EXHIBIT 10.1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT"), dated as of July 26,
2004, is made by EMPIRE RESORTS, INC., a Delaware corporation (the "COMPANY"),
and each of its Subsidiaries now or hereafter party hereto (such Subsidiaries,
together with Company, each, a "DEBTOR" and, collectively, the "DEBTORS"), in
favor of THE BANK OF NEW YORK ("BNY"), as collateral agent (together with its
successor(s) thereto in such capacity, "COLLATERAL AGENT") for the Trustee and
Holders, in light of the following:
WHEREAS, the Company and the other Debtors and BNY, as collateral
agent and as trustee, have entered into an Indenture, dated as of July 26, 2004
(as amended, restated, supplemented or otherwise modified from time to time, the
"INDENTURE"), pursuant to which the Company has issued $65,000,000 of its 5 1/2%
Convertible Senior Notes due 2014 (and, together with any additional notes that
may be issued by the Company from time to time thereunder or exchanged therefor
or for such additional notes, the "Notes") and the other Debtors have guaranteed
the payment of the Notes and the other Obligations thereunder;
WHEREAS, one or more of the Debtors may after the date hereof enter
into the Credit Agreement;
WHEREAS, if the Credit Agreement is entered into, the Debtors and
lenders under the Credit Agreement or their agent may enter into one or more
security agreements (as amended, restated, supplemented, replaced or otherwise
modified from time to time, together with the Credit Agreement to the extent the
Credit Agreement constitutes a security agreement, the "CREDIT AGREEMENT
SECURITY AGREEMENT"), pursuant to which the Debtors will grant a security
interest in the Collateral in favor of the lenders under the Credit Agreement or
their agent;
WHEREAS, if the Credit Agreement Security Agreement is entered into,
the Collateral Agent, the lenders under the Credit Agreement or their agent and
the Debtors may enter into an intercreditor agreement substantially in the form
of Exhibit E to the Indenture (as amended, restated, supplemented, replaced or
otherwise modified from time to time, collectively, the "INTERCREDITOR
AGREEMENT"), which agreement, among other things, will set forth, as between the
Collateral Agent and the lenders under the Credit Agreement or their agent, the
relative priority of their respective Liens in the Collateral and their rights
with respect thereto;
WHEREAS, the Company desires to secure its Obligations under the
Notes, the Indenture and each other Indenture Document to which it is or may
become a party and each other Debtor desires to secure its Guarantee, the
Indenture and each other Indenture Document to which it is or may become a party
by granting to Collateral Agent, for the benefit of itself, the Trustee and the
Holders, security interests in the Collateral as set forth herein; and
WHEREAS, to induce the Initial Purchaser to purchase the Notes, each
Holder to hold the Notes to be held by it and BNY to act in its capacities as
Trustee and Collateral Agent, each Debtor desires to pledge, grant, transfer,
and assign to Collateral Agent, for the benefit of itself, the Holders and the
Trustee, a security interest in the Collateral to secure the Obligations, as
provided herein.
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
each intending to be bound hereby, Collateral Agent and each Debtor agree as
follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Indenture. As
used in this Agreement, the following terms shall have the following
definitions:
"ACCOUNT" means an account (as that term is defined in the Code).
"ACCOUNT DEBTOR" means any Person who is obligated on an Account,
chattel paper, or a General Intangible.
"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION 2.4(c).
"AGREEMENT" has the meaning set forth in the preamble hereto.
"BNY" has the meaning set forth in the preamble to this Agreement.
"BOOKS" means, with respect to each Debtor, all of such Debtor's now
owned or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of such Debtor's Records relating to its business operations or
financial condition, and all of its goods or General Intangibles related to such
information).
"CODE" means the Uniform Commercial Code, as in effect from time to
time in the State of New York; PROVIDED, HOWEVER, that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection,
priority, or remedies with respect to the Collateral Agent's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.
"COLLATERAL" means, with respect to each Debtor, all of such
Debtor's now owned or hereafter acquired right, title, and interest in and to
each of the following:
(a) all of its Accounts,
(b) all of its Books,
(c) all of its commercial tort claims described on SCHEDULE 3.6(d)
(and any supplement thereto pursuant to SECTION 2.4(b)),
(d) all of its Deposit Accounts,
(e) all of its Equipment,
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(f) all of its General Intangibles,
(g) all of its Inventory,
(h) all of its Investment Property (including all of its securities
and Securities Accounts),
(i) all of its Negotiable Collateral,
(j) all of its Supporting Obligations,
(k) money or other assets of such Debtor that now or hereafter come
into the possession, custody, or control of the Collateral Agent, and
(l) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Supporting
Obligations, money, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
Notwithstanding the foregoing, the term Collateral shall in no event include (a)
any rights under any Account, contract, license or other agreement or any
General Intangible, in each case, to the extent that the grant of a security
interest under any Collateral Agreement (i) would invalidate the underlying
rights of such Debtor in such General Intangible, (ii) is prohibited by such
Account, contract, license, agreement, intellectual property or General
Intangible without the consent of any other party thereto (including applicable
Gaming Authorities, Racing Authorities, liquor agencies and authorities and
other Governmental Authorities) (PROVIDED, that each applicable Debtor agrees to
use its reasonable best efforts to obtain such consents), (iii) would give any
other party to such Account, contract, license, agreement or General Intangible
the right to terminate its obligations thereunder, or (iv) is not permitted
without consent, unless in each case, all necessary consents to such grant of a
security interest have been obtained from the other parties thereto; PROVIDED,
HOWEVER, that nothing herein shall be intended to limit the affect of 9-406 of
the Code or otherwise limit or restrict the conveyance by such Debtor of any
rights under any such Account, contracts, licenses, agreements or General
Intangibles to the extent which would not be violative of the restrictive terms
thereof; or (b) cash, other than cash deposited in Deposit Accounts or Security
Accounts (collectively, the "EXCLUDED ASSETS").
"COLLATERAL AGENT" has the meaning set forth in the preamble to this
Agreement.
"COLLATERAL AGENT-RELATED PERSON" means the Collateral Agent,
together with its Affiliates, officers, directors, employees, attorneys, and
agents.
"COLLATERAL AGENT'S LIENS" means the Liens granted by a Debtor to
Collateral Agent under this Agreement or the other Indenture Documents to which
such Debtor is a party.
"COLLECTIONS" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
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"COMMERCIAL TORT CLAIM ASSIGNMENT" has the meaning set forth in
SECTION 4.4(b).
"COMPANY" has the meaning set forth in the preamble to this
Agreement.
"CONTROL AGREEMENT" means, with respect to the applicable Debtor, a
control agreement, in form and substance reasonably satisfactory to the lenders
under the Credit Agreement or their agent if the Intercreditor Agreement is then
in effect and the Collateral Agent, executed and delivered by (a) such Debtor,
(b) (i) such lenders or agent for the benefit of the Collateral Agent for the
benefit of itself and the other Secured Parties or (ii) if the Intercreditor
Agreement is not in effect, the Collateral Agent, and (c) the applicable (i)
securities intermediary (with respect to a Securities Account of such Debtor) or
(ii) bank (with respect to a Deposit Account of such Debtor).
"CREDIT AGREEMENT" has the meaning set forth in the recitals to this
Agreement.
"DEBTOR" and "DEBTORS" have the meanings set forth in the preamble
to this Agreement.
"DEPOSIT ACCOUNT" means any deposit account (as that term is defined
in the Code).
"DISPOSITION" shall have the meaning ascribed to the term Asset Sale
in the Indenture, and the words "DISPOSE" and "DISPOSAL" shall be interpreted
similarly.
"EQUIPMENT" means equipment (as that term is defined in the Code)
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"EXCLUDED ASSETS" is defined in the definition of the term
"Collateral".
"GENERAL INTANGIBLES" means general intangibles (as that term is
defined in the Code), including limited liability and limited partnership
interests, payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trade secrets, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any other personal property other than Accounts, Deposit
Accounts, goods, Investment Property, and Negotiable Collateral.
"GOVERNING DOCUMENTS" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
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agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 8.3.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 8.3.
"INDENTURE" has the meaning set forth in the recitals to this
Agreement.
