Exhibit 10.4


 


PLEDGE AND SECURITY AGREEMENT


 


dated as of July 19,
2005


 


among


 


DIAMOND JO WORTH,
LLC,


 


DIAMOND JO WORTH
CORP.,


 


and


 


DIAMOND JO WORTH
HOLDINGS, LLC,


 


and


 


U.S. BANK NATIONAL
ASSOCIATION, as Trustee,

as Secured Party.


 





















 


TABLE OF CONTENTS


 


	
  1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
  1.1

  	
  General Definitions

  	
   

  
	
   

  	
  1.2

  	
  Definitions; Interpretation

  	
   

  
	
  2.

  	
  GRANT OF SECURITY

  	
   

  
	
   

  	
  2.1

  	
  Grant of Security

  	
   

  
	
   

  	
  2.2

  	
  Certain Limited Exclusions

  	
   

  
	
   

  	
  2.3

  	
  Intercreditor Agreement

  	
   

  
	
  3.

  	
  SECURITY FOR OBLIGATIONS

  	
   

  
	
   

  	
  3.1

  	
  Security for Obligations

  	
   

  
	
   

  	
  3.2

  	
  Obligations Remain

  	
   

  
	
  4.

  	
  REPRESENTATIONS
  AND WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
  4.1

  	
  Generally

  	
   

  
	
   

  	
  4.2

  	
  Equipment and Inventory

  	
   

  
	
   

  	
  4.3

  	
  Receivables Contracts

  	
   

  
	
   

  	
  4.4

  	
  Investment Related Property

  	
   

  
	
   

  	
  4.5

  	
  Intellectual Property

  	
   

  
	
   

  	
  4.6

  	
  Commercial Tort Claims

  	
   

  
	
   

  	
  4.7

  	
  Judgments

  	
   

  
	
  5.

  	
  FURTHER
  ASSURANCES; ADDITIONAL DEBTORS

  	
   

  
	
   

  	
  5.1

  	
  Further Assurances

  	
   

  
	
   

  	
  5.2

  	
  Additional Debtors

  	
   

  
	
  6.

  	
  ATTORNEY-IN-FACT

  	
   

  
	
   

  	
  6.1

  	
  Power of Attorney

  	
   

  
	
   

  	
  6.2

  	
  No Duty on the
  Part of Secured Party

  	
   

  
	
  7.

  	
  REMEDIES

  	
   

  
	
   

  	
  7.1

  	
  Generally

  	
   

  
	
   

  	
  7.2

  	
  Application of Proceeds

  	
   

  
	
   

  	
  7.3

  	
  Investment Related Property

  	
   

  
	
   

  	
  7.4

  	
  Intellectual Property

  	
   

  
	
   

  	
  7.5

  	
  Cash Proceeds

  	
   

  
	
   

  	
  7.6

  	
  Regulatory Matters

  	
   

  
	
  8.

  	
  CONTINUING
  SECURITY INTEREST; TRANSFER OF NOTES

  	
   

  
	
  9.

  	
  STANDARD OF
  CARE; SECURED PARTY MAY PERFORM

  	
   

  
	
  10.

  	
  INDEMNITY

  	
   

  
	
  11.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  11.1

  	
  Notices

  	
   

  
	
   

  	
  11.2

  	
  Expenses

  	
   

  
	
   

  	
  11.3

  	
  Subrogation

  	
   

  
	
   

  	
  11.4

  	
  Debtor Waivers

  	
   

  
	
   

  	
  11.5

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  11.6

  	
  Successors and Assigns

  	
   

  
	
   

  	
  11.7

  	
  Independence of Covenants

  	
   

  
	
   

  	
  11.8

  	
  Survival
  of Representations, Warranties and Agreements

  	
   

  
	
   

  	
  11.9

  	
  No Waiver; Remedies
  Cumulative

  	
   

  



 


i





















 


	
   

  	
  11.10

  	
  Severability

  	
   

  
	
   

  	
  11.11

  	
  Headings

  	
   

  
	
   

  	
  11.12

  	
  APPLICABLE LAW

  	
   

  
	
   

  	
  11.13

  	
  SUBMISSION TO JURISDICTION

  	
   

  
	
   

  	
  11.14

  	
  Counterparts

  	
   

  
	
   

  	
  11.15

  	
  Gaming Laws

  	
   

  
	
   

  	
  11.16

  	
  Effectiveness

  	
   

  
	
   

  	
  11.17

  	
  Entire Agreement

  	
   

  
	
   

  	
  11.18

  	
  The Mortgages

  	
   

  
	
   

  	
  11.19

  	
  Indenture Controls

  	
   

  
	
   

  	
  11.20

  	
  Trust Indenture Act
  Controls

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Diligence Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Supplement to Security Agreement

