 5,586,936 12/24/96 Xxxxxxx, Xxxx Automated Gaming Table
& Xxxxxxxx Tracking System and Method
Therefor
USA 5,374,061 12/20/94 Xxxxxxxx Card Dispensing Shoe
Having a Counting Device
and Method of Using the
Same
USA 5,116,055 05/26/92 Xxxxx Progressive Jackpot Gaming
System Linking Gaming
Machines with Different Hit
Frequencies and
Denominations
USA 5,280,909 01/25/94 Xxxxx Gaming System with
Progessive Jackpot
USA 5,344,144 09/06/94 Canon Progressive Jackpot Gaming
System with Enhanced
Accumulator
USA 5,605,334 02/25/97 XxXxxx, Jr. Secure Multi-Site Progressive
Jackpot System for Live
Card Games
PENDING PATENT APPLICATIONS
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COUNTRY SERIAL NO. FILING DATE INVENTOR(S) TITLE
------- ---------- ----------- ----------- -----
USA 08/602,074 02/15/96 XxXxxx, Jr. Jackpot Systems for
08/933,636 09/19/97 XxXxxx, Jr. Live Card Games
Based Upon Game
Play Wagering And
Method Therefore
2
SCHEDULE II
to
Security Agreement
ITEM A. (CON'T.) PATENTS
USA 08/665,889 06/19/96 Xxxxxxxx Improved Lens
Design for Outdoor
Sign
USA 08/665,888 06/19/96 Xxxxxxxx Incandescent Visual
Display System
USA 07/577,436 09/04/90 Green, Xxxxx A Configurable LED
08/893,124 07/15/97 Green, Xxxxx Matrix Display
USA 08/516,882 08/18/95 Xxxxxx Large Incandescent
Live Image Display
System
USA 08/666,752 06/19/96 Xxxxxx Incandescent Visual
Display System
USA 08/699,151 08/16/96 Xxxxxx Visual Display
Lighting System
Having Front and
Rear Access
USA 60/056,692 08/28/97 Xxxxxx Multi-Player Gaming
Machines
PATENT APPLICATIONS IN PREPARATION
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COUNTRY DOCKET NO. FILING DATE INVENTOR(S) TITLE
------- ---------- ----------- ----------- -----
USA 1482/132 10/07/97 Xxxxxx Intelligent Casino
Chip System
USA 1482/134 10/11/97 Xxxxxx Automated Wheel
Game
3
SCHEDULE II
to
Security Agreement
ITEM A. (CON'T.) PATENTS
USA 1482/135 10/11/97 Xxxxxx Stepper Dice Bonus
Game
USA 1482/136 10/11/97 Xxxxxx Wheel with Lighted
Player Table and
Multimedia Effects
USA 1482/137 10/11/97 Xxxxxx Modular Giant
Gaming System
USA 1482/112 10/13/97 Xxxxxxxx Xxxx-Mutuel Gaming
Invention
USA 1505/5 12/09/94 Xxxxxxx Universal Gaming
Engine
USA 1482/106 06/24/97 Xxxxxxxx Cashless Method for
a Gaming System
USA 1482/86 06/24/97 Xxxxxxxx & Cashless Device for
Xxxxxxxx a Gaming System
4
SCHEDULE II
to
Security Agreement
ITEM B. PATENT LICENSES
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EFFECTIVE EXPIRATION SUBJECT
COUNTRY INVENTOR LICENSEE DATE DATE MATTER
------- -------- -------- --------- ---------- -------
USA Xxxxxxxxx Xxxxxxxxx 01/09/96 Method of Playing a
Bingo Game with
Progressive Jackpot
USA XxXxxx, Jr. Mikohn 02/25/97 Secure Multi-Site
Progressive Jackpot
System for Live Card
Games
USA XxXxxx, Jr. Mikohn 07/03/97 Jackpot System for
Live Card Games
Based Upon Game
Play Wagering and
Method Therefore
5