"INDENTURE DOCUMENTS" means, collectively, the Indenture, the Notes,
this Agreement and the other Collateral Agreements.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"INTELLECTUAL PROPERTY" means, with respect to any Debtor, all of
such Debtor's right, title and interest in and to all of the following now owned
and existing and hereafter arising, created or acquired property and products
and proceeds thereof:
(i) patents and patent applications, including, without
limitation, rights in the inventions and improvements described and
claimed therein, and those patents listed on EXHIBIT A attached
hereto and hereby made a part hereof, and (a) all reissues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof, (b) all income, royalties, damages,
proceeds and payments now and hereafter due or payable under or with
respect thereto, including, without limitation, damages and payments
for past or future infringements thereof, (c) the right to xxx for
past, present and future infringements thereof, and (d) all rights
corresponding thereto throughout the world (all of the foregoing
patents and applications, together with the items described in
clauses (a)-(d) of this clause (i), are sometimes hereinafter
referred to individually as a "PATENT" and, collectively, as the
"PATENTS"); and
(ii) trademarks, trademark registrations, trademark
applications, trade names and tradestyles, brand names, service
marks, service xxxx registrations and service xxxx applications,
including, without limitation, the trademarks, trade names, brand
names, service marks and applications and registrations thereof
listed on EXHIBIT B attached hereto and hereby made a part hereof,
and (a) all renewals or extensions thereof, (b) all income,
royalties, proceeds, damages and payments now and hereafter due or
payable with respect thereto, including, without limitation, damages
and payments for past or future infringements thereof, (c) the right
to xxx for past, present and future infringements thereof, and (d)
all rights corresponding thereto throughout the world (all of the
foregoing trademarks, trade names and tradestyles, brand names,
service marks and applications and registrations thereof, together
with the items described in clauses (a)-(d) of this clause (ii), are
sometimes hereinafter referred to individually as a "TRADEMARK" and,
collectively, as the "TRADEMARKS"); and
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(iii) rights under or interests in any patent,
trademark, or copyright license agreements with any other Person (to
the extent a security interest may be granted in such rights without
violating the terms of any such license agreement; with respect to
any of the Intellectual Property or any other patent, trademark,
service xxxx or any application or registration thereof or any other
trade name or tradestyle between such Debtor and any other Person,
whether such Debtor is a licensor or licensee under any such license
agreement, including, without limitation, the licenses listed on
EXHIBIT C attached hereto and hereby made a part hereof (all of the
foregoing license agreements and such Debtor's rights thereunder are
referred to collectively as the "LICENSES"); and
(iv) the goodwill of such Debtor's business connected
with and symbolized by the Trademarks; and
(v) copyrights, copyright registrations and copyright
applications, used in the United States and elsewhere, including,
without limitation, the copyright registrations and copyright
applications listed on EXHIBIT D attached hereto and made a part
hereof, and (a) renewals or extensions thereof, (b) all income,
royalties, proceeds, damages and payments now and hereafter due
and/or payable with respect thereto, including, without limitation,
damages and payments for past or future infringements thereof, (c)
the right to xxx for past, present and future infringements thereof,
and (d) all rights corresponding thereto throughout the world (all
of the foregoing copyrights, copyright registrations and copyright
applications, together with the items described in clauses (a)-(d),
are sometimes hereinafter individually and/or collectively referred
to as the "COPYRIGHTS"); and
(vi) all trade secrets, formulas, processes, devices,
know-how, or compilations of information (including technical
information and non-technical information such as customer lists and
marketing plans), collectively referred to as trade secrets, which
are not available to others and which are maintained as confidential
by such Debtor, and the right to prevent misappropriation and
unauthorized disclosures thereof and all rights corresponding
thereto throughout the world (all of the foregoing trade secrets and
associated rights are sometimes hereinafter individually and/or
collectively referred to as the "TRADE SECRETS").
"INTERCREDITOR AGREEMENT" has the meaning set forth in the recitals
to this Agreement.
"INVENTORY" means inventory (as that term is defined in the Code).
"INVESTMENT PROPERTY" means investment property (as that term is
defined in the Code).
"NEGOTIABLE COLLATERAL" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper).
"NOTES" has the meaning set forth in the recitals to this Agreement.
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"OBLIGATIONS" means all debts, principal, interest (including any
interest that, but for the commencement of an Insolvency Proceeding, would have
accrued), premiums, liabilities (including all amounts owed by any Debtor
pursuant hereto), obligations (including indemnification obligations), fees,
charges, costs, reasonable expenses (including any expenses that, but for the
commencement of an Insolvency Proceeding, would have accrued), guaranties,
covenants, and duties of any kind and description owing by any Debtor to the
Collateral Agent or any other Secured Party pursuant to or evidenced by the
Indenture Documents and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and
all reasonable expenses that any Debtor is required to pay or reimburse by the
Indenture Documents, by law, or otherwise. Any reference in this Agreement to
the Obligations shall include all extensions, modifications, renewals or
alterations thereof, both prior and subsequent to any Insolvency Proceeding.
"PERMITTED DISPOSITIONS" means Dispositions consummated in
accordance with the terms of Section 4.15 of the Indenture.
"PERMITTED PROTEST" means the right of any Debtor to protest any
Lien (other than any Lien that secures the Obligations), taxes (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, PROVIDED that (a) a reserve with respect to such
obligation is established on the Books of such Debtor in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by such Debtor in good faith, and (c) while any such protest is
pending, there will be no impairment of the enforceability, validity, or
priority of any of the Collateral Agent's Liens.
"RECORD" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"SECURED PARTIES" means, collectively, the Collateral Agent, the
Trustee and the Holders.
"SECURITIES ACCOUNT" means a securities account (as that term is
defined in the Code).
"SUPPORTING OBLIGATION" means a letter-of-credit right or secondary
obligation that supports the payment or performance of an Account, chattel
paper, document, General Intangible, instrument, or Investment Property.
"TRUSTEE" has the meaning set forth in the recitals to this
Agreement.
"UNITED STATES" means the United States of America.
"VOIDABLE TRANSFER" has the meaning set forth in SECTION 12.7.
1.2 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein; PROVIDED, HOWEVER, that to the extent that the Code is used to
define any term herein and such term is defined differently in different
Articles of the Code, the definition of such term contained in Article 9 shall
govern.
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1.3 CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the terms "includes" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Section, subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to the satisfaction or repayment in full
of the Obligations shall mean the repayment in full in cash of all Obligations
other than contingent indemnification Obligations. Any reference herein to any
Person shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein shall be satisfied by the transmission
of a Record and any Record transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained
therein.
1.4 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. CREATION OF SECURITY INTEREST.
2.1 GRANT OF SECURITY INTEREST. Each Debtor hereby grants to the
Collateral Agent, for the benefit of itself and the other Secured Parties, a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Collateral of such Debtor
in order to secure prompt repayment of any and all of the Obligations in
accordance with the terms and conditions of the Indenture Documents and in order
to secure prompt performance by such Debtor of each of its covenants and duties
under the Indenture Documents. The Collateral Agent's Liens in and to the
Collateral of such Debtor shall attach to all Collateral of such Debtor without
any further action on the part of the Collateral Agent or such Debtor. Anything
contained in this Agreement or any other Indenture Document to the contrary
notwithstanding, except for Permitted Dispositions, no Debtor has any authority,
express or implied, to Dispose of any item or portion of the Collateral.
2.2 NEGOTIABLE COLLATERAL. In the event that any Collateral of any
Debtor, including proceeds, is evidenced by or consists of Negotiable
Collateral, and to the extent that the perfection or priority of the Collateral
Agent's security interest is dependent on or enhanced by possession, such
Debtor, shall endorse and deliver physical possession of such Negotiable
Collateral with an individual value in excess of $20,000 to the Collateral Agent
to be administered in accordance with the terms of the Intercreditor Agreement.
2.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, the Collateral Agent or the Collateral Agent's designee may
(a) notify Account Debtors of such Debtor that such Debtor's Accounts, chattel
paper, or General Intangibles have been assigned to the Collateral Agent or that
the Collateral Agent has a security interest therein, or (b) collect such
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Debtor's Accounts, chattel paper, or General Intangibles directly and the
collection costs and expenses arising in connection therewith shall be for the
account of such Debtor. Each Debtor agrees that it will hold in trust for the
Collateral Agent, as the Collateral Agent's trustee, any of its Collections that
it receives and immediately will deliver such Collections at any time that an
Event of Default is outstanding to the Collateral Agent in their original form
as received by such Debtor (together with any necessary endorsements).