  	
   

  
	
  Exhibit B

  	
  Control Agreement (Securities Accounts)

  	
   

  
	
  Exhibit C

  	
  Control Agreement (Deposit Accounts)

  	
   

  



 


ii





















 


This PLEDGE AND SECURITY
AGREEMENT, dated as of July 19, 2005 (this “Agreement”), among Diamond Jo Worth, LLC, a Delaware limited
liability company (the “Company”),
Diamond Jo Worth Corp., a Delaware corporation (“DJW Corp.”
and, together with the Company, the “Issuers”),
Diamond Jo Worth Holdings, LLC, a Delaware limited liability company (“Parent”), and each Subsidiary Guarantor (as defined in the
Indenture referred to below) from time to time party hereto pursuant to Section 5.2
(the Issuers, Parent and each such Subsidiary Guarantor, each a “Debtor” and collectively, the “Debtors”),
and U.S. Bank National Association, as Trustee (together with any successor
Trustee pursuant to the terms of the Indenture, the “Secured
Party”), acting in the capacity of
collateral agent for the benefit of itself and the Holders.


 


R  E
C  I  T  A  L  S:


 


WHEREAS, the Debtors and the
Secured Party, have entered into an Indenture, dated as of July 15, 2005 (as
amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), pursuant to which the Issuers incurred
indebtedness for certain notes (such notes, together with all additional notes
and all other notes issued thereunder in exchange for such notes and additional
notes, the “Notes”) and the other Debtors that
are Subsidiary Guarantors have guaranteed the payment of the Notes and the
other Obligations thereunder;


 


WHEREAS, each Issuer desires to
secure the Notes and its other Obligations under the Indenture, Parent desires
to secure the Obligations of the Issuers under the Notes and the Indenture and
each other Debtor desires to secure its guarantee under the Indenture by
granting to the Secured Party, for the benefit of itself and the Holders,
security interests in the Collateral as set forth herein;


 


WHEREAS, certain of the Debtors
may enter into a Senior Credit Facility pursuant to clause (i) of Section 4.7(b) of
the Indenture and in connection therewith, also enter into an intercreditor
agreement, substantially in the form of Exhibit F to the Indenture, with
the Secured Party and the Credit Facility Secured Party (as amended, restated,
supplemented, replaced or otherwise modified from time to time, the “Intercreditor Agreement”), which agreement, among other
things, will set forth, as between the Secured Party and the Credit Facility
Secured Party, the relative priority of their respective Liens in the
Collateral and their rights with respect thereto; and


 


WHEREAS, to induce the Initial
Purchaser to purchase the Notes, each Holder to hold the Notes to be held by it
and U.S. Bank National Association to act in its capacity as the Secured Party,
each Debtor desires to pledge, grant, transfer, and assign to the Secured
Party, for its benefit and the benefit of the Holders, a security interest in
the Collateral to secure the Secured Obligations of such Debtor, as provided
herein.


 


NOW, THEREFORE,
in consideration of the premises and the agreements, provisions and covenants
herein contained, each Debtor and the Secured Party agree as follows:


 


1.                                      DEFINITIONS


 


1.1                               General Definitions.  In this Agreement, the following terms shall
have the following meanings:


 


“Account  Debtor” shall mean each Person who is obligated on a
Receivables Contract or any Supporting Obligation related thereto.


 


“Accounts” shall
mean all “accounts” as defined in Article 9 of the UCC.


 


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“Agreement”
shall have the meaning set forth in the preamble.


 


“Bankruptcy  Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy”, as now and hereafter in effect, or any successor statute.


 


“Cash  Proceeds” shall mean all proceeds of any Collateral received
by any Debtor consisting of cash, checks and other near-cash items.


 


“Chattel  Paper” shall mean all “chattel paper” as defined in Article 9
of the UCC, including, without limitation, “electronic chattel paper” or “tangible
chattel paper”, as each term is defined in Revised Article 9 of the UCC.


 


“Collateral”
shall have the meaning set forth in Section 2.1 hereof.


 


“Collateral  Records” shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software, computer printouts, tapes, disks and related data processing
software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon.


 


“Collateral  Support” shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a lien or security interest
in such real or personal property.


 


“Commercial  Tort  Claims” shall
mean all “commercial tort claims” as defined in the UCC, including, without
limitation, all commercial tort claims listed and described with specification
on Schedule E of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time).


 


“Commodities
Accounts” (i) shall mean all “commodity
accounts” as defined in Article 9 of the UCC and (ii) shall include,
without limitation, all of the accounts listed on Schedule A of the
Diligence Certificate under the heading “Commodities Accounts” (as such schedule may
be amended or supplemented from time to time).


 


“Company”
shall have the meaning set forth in the preamble.


 


“Controlled  Foreign  Corporation”
shall mean “controlled foreign corporation” as defined in the Tax Code.


 


“Copyright  Licenses” shall mean any and all agreements providing for
the granting of any right in or to Copyrights (whether such Debtor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule B of the Diligence Certificate (as such schedule may
be amended or supplemented from time to time).


 


“Copyrights”
shall mean all United States, state and foreign copyrights, including but not
limited to copyrights in software and databases, and all Mask Works (as defined
under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or
unregistered, and, with respect to any and all of the foregoing: (i) all
registrations and applications therefor including, without limitation, the
applications referred to in Schedule B of the Diligence Certificate (as
such schedule may be amended or supplemented from time to time), (ii) all
extensions and renewals thereof, (iii) all rights corresponding thereto


 


2





















 


throughout the world, (iv) all rights to sue for past, present and
future infringements thereof, (v) all licenses, claims, damages and
proceeds of suit arising therefrom, and (vi) all payments and rights to
payments arising out of the sale, lease, license, assignment, or other
disposition thereof.


 


“Credit  Facility  Secured  Party” shall mean, as the context may require, all or any of
the Senior Lien Creditor Representatives (as defined in the Intercreditor
Agreement).


 


“Debtor” and “Debtors” shall have the meanings set forth in the preamble.


 


“Deposit Accounts”
shall mean all (i) ”deposit accounts” as defined in Article 9 of the
UCC and (ii) shall include, without limitation, all other accounts listed
on Schedule A of the Diligence Certificate under the heading “Deposit
Accounts” (as such schedule may be amended or supplemented from time to
time).


 


“Diligence
Certificate” shall mean the Pre-Closing UCC
Diligence Certificate dated as of the date of this Agreement and executed by each Debtor.


 


“DJW Corp.”
shall have the meaning set forth in the preamble.


 


“Documents”
shall mean all “documents” as defined in Article 9 of the UCC.


 


“Equipment”
shall mean:  (i) all “equipment” as
defined in the UCC, (ii) all machinery, manufacturing equipment, data
processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC), (iii) slot machines, electronic
gaming devices and related equipment and (iv) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or attached thereto, and all replacements
therefor, wherever located, now or hereafter existing, including any fixtures.


 


“Gaming Laws”
shall mean the gaming laws of any jurisdiction or jurisdictions to which the
Company, any of its Restricted Subsidiaries or any of the Subsidiary Guarantors
is, or may at any time after the date hereof, be subject.


 


“General  Intangibles” (i) shall mean all “general intangibles”
as defined in Article 9 of the UCC and (ii) shall include, without
limitation, all interest rate or currency protection or hedging arrangements,
all tax refunds, all licenses, permits, concessions and authorizations, and all
Intellectual Property (in each case, regardless of whether characterized as
general intangibles under the UCC) and exclude all Gaming Licenses held by a
Debtor.


 


“Goods” (i) shall
mean all “goods” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all Inventory and Equipment (in each case,
regardless of whether characterized as goods under the UCC).


 


“Governmental Authority”
shall mean any agency, authority, board, bureau, commission, department,
office, public entity, or instrumentality of any nature whatsoever of the
United State federal or foreign government, any state, province or any city or
other political subdivision or otherwise, whether now or hereafter in
existence, or any officer or official thereof, including, without limitation,
any Gaming Authority.


 


3





















 


“Indemnitee”
shall mean the Secured Party, and its and its Affiliates’ officers, directors,
employees and agents, and including, if the Secured Party or its agent is a
partnership, its partners, and if the Secured Party or its agent is a trust,
its trustee.


 


“Indenture”
shall have the meaning set forth in the first recital.


 


“Indenture  Documents” shall mean the Indenture, the Notes, the Security
Documents and the Registration Rights Agreement, and such other agreements,
instruments and certificates executed and delivered (or issued) by the Debtors
pursuant to the Indenture or any of the foregoing, as any or all of the same
may be amended, restated, supplemented or otherwise modified from time to time.


 


“Instruments”
shall mean all “instruments” as defined in Article 9 of the UCC.


 


“Insurance”
shall mean:  (i) all insurance
policies covering any or all of the Collateral (regardless of whether the
Secured Party is the loss payee thereof) and (ii) any key man life
insurance policies.


 


“Intellectual Property”
shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents,
the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets,
and the Trade Secret Licenses.


 


“Intercreditor Agreement”
shall have the meaning set forth in the third recital.


 


“Inventory”
shall mean:  (i) all “inventory” as
defined in the UCC and (ii) all goods held for sale or lease or to be
furnished under contracts of service or so leased or furnished, all raw materials,
work in process, finished goods, and materials used or consumed in the
manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in any Debtor’s
business; all goods in which any Debtor has an interest in mass or a joint or
other interest or right of any kind; and all goods which are returned to or
repossessed by any Debtor, all computer programs embedded in any goods and all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).