2.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY
OF ADDITIONAL DOCUMENTATION REQUIRED.
(a) Each Debtor shall and hereby authorizes the Collateral Agent to
file any financing statement necessary or desirable to effectuate the
transactions contemplated by the Indenture Documents, and any continuation
statement or amendment with respect thereto, in any appropriate filing office;
PROVIDED, HOWEVER, that no such authorization shall obligate the Collateral
Agent to make any such filing.
(b) If any Debtor acquires any commercial tort claims after the date
hereof for a claim of at least $20,000, such Debtor shall promptly (but in any
event within 5 Business Days after such acquisition) (i) deliver to the
Collateral Agent a written description of such commercial tort claim, (ii)
execute and deliver a supplement to this Agreement, pursuant to which such
Debtor shall grant a perfected security interest in all of its right, title and
interest in and to such commercial tort claim to the Collateral Agent, as
security for the Obligations (a "COMMERCIAL TORT CLAIM ASSIGNMENT") and (iii)
not in limitation but in furtherance of CLAUSE (C) below, file a financing
statement or amendment to a previously filed and effective financial statement
describing such commercial tort claim with sufficient particularity to the
extent necessary to perfect the Collateral Agent's Lien therein.
(c) Each Debtor shall prepare, execute and deliver to, and if
applicable, file, any and all financing statements, original financing
statements in lieu of continuation statements, amendments to financing
statements, fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (collectively, the "ADDITIONAL DOCUMENTS") as may be
necessary (and to the extent the Collateral Agent is a party thereto, in form
and substance reasonably satisfactory to the Collateral Agent) to create,
perfect, and continue the perfection of or to improve the priority the
Collateral Agent's Liens in the Collateral of such Debtor (whether now owned or
hereafter arising or acquired or tangible or intangible), or to fully consummate
all of the transactions contemplated hereby and under the other Indenture
Documents. Not in limitation but in furtherance of the foregoing, each Debtor
shall comply with its obligations in the immediately preceding sentence as such
obligations relate to the preparation and filing by it of a Code financing
statement, together with any applicable filing fees, within 10 days of the date
hereof (or if later, the date it became a party hereto) in the applicable filing
office, and following the filing thereof shall provide the Collateral Agent with
evidence of the same. To the maximum extent permitted by applicable law, such
Debtor authorizes the Collateral Agent to execute any such Additional Documents
in such Debtor's name and authorizes the Collateral Agent to file such executed
Additional Documents in any appropriate filing office; PROVIDED, HOWEVER, that
no such authorization shall obligate the Collateral Agent to take any such
action. In addition, no less frequently than annually, each Debtor shall (i)
provide the Collateral Agent with a report of all new material patents, patent
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applications, trademarks, trademark applications, copyrights or copyright
applications acquired or generated by such Debtor during the prior period and
(ii) cause to be prepared, executed, and delivered to the Collateral Agent
supplemental schedules to the applicable Collateral Agreements to identify such
patents, copyrights, and trademarks as being subject to the security interests
created thereunder; PROVIDED, HOWEVER, that no Debtor shall register or apply to
register with (A) the United States Copyright Office any unregistered copyrights
(whether in existence on the Issue Date or thereafter acquired, arising, or
developed) unless within 30 days of any such registration or application for
registration, such Debtor executes and delivers to the Collateral Agent and
files with the United States Copyright Office a copy of this Agreement in proper
form for filing, supplemental schedules to this Agreement, or such other
documentation as may be necessary in order to perfect and continue the
perfection of or protect the Collateral Agent's Liens on such copyrights
following such registration or (B) the United States Patent and Trademark Office
any unregistered patents or trademarks (whether in existence on the Issue Date
or thereafter acquired, arising, or developed) unless within 30 days of any such
registration or application for registration, the applicable Person executes and
delivers to the Collateral Agent and files with the United States Patent and
Trademark Office a copy of this Security Agreement in proper form for filing,
supplemental schedules to this Agreement, or such other documentation as may be
necessary in order to perfect and continue the perfection of or protect the
Collateral Agent's Liens on such patents or trademarks following such
registration. Each Debtor, to the extent it executes an Intellectual Property
and Security Agreement, shall submit such Intellectual Property and Security
Agreement for filing with the United States Copyright Office or the United
States Patent and Trademark Office, as applicable, together with all necessary
filing, registration or similar fees, within 15 days of the date of the
execution thereof, and following such submission thereof shall provide the
Collateral Agent with evidence of the same.
2.5 POWER OF ATTORNEY. Each Debtor hereby irrevocably makes,
constitutes, and appoints the Collateral Agent (and any of the Collateral
Agent's officers, employees, or agents designated by the Collateral Agent) as
such Debtor's true and lawful attorney, with power to (a) if such Debtor refuses
to, or fails timely to execute and deliver any of the documents described in
SECTION 2.4, sign the name of such Debtor on any of the documents described in
SECTION 2.4, (b) at any time that an Event of Default has occurred and is
continuing, sign such Debtor's name on any invoice or xxxx of lading relating to
the Collateral of such Debtor, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of such Debtor's Accounts at
any time when an Event of Default has occurred and is continuing, (d) endorse
such Debtor's name on any of its payment items (including all of its
Collections) that may come into the Collateral Agent's possession, (e) at any
time that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under such Debtor's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting such Debtor's Accounts, chattel paper, or
General Intangibles directly with Account Debtors, for amounts and upon terms
that the Collateral Agent determines to be reasonable, and the Collateral Agent
may cause to be executed and delivered any documents and releases that the
Collateral Agent determines to be necessary. The appointment of the Collateral
Agent as such Debtor's attorney, and each and every one of its rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations (other than contingent indemnification obligations) have been paid
and performed in full or the Collateral Release Event shall have occurred.
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2.6 RIGHT TO INSPECT. The Collateral Agent (through any of its
officers, employees, or agents) shall have the right (but not the obligation) to
inspect the Books and make copies or abstracts thereof and to check, test, and
appraise the Collateral, or any portion thereof, in order to verify each
Debtor's financial condition or the amount, quality, value, condition of, or any
other matter relating to, the Collateral at such reasonable times and intervals
as the Collateral Agent may designate, and so long as no Default or Event of
Default has occurred and is continuing, with reasonable prior notice. Not in
limitation but in furtherance of the immediately preceding sentence, the
Collateral Agent shall have the right to inspect each Debtor's premises and to
examine such Debtor's books, records and operations, including, without
limitation, such Debtor's quality control processes, and each Debtor agrees (i)
to maintain the quality of any and all products in connection with which the
material Trademarks are used, consistent with the quality of said products (as
determined by such Debtor in its commercially reasonable business judgment) and
(ii) to provide the Collateral Agent, upon the Collateral Agent's reasonable
request from time to time, with a certificate of an officer of such Debtor
certifying such Debtor's compliance with the foregoing.
2.7 CONTROL AGREEMENTS. Each Debtor agrees that it will take all
commercially reasonable steps in order for the Collateral Agent to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to all of its Securities Accounts, Deposit Accounts,
electronic chattel paper, Investment Property, and letter-of-credit rights
(other than Deposit Accounts and Securities Accounts having an average closing
balance in excess of (i) $20,000, individually, or (ii) $50,000, in the
aggregate, in each case, for any five consecutive Business Day period). Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may notify any bank or securities intermediary subject to a Control
Agreement to liquidate the applicable Deposit Account or Securities Account or
any related Investment Property maintained or held thereby and remit the
proceeds thereof to the Collateral Agent.
3. REPRESENTATIONS AND WARRANTIES.
In order to induce the Collateral Agent to enter into this
Agreement, each Debtor makes the following representations and warranties to the
Collateral Agent which shall be true, correct, and complete, in all material
respects, as of the date such Debtor became a party hereto, and such
representations and warranties shall survive the execution and delivery of this
Agreement:
3.1 AS TO EQUITY INTERESTS OF SUBSIDIARIES. The Collateral comprised
of Capital Stock of any Issuer that is (a) a Subsidiary of such Debtor and (b) a
general partnership, limited partnership or limited liability company (i) are
not dealt in or traded on securities exchanges or in securities markets, (ii) do
not have terms expressly providing that they are securities governed by Article
8 of the Code as in effect in the jurisdiction in which such Issuer was formed,
and (iii) are not investment company securities, and are not, therefore,
"securities" governed by Article 8 of the Code.