 


“Investment  Related  Property” shall
mean:  (i) all “investment property”
(as such term is defined in Article 9 of the UCC); and (ii) all of
the following (regardless of whether classified as investment property under
the UCC): all Pledged Equity Interests, Pledged Debt, the Deposit Accounts,
Securities Accounts, Commodities Accounts and certificates of deposit.


 


“Issuers” shall
have the meaning set forth in the preamble.


 


“Legal Requirements” means all applicable restrictive covenants,
applicable zoning and subdivision ordinances and building codes, all applicable
health and environmental laws and regulations, all applicable Gaming Laws and
applicable regulations, and all other applicable laws, ordinances, rules,
regulations, judicial decisions, administrative orders and other requirements
of any Governmental Authority having jurisdiction over any Debtor, the
Collateral and/or any Affiliate of such Debtor, in effect either at the time of
execution of this Agreement or at any time during the term hereof.


 


“Letter of Credit
Right”  shall mean “letter-of-credit
right” as defined in the UCC.


 


4





















 


“Material
Collateral Contract”
shall mean any contract or other arrangement to which any Debtor is a party for
which breach, nonperformance, cancellation or failure to renew could reasonably
be expected to have a Material Adverse Effect.


 


“Money” shall mean “money” as defined
in the UCC.


 


“Notes” shall have
the meaning set forth in the first recital.


 


“Parent” shall
have the meaning set forth in the preamble.


 


“Patent  Licenses” shall mean all agreements providing for the
granting of any right in or to Patents (whether such Debtor is licensee or
licensor thereunder) including, without limitation, each agreement referred to
in Schedule B of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time).


 


“Patents” shall mean all United States
and foreign patents and certificates of invention, or similar industrial property
rights, including, but not limited to each patent referred to in Schedule B
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time), and with respect to any and all of the
foregoing, (i) all applications therefore including, without limitation,
the patent applications referred to in Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time), (ii) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals, and reexaminations thereof, (iii) all rights
corresponding thereto throughout the world, (iv) all inventions and
improvements described therein, (v) all rights to sue for past, present
and future infringements thereof, (vi) all licenses, claims, damages, and
proceeds of suit arising therefrom, and (vii) all payments and rights to
payments arising out of the sale, lease, license, assignment, or other
disposition thereof.


 


“Payment  Intangible” shall have the meaning specified in the UCC.


 


“Pledged  Debt” shall mean all Indebtedness owed to such Debtor,
including, without limitation, all Indebtedness described on Schedule A of
the Diligence Certificate under the heading “Pledged Debt and Instruments” (as
such schedule may be amended or supplemented from time to time), issued by
the obligors named therein, the instruments evidencing such Indebtedness, and
all interest, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Indebtedness.


 


“Pledged  Equity  Interests”
shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership
Interests and Pledged Trust Interests.


 


“Pledged  LLC  Interests”
shall mean all interests in any limited liability company including, without
limitation, all limited liability company interests listed on Schedule A
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time) and the certificates, if any, representing such
limited liability company interests and any interest of such Debtor on the
books and records of such limited liability company or on the books and records
of any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such limited
liability company interests.


 


“Pledged  Partnership  Interests”
shall mean all interests in any general partnership, limited partnership,
limited liability partnership or other partnership including, without
limitation, all


 


5





















 


partnership interests listed on Schedule A of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) and the certificates, if any, representing such partnership interests and
any interest of such Debtor on the books and records of such partnership or on
the books and records of any securities intermediary pertaining to such
interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such partnership interests.


 


“Pledged  Trust  Interests”
shall mean all interests in a Delaware business trust or other trust including,
without limitation, all trust interests listed on Schedule A of the
Diligence Certificate (as such schedule may be amended or supplemented
from time to time) and the certificates, if any, representing such trust
interests and any interest of such Debtor on the books and records of such
trust or on the books and records of any securities intermediary pertaining to
such interest and all dividends, distributions, cash, warrants, rights,
options, instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such trust interests.


 


“Pledged  Stock” shall mean all shares of capital stock owned by such
Debtor, including, without limitation, all shares of capital stock described on
Schedule A of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time), and the certificates, if any,
representing such shares and any interest of such Debtor in the entries on the
books of the issuer of such shares or on the books of any securities
intermediary pertaining to such shares, and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares.


 


“Proceeds” shall
mean:  (i) all “proceeds” as defined
in Article 9 of the UCC, (ii) payments or distributions made with
respect to any Investment Related Property and (iii) whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.


 


“Receivables
Contracts” shall mean all (i) Accounts,
(ii) Chattel Paper, (iii) Payment Intangibles, (iv) Instruments
and (v) to the extent not otherwise covered above, all other rights to
payment, whether or not earned by performance, for goods or other property
sold, leased, licensed, assigned or otherwise disposed of, or services rendered
or to be rendered, regardless of how classified under the UCC; together with
all of such Debtors’ rights, if any, in any goods or other property giving rise
to such right to payment and all Collateral Support and Supporting Obligations
related thereto and all Receivables Records; provided, however,
that Receivables Contracts shall not include any Investment Related Property.


 


“Receivables  Records” shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables Contracts, (ii) all books, correspondence,
credit or other files, Records, ledger sheets or cards, invoices, and other
papers relating to Receivables Contracts, including, without limitation, all
tapes, cards, computer tapes, computer discs, computer runs, record keeping
systems and other papers and documents relating to the Receivables Contracts,
whether in the possession or under the control of Debtor or any computer bureau
or agent from time to time acting for Debtor or otherwise, (iii) all
evidences of the filing of UCC financing statements and the registration of
other instruments in connection therewith, and amendments, supplements or other
modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including, without
limitation, lien search reports, from filing or other registration officers,


 


6





















 


(iv) all credit information, reports and memoranda relating
thereto and (v) all other written or non-written forms of information
related in any way to the foregoing or any Receivable.


 


“Record” shall
have the meaning specified in Article 9 of the UCC.


 


“Secured  Obligations” shall have the meaning set forth in Section 3.1
hereof.


 


“Secured  Party” has the meaning set forth in the preamble.


 


“Securities”
shall mean any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.


 


“Securities  Accounts” (i) shall mean all “securities accounts” as
defined in Article 8 of the UCC and (ii) shall include, without
limitation, all of the accounts listed on Schedule A of the Diligence
Certificate under the heading “Securities Accounts” (as such schedule may
be amended or supplemented from time to time).


 


“Software
Embedded in Goods”
means, with respect to any Goods, any computer program embedded in Goods and
any supporting information provided in connection with a transaction relating
to the program if (i) the program is associated with the Goods in such a
manner that it customarily is considered part of the Goods or (ii) by
becoming the owner of the Goods a person acquires a right to use the program in
connection with the Goods.


 


“Supplement to Security
Agreement” shall mean any supplement to this agreement in
substantially the form of Exhibit A.


 


“Supporting  Obligation” shall mean all “supporting obligations” as
defined in the UCC.


 


“Tax  Code” shall mean the United States Internal Revenue Code of
1986, as amended from time to time.


 


“Trademark  Licenses” shall mean any and all agreements providing for
the granting of any right in or to Trademarks (whether such Debtor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule B of the Diligence Certificate (as such schedule may
be amended or supplemented from time to time).


 


“Trademarks”
shall mean all United States, state and foreign trademarks, trade names,
corporate names, company names, business names, fictitious business names,
Internet domain names, service marks, certification marks, collective marks,
logos, other source or business identifiers, designs and general intangibles of
a like nature, all registrations and applications for any of the foregoing
including, but not limited to the registrations and applications referred to in
Schedule B of the Diligence Certificate (as such schedule may be
amended or supplemented from time to time), all extensions or renewals of any
of the foregoing, all of the goodwill of the business connected with the use of
and symbolized by the foregoing, the right to sue for past, present and future
infringement or dilution of any of the foregoing or for any injury to goodwill,
and all proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.


 


7





















 


“Trade  Secret  Licenses” shall
mean any and all agreements providing for the granting of any right in or to
Trade Secrets (whether such Debtor is licensee or licensor thereunder)
including, without limitation, each agreement referred to in Schedule B of
the Diligence Certificate (as such schedule may be amended or supplemented
from time to time).


 


“Trade  Secrets” shall mean all trade secrets and all other
confidential or proprietary information and know-how now or hereafter owned by
or used in, the business of such Debtor (all of the foregoing being
collectively called a “Trade Secret”), whether or not such Trade Secret has
been reduced to a writing or other tangible form, including all documents and
things embodying, incorporating, or referring in any way to such Trade Secret,
the right to sue for past, present and future infringement of any Trade Secret,
and all proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.


 


“UCC” shall mean
the Uniform Commercial Code as in effect from time to time in the State of New
York; provided, if by reason of mandatory provisions of law, the perfection or
the effect of perfection or non-perfection of the security interests in any
Collateral or the priority of security interests in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than New
York, “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection or priority.