3.2 NO ENCUMBRANCES. Such Debtor has good and marketable title to,
or a valid leasehold interest in, its personal property assets and such personal
property assets of such Debtor is free and clear of Liens except for Permitted
Liens.
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3.3 EQUIPMENT. All of the Equipment of such Debtor is used or held
for use in its business and, except for Equipment that is substantially worn,
damaged or obsolete, is fit for such purposes.
3.4 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory of such
Debtor is located at the locations identified on SCHEDULE 3.4 (as such Schedule
may be updated pursuant to SECTION 4.3).
3.5 INVENTORY RECORDS. Such Debtor keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.
3.6 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of such Debtor is set forth on
SCHEDULE 3.6(a).
(b) The chief executive office of such Debtor is located at the
address indicated on SCHEDULE 3.6(b) (as such Schedule may be updated pursuant
to SECTION 4.3).
(c) Such Debtor's organizational identification numbers, if any, are
identified on SCHEDULE 3.6(c).
(d) As of the date such Debtor became a party hereto, such Debtor
did not hold any commercial tort claims, except as set forth on SCHEDULE 3.6(d).
3.7 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Such Debtor is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a material adverse effect on (A) the properties, business,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole, (B) the ability of such
Debtor to perform its obligations in all material respects under any Indenture
Document or (C) the consummation of any of the transactions contemplated under
any of the Indenture Documents (each, a "MATERIAL ADVERSE EFFECT").
(b) Set forth on SCHEDULE 3.7(b), is a complete and accurate list of
such Debtor's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of Capital Stock
authorized for each of such Subsidiaries, and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by such Debtor. All of the outstanding Capital Stock of each such
Subsidiary that is a corporation has been, validly issued and is fully paid and
non-assessable.
(c) Except as set forth on SCHEDULE 3.7(b), there are no
subscriptions, options, warrants, or calls relating to any shares of such
Debtor's Subsidiaries' Capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. None of the
Debtor's Subsidiaries is subject to any obligation (contingent or otherwise) to
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repurchase or otherwise acquire or retire any shares of such Debtor's
Subsidiaries' Capital Stock or any security convertible into or exchangeable for
any such Capital Stock.
3.8 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by such Debtor of this
Agreement and the Indenture Agreements to which it is a party have been duly
authorized by all necessary action on the part of such Debtor.
(b) The execution, delivery, and performance by such Debtor of this
Agreement and the other Indenture Documents to which it is a party do not and
will not (i) violate any provision of federal, state, or local law or regulation
applicable to such Debtor, the Governing Documents of such Debtor, or any order,
judgment, or decree of any court or other Governmental Authority binding on such
Debtor, except where such violation could not reasonably be expected to have a
Material Adverse Effect, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
contractual obligation of such Debtor, except such conflict or breach which
could not reasonably be expected to have a Material Adverse Effect, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of such Debtor, other than Permitted Liens, or
(iv) require any approval of the holders of such Debtor's Capital Stock or any
approval or consent of any Person under any contractual obligation of such
Debtor, other than (x) consents or approvals that have been obtained and that
are still in force and effect and (y) those consents and approvals the failure
to obtain could not reasonably be expected to have a Material Adverse Effect.
(c) Other than the filing of financing statements and the
recordation of the Mortgages, the execution, delivery, and performance by such
Debtor of this Agreement and the other Indenture Documents to which such Debtor
is a party do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental
Authority, other than (x) consents or approvals that have been obtained and that
are still in force and effect and (y) those consents and approvals the failure
to obtain could not reasonably be expected to have a Material Adverse Effect.
(d) This Agreement and the other Indenture Documents to which such
Debtor is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by such Debtor will be the legally valid and binding
obligations of such Debtor, enforceable against such Debtor in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.
(e) The Collateral Agent's Liens on the Collateral of such Debtor
are validly created, perfected, and first priority Liens, subject only to
Permitted Liens.
3.9 INTELLECTUAL PROPERTY.
(a) To such Debtor's knowledge, such Debtor owns, or holds licenses
in, all trademarks, trade names, copyrights, patents and licenses that are
necessary to the conduct of its business as currently conducted. The
Intellectual Property listed on EXHIBITS A, B, C, and D, respectively,
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constitute all of the Registered Intellectual Property now owned by such Debtor,
and the Intellectual Property listed on EXHIBIT C constitute all of the material
Licenses now owned by such Debtor.
(b) None of the issued patents, patent applications, registered
trademarks, trademark applications, registered copyrights or copyright
applications (collectively, the "REGISTERED INTELLECTUAL PROPERTY") of such
Debtor has been adjudged invalid or unenforceable nor has any such Registered
Intellectual Property of such Debtor been cancelled, in whole or in part, and
each such Intellectual Property of such Debtor is presently subsisting.
(c) To the knowledge of such Debtor, none of the Intellectual
Property of such Debtor infringes upon the rights or property of any other
Person or is currently being challenged in any way.
(d) There are no pending or, to the knowledge of such Debtor,
threatened claims, litigation, proceedings or other investigations regarding any
of the Intellectual Property of such Debtor.
(e) Each of the Intellectual Property material to such Debtor's
business is valid and enforceable, and such Debtor has adopted adequate
precautions to protect its Trade Secrets from unauthorized or accidental
disclosure.
(f) Such Debtor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Registered Intellectual
Property of such Debtor, free and clear of any liens, security interests,
mortgages, charges and encumbrances, including, without limitation, licenses,
consent-to-use agreements, shop rights and covenants by such Debtor not to xxx
third Persons (except for Permitted Liens).
(g) Such Debtor has adopted, used and is currently using all of the
Trademarks, and, to the knowledge of such Debtor, such Debtor's use thereof does
not infringe the intellectual property rights of any person or entity.
(h) Such Debtor has no written notice or knowledge of any suits or
actions commenced or threatened with reference to or in connection with any of
the Intellectual Property of such Debtor.
(i) No trademark opposition or cancellation proceedings have been
filed in the prior three years with the United States Patent and Trademark
Office against any of the Trademarks of such Debtor.
(j) The Licenses of such Debtor, complete copies of which will be
provided to the Collateral Agent at its request, are valid and binding
agreements, enforceable in accordance with their terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
and similar laws from time to time in effect). Each of the material Licenses of
such Debtor is in full force and effect and has not been amended or abrogated
and, to the knowledge of such Debtor, there is no default under any of the
Licenses of such Debtor.
3.10 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on SCHEDULE
3.10 (as such schedule may be amended from time to time by such Debtor and, to
the extent required by SECTION 2.7 consented to by the Collateral Agent as
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evidenced by the execution and delivery by such Debtor, the applicable
securities intermediary or bank and the Collateral Agent of a Control Agreement)
is a listing of all of such Debtor's Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (a) the name and
address of such Person, and (b) the account numbers of the Deposit Accounts or
Securities Accounts maintained with such Person.
4. AFFIRMATIVE COVENANTS.
Each Debtor covenants and agrees that, until payment in full of the
Obligations (other than contingent indemnification obligations) or the
occurrence of the Collateral Release Event, such Debtor shall do all of the
following:
4.1 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all material leases to which it is a party
as lessee, so as to prevent any loss or forfeiture thereof or thereunder.
4.2 INSURANCE.
(a) At such Debtor's expense, maintain insurance respecting its
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks and in such amounts as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Such Debtor
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. Such Debtor shall deliver copies of all such policies
or certificates of insurance evidencing the same to the Collateral Agent with an
endorsement naming the Collateral Agent as loss payee (under a satisfactory
lender's loss payable endorsement) or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to the Collateral Agent in
the event of cancellation of any such policy for any reason whatsoever.
(b) Such Debtor shall give the Collateral Agent prompt notice of any
loss in an amount in excess of $20,000 covered by such insurance. If an Event of
Default shall have occurred and is outstanding, the Collateral Agent shall have
the exclusive right (but not the obligation) to adjust any losses claimed under
any such insurance policies, without any liability to such Debtor whatsoever in
respect of such adjustments. Any monies received as payment for any loss under
any insurance policy mentioned above (other than liability insurance policies)
or as payment of any award or compensation for condemnation or taking by eminent
domain, shall be deposited into a Deposit Account of such Debtor with respect to
which a Control Agreement is in effect unless directed by the Collateral Agent
to be paid over to the Collateral Agent at any time an Event of Default is
outstanding, in which case, such payment shall be paid over to the Collateral
Agent.