 


1.2                               Definitions;
Interpretation.  All capitalized
terms used herein (including the preamble and recitals hereto) and not
otherwise defined herein shall have the meanings ascribed thereto in the
Indenture or, if not defined therein, in the UCC.  References to “Sections,” “Exhibits” and “Schedules”
shall be to Sections, Exhibits and Schedules, as the case may be, of this Agreement
unless otherwise specifically provided.  Section headings
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose or be given
any substantive effect.  Any of the terms
defined herein may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference.  The use herein of the word “include” or “including”,
when following any general statement, term or matter, shall not be construed to
limit such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.  If any conflict or inconsistency exists
between this Agreement and the Indenture, the Indenture shall govern.  All references herein to provisions of the
UCC shall include all successor provisions under any subsequent version or
amendment to any Article of the UCC.


 


2.                                      GRANT OF SECURITY


 


2.1                               Grant
of Security.  Subject to applicable
Gaming Laws, each Debtor hereby grants to the Secured Party a security interest
and continuing lien on all of such Debtor’s right, title and interest in, to
and under all property of such Debtor including, but not limited to the
following, in each case whether now owned or existing or hereafter acquired or
arising and wherever located (such Debtor’s “Collateral”):


 


(i)                                     Accounts;


 


(ii)                                  Chattel Paper, together with all
returned, rejected or repossessed goods, the sale or lease of which shall have
given or shall give rise to chattel


 


8





















 


paper, and all property and goods
both now owned and hereafter acquired by the Debtors which are sold, leased,
secured, or the subject of or otherwise covered by, the Debtors’ Chattel Paper,
together with all reversionary rights embodied therein and all other rights
incident to such property and goods;


 


(iii)                               Documents;


 


(iv)                              Goods (including Documents
Representing Goods and Software Embedded in Goods);


 


(v)                                 Instruments;


 


(vi)                              Insurance;


 


(vii)                           Intellectual Property;


 


(viii)                        Investment Related Property;


 


(ix)                                judgments;


 


(x)                                   Letter of Credit Rights;


 


(xi)                                Money;


 


(xii)                             Receivables Contracts and Receivable
Records;


 


(xiii)                          Commercial Tort Claims;


 


(xiv)                         to the extent not otherwise included
above, all General Intangibles, Material Collateral Contracts and other
personal property of any kind;


 


(xv)                            to the extent not otherwise included
above, all Collateral Records, Collateral Support and Supporting Obligations
relating to any of the foregoing; and


 


(xvi)                         to the extent not otherwise included
above, all Proceeds, products, accessions, rents and profits of or in respect
of any of the foregoing.


 


2.2                               Certain
Limited Exclusions.  Notwithstanding
anything herein to the contrary, in no event shall the Collateral include, and
no Debtor shall be deemed to have granted a security interest in, any of such
Debtor’s right, title or interest in any Excluded Asset.


 


2.3                               Intercreditor
Agreement.  Notwithstanding anything
herein to the contrary, the relative rights and remedies of the Secured Party
hereunder and the Credit Facility Secured Party shall be subject to and
governed by the terms of the Intercreditor Agreement at any time the
Intercreditor Agreement is in effect, and in the event of any inconsistency
between the terms hereof and the Intercreditor Agreement, the Intercreditor
Agreement shall control at any time the Intercreditor Agreement is in effect.


 


9





















 


3.                                      SECURITY FOR OBLIGATIONS


 


3.1                               Security
for Obligations.  This Agreement
secures, and the Collateral is collateral security for, the prompt and complete
payment or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§362(a) (and any successor provision thereof)), of all obligations and
liabilities of every nature of each Debtor now or hereafter existing under the
Indenture Documents to which such Debtor is a party (all such obligations and
liabilities being the “Secured Obligations”).


 


3.2                               Obligations
Remain.  Notwithstanding anything
herein to the contrary,


 


(a)                                  each Debtor
shall remain liable under any partnership agreement or limited liability
company agreement relating to any Pledged Partnership Interest or Pledged LLC
Interest and/or any other contracts and agreements included in the Collateral,
to the extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed;


 


(b)                                 the exercise
by the Secured Party of any of its rights hereunder shall not release any
Debtor from any of its duties or obligations under the contracts and agreements
included in the Collateral until title or all rights thereto has been
transferred from such Debtor in accordance with such contracts or agreements;
and


 


(c)                                  the Secured
Party shall not have any obligation or liability under any partnership
agreement or limited liability company agreement relating to any Pledged
Partnership Interests or Pledged LLC Interests or any other contracts and
agreements included in the Collateral by reason of this Agreement or any other
Security Document, nor shall the Secured Party be obligated to assume or
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 by reason
of this Agreement or any other Security Document.


 


4.                                      REPRESENTATIONS AND WARRANTIES AND
COVENANTS


 


4.1                               Generally.


 


(a)                                  Representations
and Warranties.  Each Debtor hereby
represents and warrants, on the Issue Date, that:


 


(i)                                     it owns the Collateral purported to
be owned by it or otherwise has the rights it purports to have in each item of
Collateral and, as to all Collateral whether now existing or hereafter
acquired, will continue to own or have such rights in each item of the
Collateral, in each case free and clear of any and all Liens, rights or claims
of all other Persons other than Permitted Liens, including, without limitation,
liens arising as a result of such Debtor becoming bound (as a result of merger
or otherwise) as debtor under a security agreement entered into by another
Person;


 


(ii)                                  it has indicated in Section I
of the Diligence Certificate (as such section may be amended or
supplemented from time to time): (w) the taxpayer identification number of such
Debtor and the organization identification


 


10





















 


number of such Debtor, if any,
provided by the Secretary of State of such Debtor’s state of organization, (x)
the type of organization of such Debtor, (y) the jurisdiction of organization
of such Debtor and (z) the jurisdiction where the chief executive office or its
sole place of business, as the case may be, is, and for the five (5)-year
period preceding the date hereof has been, located.


 


(iii)                               the full legal name of such Debtor
is as set forth in Section I of the Diligence Certificate and it has not
done in the last five (5) years, and does not do, business under any other
name (including any trade-name or fictitious business name) except for those
names set forth in Section I of the Diligence Certificate (as such section may
be amended or supplemented from time to time);


 


(iv)                              the names of all companies with
which such Debtor has merged or consolidated in the last five (5) years,
together with the dates of such mergers or consolidations are set forth in Section I
of the Diligence Certificate;


 


(v)                                 the location(s) at which such Debtor
has kept or maintained Equipment or Inventory in the last five (5) years
that is Collateral under this Agreement is set forth in Section II of the
Diligence Certificate;


 


(vi)                              such Debtor has not within the last
five (5) years become bound (whether as a result of merger or otherwise)
as debtor under a security agreement entered into by another Person, which has
not heretofore or concurrently with the delivery hereof been terminated;


 


(vii)                           the security interests granted by
each Debtor in the Collateral of such Debtor to Secured Party hereunder
constitute valid security interests in such Collateral securing the payment of
the Secured Obligations of such Debtor, and upon the filing of all UCC
financing statements naming such Debtor as “debtor” and the Secured Party as “secured
party” and describing such Collateral in the filing offices set forth opposite
such Debtor’s name in Section I of the Diligence Certificate (as such section may
be amended or supplemented from time to time) and, to the extent not subject to
Article 9 of the UCC, upon the recordation of the security interest
granted hereunder in Patents, Trademarks and Copyrights in the applicable
patent, trademark and copyright registries (including the United States Patent
and Trademark Office and the United States Copyright Office), and the
registration of all unregistered Copyrights and other filings delivered by such
Debtor, the security interests granted to the Secured Party hereunder
constitute perfected Liens (subject in the case of priority only to Permitted
Liens) on all such Collateral (other than Collateral constituting goods covered
by certificates of title, Money, deposit accounts, Letter of Credit Rights and
insurance policies);


 


(viii)                        all actions, consents and approvals,
including all filings, notices, registrations and recordings necessary for the
exercise by the Secured Party of the voting or other rights provided for in
this Agreement or the


 


11





















 


exercise of remedies in respect of
the Collateral have been made or obtained except to the extent any actions,
consents or approvals are required (A) in the case of any action, to be
performed by the Secured Party or (B) under applicable Gaming Laws, the
Intercreditor Agreement or any Intellectual Property license, contract or
agreement;


 


(ix)                                other than the UCC financing
statements filed in favor of the Secured Party, no effective UCC financing
statement, fixture filing or other instrument similar in effect under any
applicable law covering all or any part of the Collateral is on file in any
filing or recording office except for (x) UCC financing statements for which
proper termination statements have been delivered to the Secured Party for
filing and (y) UCC financing statements filed in connection with Permitted
Liens;


 


(x)                                   no authorization, approval or other
action by, and no notice to or filing with, any Governmental Authority is
required for either (i) the pledge or grant by any Debtor of the Liens
purported to be created in favor of the Secured Party hereunder or (ii) the
exercise by Secured Party of any rights or remedies in respect of any
Collateral (whether specifically granted or created hereunder or created or
provided for by applicable law), except (A) for the filings contemplated
by clause (vii) above, (B) as may be required, in connection with the
disposition of any Investment Related Property, by laws generally affecting the
offering and sale of Securities, (C) to the extent any authorizations,
consents or approvals are required under applicable Gaming Laws, the
Intercreditor Agreement or any Intellectual Property license, contract or
agreement and (D) to the extent any actions are required to be performed
by the Secured Party;


 


(xi)                                all written information supplied by
any Debtor with respect to any of the Collateral (in each case taken as a whole
with respect to any particular Collateral) is accurate and complete in all
material respects; and


 


(xii)                             none of the Collateral constitutes,
or is the Proceeds of, “farm products” (as defined in the UCC).