(c) Such Debtor will not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this SECTION 4.2, unless the Collateral Agent is included thereon as an
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additional insured or loss payee under a lender's loss payable endorsement. Such
Debtor promptly shall notify the Collateral Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies or
certificates of insurance evidencing the same shall be promptly provided to the
Collateral Agent.
4.3 LOCATION OF INVENTORY AND EQUIPMENT. Keep such Debtor's
Inventory and Equipment only at the locations identified on SCHEDULE 3.4 and its
chief executive offices only at the locations identified on SCHEDULE 3.6(b);
provided, however, that such Debtor may amend SCHEDULE 3.4 and SCHEDULE 3.6(b)
so long as such amendment occurs by prompt written notice to the Collateral
Agent, so long as such new location is within the continental United States or
Canada.
4.4 NEW INTELLECTUAL PROPERTY. If, before all Obligations (other
than contingent indemnification obligations) shall have been satisfied in full
or the Collateral Release Event shall have occurred, such Debtor shall (i)
become aware of any existing Registered Intellectual Property of such Debtor of
which such Debtor has not previously informed the Collateral Agent, (ii) obtain
rights to any Registered Intellectual Property, or (iii) become entitled to the
benefit of any material Intellectual Property which benefit is not in existence
on the date hereof, the provisions of this Agreement above shall automatically
apply thereto and such Debtor shall give to the Collateral Agent prompt written
notice thereof. Such Debtor shall prepare an amendment (in form and substance
reasonably satisfactory to the Collateral Agent) to EXHIBITS A, B, C, and D, as
applicable, to include any such Intellectual Property, and such Debtor shall
file or refile this Agreement with the United States Patent and Trademark Office
and United States Copyright Office. Such Debtor shall promptly execute, deliver
and file with any necessary Governmental Authority any and all documents and
instruments necessary or advisable to record or preserve the Collateral Agent's
interest in all Intellectual Property added to EXHIBITS A, B, C, and D pursuant
to this Section.
4.5 DUTIES OF SUCH DEBTOR. Such Debtor shall have the duty to the
extent commercially reasonable and in such Debtor's good faith business
judgment, desirable: (i) to file and prosecute diligently any patent, trademark
or service xxxx applications of such Debtor pending as of the date hereof or
hereafter until all Obligations (other than contingent indemnification
obligations) shall have been paid in full or the Collateral Release Event shall
have occurred, (ii) except as otherwise provided in the Indenture or any other
Indenture Document, to preserve and maintain all rights in the material
Intellectual Property of such Debtor (including, but not limited to, with
respect to Trademarks, the filing of affidavits of use and, incontestability,
where applicable, under ss.ss.8 and 15 of the Xxxxxx Act (15 U.S.C. ss. 1058,
1065) and renewals and, to the extent commercially reasonable, initiating
opposition or cancellation proceedings or litigation against users of the same
or confusingly similar marks who seriously threaten the validity or rights of
such Debtor in its material Trademarks), and (iii) to ensure that the Registered
Intellectual Property of such Debtor is and remains enforceable. The Collateral
Agent shall be reimbursed for all such reasonable costs and expenses. Such
Debtor shall not knowingly or unreasonably abandon any right to file a material
patent, trademark or service xxxx application, or abandon any pending patent
application, or any other material Intellectual Property, of such Debtor unless
such Debtor, in the exercise of its commercially reasonable business judgment
determines that such abandonment will not materially and adverse effect its
business.
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4.6 FOREIGN PATENTS, COPYRIGHTS AND TRADEMARKS. Upon the occurrence
and during the continuance of an Event of Default, at the request of the
Collateral Agent and at the sole cost and expense (including, without
limitation, reasonable attorneys' fees) of such Debtor, such Debtor shall take
all actions and execute and deliver any and all instruments, agreements,
assignments, certificates and/or documents, reasonably required by the
Collateral Agent to collaterally assign any and all of such Debtor's foreign
patent, copyright and trademark registrations and applications now owned or
hereafter acquired to and in favor of the Collateral Agent. Upon the execution
and delivery of any such collateral assignments or documents, the terms
"Patents", "Copyrights", and "Trademarks" as used herein with respect to such
Debtor shall automatically be deemed amended to include such foreign patent,
copyright and trademark registrations and applications without any action
required by any person or entity.
4.7 POST-CLOSING INTELLECTUAL PROPERTY SEARCHES. Each Debtor shall
provide to the Collateral Agent true and complete copies of intellectual
property searches from the United States Patent and Trademark Office relating to
such Debtor within 30 days of the date hereof.
5. NEGATIVE COVENANTS.
Each Debtor covenants and agrees that, until the Obligations are
paid and performed in full (other than contingent indemnification obligations)
or the Collateral Release Event shall have occurred, such Debtor will not do any
of the following:
5.1 DISPOSAL OF ASSETS. Other than Permitted Dispositions, Dispose
of any of such Debtor's assets.
5.2 CHANGE NAME. Change such Debtor's name, organizational
identification number, state of organization or organizational identity unless
such Debtor shall within ten Business Days of any such change provide written
notice to the Collateral Agent of such change and file any financing statements
or amendments thereto necessary to continue the perfection and priority of the
Collateral Agent's Liens.
5.3 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Maintain, on or after
the date that is 30 days following the Issue Date, any Deposit Account or
Securities Account having an average closing balance in excess of (i) $20,000,
individually, or (ii) $50,000, in the aggregate, in each case, for any five
consecutive Business Day period unless such Debtor and the applicable securities
intermediary or bank have entered into a Control Agreement governing such
Deposit Account or Securities Account, as the case may be, in order to perfect
or improve the priority the Collateral Agent's Liens therein.
5.4 RESTRICTIONS ON FUTURE AGREEMENTS. Except as otherwise permitted
pursuant to the Indenture, without the prior written consent of the Collateral
Agent, Dispose, xxxxx x Xxxx on, encumber or assign any or all of, or grant any
license or sublicense under (other than as commercially reasonable in such
Debtor's good faith business judgment), the Intellectual Property of such
Debtor, or enter into any other agreement with respect to the Intellectual
Property of such Debtor, and such Debtor further agrees that it shall not
knowingly take any action or knowingly permit any action to be taken by others
subject to its control, including, without limitation, licensees or
17
sublicensees, or knowingly fail to take any action, which would materially
adversely affect the validity or enforcement of the Collateral Agent's rights
subject to this Agreement, other than in the ordinary course of business.
6. COLLATERAL AGENT'S RIGHTS AND REMEDIES.
6.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Collateral Agent (at its election (or
at the direction of the Holders holding a majority in aggregate principal amount
of the Notes but without notice of its election (or such direction) and without
demand) may (but shall not be obligated to) do any one or more of the following,
all of which are authorized by each Debtor:
(a) Proceed directly and at once, without notice, against such
Debtor to collect and recover the full amount or any portion of the Obligations,
without first proceeding against any other Debtor, or against any security or
collateral for the Obligations;
(b) Settle or adjust disputes and claims directly with such Debtor's
Account Debtors for amounts and upon terms which the Collateral Agent considers
advisable;
(c) Cause such Debtor to hold all of its returned Inventory in trust
for the Collateral Agent and segregate all such Inventory from all other assets
of such Debtor or in such Debtor's possession;
(d) Without notice to or demand upon such Debtor, make such payments
and do such acts as the Collateral Agent considers necessary or reasonable to
protect its security interests in the Collateral (including, without limitation,
in connection with the filing or recording of any documents (including all taxes
in connection therewith) in public offices, the payment or discharge of any
taxes, counsel fees, maintenance fees, encumbrances or otherwise in protecting,
maintaining or preserving the Intellectual Property of such Debtor, or in
defending or prosecuting any actions or proceedings arising out of or related to
the Intellectual Property of such Debtor, shall be borne by and paid by such
Debtor on demand by the Collateral Agent on behalf of the Secured Parties and
until so paid shall bear interest at the "default rate of interest" set forth in
the Indenture). Such Debtor agrees to assemble the Collateral if the Collateral
Agent so requires, and to make the Collateral available to the Collateral Agent
at a place that the Collateral Agent may designate which is reasonably
convenient to both parties. Such Debtor authorizes the Collateral Agent to enter
the premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any Lien that conflicts with the priority of the Collateral Agent's Liens in and
to the Collateral and to pay all expenses incurred in connection therewith,
which expenses shall be for the account of such Debtor. With respect to any of
such Debtor's owned or leased premises, such Debtor hereby grants the Collateral
Agent a license to enter into possession of such premises and to occupy the
same, without charge, in order to exercise any of the Collateral Agent's rights
or remedies provided herein, at law, in equity, or otherwise;
(e) Without notice to such Debtor (such notice being expressly
waived), and without constituting an acceptance of any collateral in full or
partial satisfaction of an obligation (within the meaning of the Code), set off
and apply to the Obligations any and all (i) balances and deposits of such
Debtor held by the Collateral Agent, or (ii) Indebtedness at any time owing to
or for the credit or the account of such Debtor held by the Collateral Agent;
18
(f) Hold, as cash collateral, any and all balances and deposits of
such Debtor held by the Collateral Agent to secure the full and final repayment
of all of the Obligations (other than contingent indemnification obligations);
(g) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral of such Debtor. Such Debtor hereby grants to the Collateral Agent a
license or other right to use, without charge, such Debtor's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral of such Debtor, in completing production of, advertising for sale,
and selling any Collateral of such Debtor and such Debtor's rights under all
licenses and all franchise agreements shall inure to the Collateral Agent's
benefit;
(h) Sell all or any part of the Collateral of such Debtor at either
a public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
such Debtor's premises) as is commercially reasonable. It is not necessary that
such Collateral of such Debtor be present at any such sale;
(i) Except in those circumstances where no notice is required under
the Code, the Collateral Agent shall give notice of the disposition of the
Collateral of such Debtor as follows:
(i) The Collateral Agent shall give such Debtor a notice
in writing of the time and place of public sale, or, if the sale is
a private sale or some other disposition other than a public sale is
to be made of the Collateral of such Debtor, the time on or after
which the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to such Debtor as provided in SECTION 9, at least
10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any
portion of the Collateral of such Debtor that is perishable or
threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;
(j) The Collateral Agent or any other Secured Party may credit bid
and purchase at any public sale;
(k) The Collateral Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral of such Debtor
or to operate same and, to the maximum extent permitted by applicable law, may
seek the appointment of such a receiver without the requirement of prior notice
or a hearing;
(l) The use by the Collateral Agent for the benefit of the Secured
Parties of all Intellectual Property of such Debtor shall be worldwide and as
extensive as the rights of such Debtor to use such Intellectual Property of such
Debtor, and without any liability for royalties or other related charges from
the Collateral Agent or the other Secured Parties to such Debtor, solely for the
purpose of completing production of, advertising for sale and selling any
Intellectual Property.
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(m) The Collateral Agent for the benefit of the Secured Parties
shall have the right, but shall in no way be obligated, to bring suit in its own
name to enforce the Intellectual Property of such Debtor, only after the
Collateral Agent has tendered notice to such Debtor of the Collateral Agent's
desire to initiate such suit and such Debtor has declined in writing to itself
pursue such suit, and, if the Collateral Agent shall commence any such suit,
such Debtor shall, at the request of the Collateral Agent, do any and all lawful
acts and execute any and all proper documents and instruments reasonably
required by the Collateral Agent for the benefit of the Secured Parties in aid
of such enforcement.
(n) The Collateral Agent shall have the right and be authorized (but
not obligated) to (i) endorse such Debtor's name on all applications, documents,
papers and instruments necessary or desirable for the Collateral Agent in the
use of the Intellectual Property of such Debtor, or (ii) take any other actions
with respect to the Intellectual Property of such Debtor as the Collateral Agent
deems in its commercially reasonable judgment to be in the best interest of the
Secured Parties, or (iii) grant or issue any exclusive or non-exclusive license
under the Intellectual Property of such Debtor to any person or entity, or (iv)
assign, pledge, sell, convey or otherwise transfer title in or dispose of any of
the Intellectual Property of such Debtor to any person or entity.
(o) The Collateral Agent shall have all other rights and remedies
available at law or in equity or pursuant to any other Indenture Document; and
(p) Be entitled to any deficiency that exists after disposition of
the Collateral as provided above by immediate payment from each Debtor. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Collateral Agent to the applicable Debtor.
Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to preservation of rights against prior parties or any other
rights pertaining thereto and the Collateral Agent shall not be responsible for
filing any financing or continuation statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting or
maintaining the perfection of any security interest in the Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property and
shall not be liable or responsible for any loss or diminution in the value of
any of the Collateral, by reason of the act or omission of any carrier,
forwarding agency or other agent or bailee selected by the Collateral Agent in
good faith.
The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Liens in any of the Collateral, whether
impaired by operation of law or by reason of any of any action or omission to
act on its part hereunder, except to the extent such action or omission
constitutes gross negligence or willful misconduct on the part of the Collateral
Agent, for the validity or sufficiency of the Collateral or any agreement or
assignment contained therein, for the validity of the title of the Debtor to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of
20
the Collateral. The Collateral Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms of this Security
Agreement or the Indenture Documents by the Debtors.
6.2 REMEDIES CUMULATIVE. The rights and remedies of the Collateral
Agent under this Agreement, the other Indenture Documents, and all other
agreements shall be cumulative. The Collateral Agent shall have all other rights
and remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by the Collateral Agent of one right or remedy shall be
deemed an election, and no waiver by the Collateral Agent of any Event of
Default shall be deemed a continuing waiver. No delay by the Collateral Agent
shall constitute a waiver, election, or acquiescence by it.
7. TAXES AND EXPENSES.
If any Debtor fails to pay any monies (whether taxes, assessments,
rents, insurance premiums, or, in the case of leased properties or assets, rents
or other amounts payable under such leases) due to third Persons, or fails to
make any deposits or furnish any required proof of payment or deposit, in each
case, to the extent required under the terms of this Agreement, then, the
Collateral Agent, in its sole discretion and without prior notice to such
Debtor, may (but shall not be obligated to) do any or all of the following: (a)
make payment of the same or any part thereof or (b) in the case of the failure
to comply with SECTION 4.2 hereof, if an Event of Default shall occur and be
continuing, obtain and maintain insurance policies of the type described in
SECTION 4.2 and take any action with respect to such policies as the Collateral
Agent deems prudent. Any such amounts paid by the Collateral Agent shall
constitute Obligations owing to the Collateral Agent and any such payments shall
not constitute an agreement by the Collateral Agent to make similar payments or
deposits in the future or a waiver by the Collateral Agent of any Event of
Default under this Agreement. The Collateral Agent need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
8. WAIVERS; INDEMNIFICATION.
8.1 DEMAND; PROTEST. Each Debtor waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Collateral Agent on which such Debtor may in any way be liable.
8.2 COLLATERAL AGENT'S LIABILITY FOR COLLATERAL OF EACH DEBTOR. Each
Debtor hereby agrees that: (a) so long as the Collateral Agent complies with its
obligations, if any, under the Code, the Collateral Agent shall not in any way
or manner be liable or responsible for: (i) the safekeeping of the Collateral of
such Debtor, (ii) any loss or damage thereto occurring or arising in any manner
or fashion from any cause, (iii) any diminution in the value thereof, or (iv)
any act or default of any carrier, warehouseman, bailee, forwarding agency, or
other Person, and (b) all risk of loss, damage, or destruction of the Collateral
of such Debtor shall be borne by such Debtor.
21
8.3 INDEMNIFICATION. Each Debtor shall, jointly and severally, pay,
indemnify, defend, and hold the Collateral Agent-Related Persons (each, an
"INDEMNIFIED PERSON") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Indenture Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement or any other Indenture
Document, or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES"). The
foregoing to the contrary notwithstanding, such Debtor shall have no obligation
to any Indemnified Person under this SECTION 8.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment in full of the Obligations or the occurrence of the Collateral Release
Event. If any Indemnified Person makes any payment to any other Indemnified
Person with respect to an Indemnified Liability as to which such Debtor was
required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by such Debtor with respect thereto. WITHOUT LIMITATION, THE
FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
9. NOTICES.
All notices and other communications hereunder to Collateral Agent
shall be in writing and shall be mailed, sent or delivered in accordance with
the Indenture and all notices and other communications hereunder to any Debtor
shall be in writing and shall be mailed, sent or delivered in care of Company in
accordance with the Indenture.
10. CHOICE OF LAW; JURY TRIAL WAIVER.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
(b) EACH DEBTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.
22
11. AMENDMENTS; WAIVERS.
11.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement, and no consent with respect to any departure by any Debtor
herefrom, shall be effective unless the same shall be in writing and signed by
the Collateral Agent and such Debtor and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
11.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by the Collateral
Agent to exercise any right, remedy, or option under this Agreement or any other
Indenture Document, or delay by the Collateral Agent in exercising the same,
will operate as a waiver thereof. No waiver by the Collateral Agent will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by the Collateral Agent on any occasion shall affect or
diminish the Collateral Agent's rights thereafter to require strict performance
by each Debtor of any provision of this Agreement. The Collateral Agent's rights
under this Agreement and the other Indenture Documents will be cumulative and
not exclusive of any other right or remedy that the Collateral Agent may have.
12. GENERAL PROVISIONS.
12.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by each Debtor and the Collateral Agent.
12.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; PROVIDED,
HOWEVER, that no party may assign this Agreement or any rights or duties
hereunder other than pursuant to the terms of the Indenture.
12.3 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
12.4 INTERPRETATION; GOVERNMENT REGULATION. Neither this Agreement
nor any uncertainty or ambiguity herein shall be construed against the
Collateral Agent, any other Secured Party or any Debtor, whether under any rule
of construction or otherwise. On the contrary, this Agreement has been reviewed
by all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to accomplish fairly the purposes and intentions
of all parties hereto.
12.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.6 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
23
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
12.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Debtor or the transfer by any Debtor to the
Collateral Agent of any property of such Debtor should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (collectively, a
"VOIDABLE TRANSFER"), and if the Collateral Agent is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Collateral Agent is required or elects
to repay or restore, and as to all reasonable costs, expenses, and attorneys
fees of the Collateral Agent related thereto, the liability of such Debtor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
12.8 INTEGRATION. This Agreement, together with the other Indenture
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
12.9 DEBTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding:
(a) Debtors will remain liable under the contracts and
agreements included in the Collateral to the extent set forth
therein, and will perform all of their duties and obligations under
such contracts and agreements to the same extent as if this
Agreement had not been executed;
(b) the exercise by Collateral Agent of any of its
rights hereunder will not release any Debtor from any of its duties
or obligations under any such contracts or agreements included in
the Collateral; and
(a) none of Collateral Agent, the Trustee or any Holder will have
any obligation or liability under any contracts or agreements included in the
Collateral by reason of this Agreement, nor will any such Person be obligated to
perform any of the obligations or duties of any Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
12.10 COLLATERAL COMPRISED OF EQUITY INTERESTS OF SUBSIDIARIES. The
provisions of the Pledge Agreement, as they relate to Collateral comprised of
Equity Interests of Issuers that are Subsidiaries of any Debtor are incorporated
by reference herein, MUTATIS MUTANDIS.
12.11 CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall: (i) remain in full
force and effect until the payment in full of all Obligations (other than
24
contingent indemnification obligations) or the occurrence of the Collateral
Release Event except as otherwise provided in the Indenture; (ii) be binding
upon each Debtor and its successors and assigns, except as otherwise provided in
the Indenture; and (iii) inure to the benefit of Collateral Agent and its
successors, transferees, and assigns. Upon the payment in full of all
Obligations (other than contingent indemnification obligations) or the
occurrence of the Collateral Release Event, the security interests granted
herein shall automatically terminate and all rights to the Collateral shall
revert to the applicable Debtor. Upon any termination of any security interest
referred to in this SECTION 12.11, Collateral Agent will, at Debtors' expense,
execute and deliver to each Debtor such documents without recourse,
representation or warranty as such Debtor shall reasonably request to evidence
such termination.
12.12 SECURITY INTEREST ABSOLUTE. To the maximum extent permitted by
law, all rights of Collateral Agent, all security interests hereunder, and all
obligations of each Debtor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any of the Obligations
or any other agreement or instrument relating thereto, including any of the
Indenture Documents;
(b) any change in the time, manner, or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from any of the Indenture Documents,
or any other agreement or instrument relating thereto;
(c) any exchange, release, or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Obligations; or
(d) any other circumstances that might otherwise constitute a
defense available to, or a discharge of, any Debtor.
To the maximum extent permitted by law, each Debtor hereby waives any right to
require Collateral Agent to: (A) proceed against or exhaust any security held
from such Debtor; or (B) pursue any other remedy in Collateral Agent's power
whatsoever.
12.13 POSTPONEMENT OF SUBROGATION. Each Debtor hereby agrees that it
will not exercise any rights which it may acquire by reason of any payment made
hereunder, whether by way of subrogation, reimbursement or otherwise, until the
prior payment in full of all Obligations (other than contingent indemnification
obligations) or the occurrence of the Collateral Release Event. Subject to the
terms of the Intercreditor Agreement, any amount paid to any Debtor on account
of any payment made hereunder prior to the payment in full of all Obligations
(other than contingent indemnification obligations) or the occurrence of the
Collateral Release Event shall be held in trust for the benefit of Collateral
Agent, the Holders and the Trustee and shall immediately be paid to Collateral
Agent, to be distributed to the Trustee for application against the Obligations,
whether matured or unmatured, in accordance with the terms of the Indenture. In
furtherance of the foregoing, for so long as any Obligations (other than
contingent indemnification obligations) remain outstanding or the Collateral
Release Event shall not have occurred, each Debtor shall refrain from taking any
action or commencing any proceeding against Company or any other Debtor (or any
25
of their respective successors or assigns, whether in connection with a
Insolvency Proceeding or otherwise) to recover any amounts in respect of
payments made under this Agreement to Collateral Agent, the Trustee or any
Holder.
12.14 APPLICABLE GAMING LAWS. The Collateral Agent acknowledges,
understands and agrees on behalf of itself and the other Secured Parties that
the Gaming Laws and Racing Laws may impose certain licensing or transaction
approval requirements prior to the exercise of the rights and remedies granted
to it under this Agreement with respect to the Collateral subject to the Gaming
Laws or Racing Laws. All rights, remedies, and powers provided in this Agreement
relative to the Collateral may be exercised only to the extent that the exercise
thereof does not violate any applicable mandatory provision of the applicable
Gaming Laws or Racing Laws and all provisions of this Agreement relative to the
Collateral are intended to be subject to all applicable mandatory provisions of
the applicable Gaming Laws or Racing Laws and to be limited solely to the extent
necessary to not render the provisions of this Agreement invalid or
unenforceable, in whole or in part. Notwithstanding the immediately preceding
sentence:
(a) if any consent under the Gaming Laws or Racing Laws is required
in connection with the taking of any of the actions which may be taken by the
Collateral Agent in the exercise of its rights hereunder, then each Debtor
agrees to use its best efforts to secure such consent and to cooperate with the
Collateral Agent in obtaining any such consent, and upon the occurrence and
during the continuation of any Event of Default, each Debtor shall promptly
execute and/or cause the execution of all applications, certificates,
instruments, and other documents and papers that the Collateral Agent may be
required to file in order to obtain any necessary approvals under the Gaming
Laws or Racing Laws, and if such Debtor fails or refuses to execute such
documents, the Collateral Agent or the court with jurisdiction may execute such
documents on behalf of such Debtor; and
(b) or any other provision of this Agreement to the contrary,
nothing in this Agreement shall (i) effect any transfer of any ownership
interest in a Debtor or (ii) effect any transfer, sale, purchase, lease or
hypothecation of, or any borrowing or loaning of money against, or any
establishment of any voting trust agreement or other similar agreement with
respect to any certificate of suitability or any owner's license heretofore
issued to any person, including any Debtor, under any of the Gaming Laws or
Racing Laws.
12.15 FURTHER ASSURANCES. Each Debtor agrees to execute and deliver
such further agreements, instruments and documents, and to perform such further
acts, as the Collateral Agent shall reasonably request from time to time in
order to carry out the purpose of this Agreement and agreements set forth
herein. Each Debtor agrees, that to the extent it has any Intellectual Property
described in EXHIBIT A, B or C, if it does not file a copy of this Agreement
with the United States Patent and Trademark Office and the United States
Copyright Office, as applicable, the Collateral Agent shall be entitled (but not
obligated) to so file this Agreement at the sole cost and expense of such
Debtor.
12.16 INTERCREDITOR AGREEMENT. If the Intercreditor Agreement is in
effect,
(a) the Liens granted hereunder in favor of Collateral Agent for the
benefit of itself, the Trustee and the Holders in respect of the Collateral and
the exercise of any right related thereto thereby shall be subject, in each
case, to the terms of the Intercreditor Agreement;
26
(b) in the event of any direct conflict between the express terms
and provisions of this Agreement and of the Intercreditor Agreement, the terms
and provisions of the Intercreditor Agreement shall control; and
(c) notwithstanding anything to the contrary herein, any provision
hereof that requires any Debtor to (i) deliver any Collateral to Collateral
Agent or (ii) provide that the Collateral Agent have control over such
Collateral may be satisfied by (A) the delivery of such Collateral by such
Debtor to the lenders under the Credit Agreement or their agent for the benefit
of the Collateral Agent for the benefit of itself and the other Secured Parties
pursuant to Section 3.02 of the Intercreditor Agreement and (B) providing that
the lenders under the Credit Agreement or their agent be provided with control
with respect to such Collateral of such Debtor for the benefit of the Collateral
Agent for the benefit of itself and the other Secured Parties pursuant to
Section 3.02 of the Intercreditor Agreement.
[Signature pages to follow.]
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
EMPIRE RESORTS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
GUARANTORS:
ALPHA MONTICELLO, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
ALPHA CASINO MANAGEMENT INC.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
MOHAWK MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Manager
MONTICELLO CASINO MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Manager
MONTICELLO RACEWAY DEVELOPMENT
COMPANY, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Manager
MONTICELLO RACEWAY MANAGEMENT, INC.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: VP-Finance
COLLATEAL AGENT:
THE BANK OF NEW YORK
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President
SCHEDULE 3.4
LOCATION OF INVENTORY AND EQUIPMENT
All debtors inventory and equipment are located at c/o Monticello
Raceway, Xx. 00X, X.X. Xxx 0000, Xxxxxxxxxx, Xxx Xxxx, 00000.
SCHEDULE 3.6(a)
JURISDICTION OF ORGANIZATION
DEBTOR JURISDICTION OF ORGANIZATION
------ ----------------------------
Empire Resorts, Inc. Delaware
Alpha Monticello, Inc. Delaware
Alpha Casino Management Inc. Delaware
Monticello Casino Management, LLC New York
Mohawk Management, LLC New York
Monticello Raceway Development Company, LLC New York
Monticello Raceway Management, Inc. New York
SCHEDULE 3.6(b)
LOCATION OF CHIEF EXECUTIVE OFFICE
All debtors chief executive offices are located at c/o Monticello
Raceway, Xx. 00X, X.X. Xxx 0000, Xxxxxxxxxx, Xxx Xxxx, 00000.
SCHEDULE 3.6(c)
ORGANIZATION IDENTIFICATION NUMBERS
DEBTOR ORGANIZATIONAL IDENTIFICATION NUMBER
------ ------------------------------------
Empire Resorts, Inc. 2329793
Alpha Monticello, Inc. 2627549
Alpha Casino Management Inc. 3248848
Monticello Casino Management, LLC N/A
Mohawk Management, LLC N/A
Monticello Raceway Development Company, LLC N/A
Monticello Raceway Management, Inc. N/A
SCHEDULE 3.6(d)
COMMERCIAL TORT CLAIMS
None.
SCHEDULE 3.7(b)
DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
PERCENTAGE OF
# OF SHARES OF OUTSTANDING SHARES
JURISDICTION OF CAPITAL STOCK OF EACH CLASS OWNED
DEBTOR SUBSIDIARY ORGANIZATION AUTHORIZED DIRECTLY BY DEBTOR
------ ---------- ------------ ---------- --------------------
Empire Resorts, Inc. Alpha Monticello, Inc. Delaware 100 100%
Empire Resorts, Inc. Alpha Casino Management Delaware 200 100%
Inc.
Empire Resorts, Inc. Monticello Casino New York N/A 60%
Management, LLC
Empire Resorts, Inc. Mohawk Management, LLC New York N/A 60%
Empire Resorts, Inc. Monticello Raceway New York N/A 100%
Development Company, LLC
Empire Resorts, Inc. Monticello Raceway New York 100 60%
Management, Inc.
Alpha Monticello, Inc. Monticello Casino New York N/A 40%
Management, LLC
Alpha Monticello, Inc. Monticello Raceway New York 100 40%
Management, Inc.
Alpha Casino Management Inc. Mohawk Management, LLC New York N/A 40%
SCHEDULE 3.7(c)
SUBSCRIPTIONS, OPTIONS, WARRANTS OR CALLS
None.
SCHEDULE 3.10
DEPOSIT ACCOUNTS AND SECURITY ACCOUNTS
NAME AND ADDRESS OF
NAME OF OBLIGOR TYPE OF ACCOUNT ACCOUNT NUMBER RELEVANT FINANCIAL INSTITUTION
--------------- --------------- -------------- ------------------------------
Empire Resorts, Inc. Checking 000-000-0000 53rd Bank
000 Xxxxx Xxxxxx #000 Xxxxxxx, Xxxxxxxx 00000
Empire Resorts, Inc. Money Market 723-043-3836 54th Bank
00 Xxxxx Xxxxxx #000 Xxxxxxx, Xxxxxxxx 00000
Empire Resorts, Inc. Investment Account 970-01728 Xxxxxxxxx & Company, Inc.
00000 Xxxxx Xxxxxx Xxxx Xxx Xxxxxxx,
Xxxxxxxxxx 00000
Monticello Raceway Horseman Fund 3017125 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. 0 Xxxxx Xxxxxx Xxxxxx, XX Xxx 000, Xxxxxx,
Xxx Xxxx 00000
Monticello Raceway General Fund 120705819 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. 0 Xxxxx Xxxxxx Xxxxxx, XX Xxx 000, Xxxxxx,
Xxx Xxxx 00000
Monticello Raceway Payroll 120705827 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. 0 Xxxxx Xxxxxx Xxxxxx, XX Xxx 000, Xxxxxx,
Xxx Xxxx 00000
Monticello Raceway ACH Wire Acct - 120706064 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. NYS Lottery 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Monticello Raceway Checking - 120706072 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. General Fund 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Monticello Raceway Credit Card 120706098 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. Receipts 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Monticello Raceway Checking - 120706106 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. Accounts 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Payable
Monticello Raceway Checking - 120706114 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. Cage 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Monticello Raceway Capital 120925191 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. Improvement 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Monticello Raceway Money Market 144029270 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Monticello Raceway Purse 120925373 The Berkshire Bank (Goshen Savings Bank division)
Management, Inc. Account 0 Xxxxx Xxxxxx Xxxxxx XX Xxx 000 Xxxxxx XX 00000
Monticello Raceway Checking 1100 9131 Community Bank of Xxxxxxxx County
Development, LLC 0000 Xxxxx 00 X.X. Xxx 0000 Xxxxxxxxxx XX 00000
EXHIBIT A
PATENTS
None.
EXHIBIT B
TRADEMARKS
EMPIRE RESORTS, INC.
TRADEMARKS
PENDING TRADEMARK APPLICATIONS
COUNTRY TRADEMARK SERIAL NO. FILING DATE
------- --------- ---------- -----------
USA Empire Resorts 76510671 April 14, 0000
XXXXXXXXXX XXXXXXX MANAGEMENT, INC.
TRADEMARKS
REGISTERED SERVICEMARKS
STATE SERVICEMARK REGISTRATION NO. ISSUE DATE
----- ----------- ---------------- ----------
NY see below S-18738 April 21, 2004
The description of the servicemark and the services for which the xxxx is used
are:
Mighty M Gaming at Monticello Raceway. An oval shaped,
multi colored design is in back of the letter M. Used in
connection with a harness racing track and operation of
video lottery terminals.
2
EXHIBIT C
LICENSES
None.
EXHIBIT D
COPYRIGHTS
None.
4