 


(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full:


 


(i)                                     except for the security interest
created by this Agreement, it shall not create or suffer to exist any Lien upon
or with respect to any of the Collateral, except Permitted Liens;


 


(ii)                                  it shall not produce, use or permit
any Collateral to be used unlawfully or in violation of any provision of this
Agreement or any applicable statute, regulation or ordinance or any policy of
insurance covering the Collateral;


 


(iii)                               it shall (A) not change such
Debtor’s name, identity, corporate structure, sole place of business or chief
executive office, as the case may be, or jurisdiction of organization unless it
shall have (1) notified the Secured


 


12





















 


Party in writing, by executing and
delivering to the Secured Party a completed Supplement to Security Agreement,
substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto, at least thirty (30) days prior to
any such change, identifying such new proposed name, identity, corporate
structure, sole place of business or chief executive office, as the case may
be, or jurisdiction of organization and providing such other information in
connection therewith as the Secured Party may reasonably request or (2) taken
all actions necessary or advisable to maintain the continuous validity and
perfection of the Secured Party’s security interest in the Collateral intended
to be granted and agreed to hereby and (B) notify the Secured Party of any
tradename established by such Debtor within thirty (30) days following such
establishment;


 


(iv)                              upon such Debtor or any officer of
such Debtor obtaining knowledge of any event not generally known to the public
at large, it shall promptly notify the Secured Party in writing of any such
event that could reasonably be expected to have a material adverse effect on (A) the
value of a significant portion of the Collateral, (B) the ability of any
Debtor or the Secured Party to dispose of the Collateral or any significant
portion thereof pursuant to applicable law or agreements that could reasonably
be expected to affect such ability or (C) the rights and remedies of the
Secured Party in relation to the Collateral or any significant portion thereof,
including, without limitation, the levy of any legal process against the
Collateral or any significant portion thereof;


 


(v)                                 it shall use commercially reasonable
efforts (which shall not require the payment of cash to, or the reimbursement
of fees and expenses of, such landlord or the making of any material
concessions under any such lease) to deliver to the Secured Party landlord
consents, to the extent it occupies and has business activities on any premises
as a lessee under a lease, executed by the landlord in respect of such lease
the effect of which would subordinate the claims of such landlord to the Liens
created under this Agreement and enable the Secured Party to access such
premises without delay for the purpose of enforcing such Liens; and


 


(vi)                              it shall, on request of the Secured
Party, cause other Persons (including without limitation those in possession of
any Collateral) to execute and deliver in favor of the Secured Party
acknowledgments, consents and control agreements necessary, or desirable and
commercially reasonable in furtherance of the purposes of this Agreement.  All matters shall be in form and substance
reasonably acceptable to the Secured Party and shall be at such Debtor’s cost.


 


4.2                               Equipment and Inventory.


 


(a)                                  Representations
and Warranties.  Each Debtor represents
and warrants, on the Issue Date, that:


 


13





















 


(i)                                     all of the Equipment and Inventory
included in the Collateral is kept only at the locations specified in Schedule C
of the Diligence Certificate; and


 


(ii)                                  any Goods now or hereafter produced
by any Debtor included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as amended.


 


(b)                                 Covenants
and Agreements.  Each Debtor covenants
and agrees that:


 


(i)                                     it shall not deliver any Document
evidencing any Equipment and Inventory to any Person other than the issuer of
such Document to claim the Goods evidenced therefor or the Secured Party or the
Credit Facility Secured Party or any other holder or representative of a holder
of a Permitted Lien; and


 


(ii)                                  if any Equipment or Inventory is in
possession or control of any third party (other than the Credit Facility
Secured Party), it shall join with the Secured Party in notifying the third
party of the Secured Party’s security interest and use its commercially
reasonable efforts (which shall not require the payment of cash to, or the
reimbursement of fees and expenses of, such third party or the making of any
material concessions under any contract or agreement relating to such Equipment
or Inventory) in obtaining an acknowledgment from the third party that it is
holding the Equipment and Inventory for the benefit of the Secured Party and
other holders of Permitted Liens.


 


4.3                               Receivables Contracts. 
Covenants and Agreements:  Each
Debtor hereby covenants and agrees that until the Secured Obligations have been
paid in full, it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables Contracts.


 


4.4                               Investment Related Property.


 


(a)                                  Representations
and Warranties.  Each Debtor hereby
represents and warrants, on the Issue Date, that:


 


(i)                                     Schedule A of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth all of the Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and Pledged Trust Interests owned by any Debtor and such
Pledged Equity Interests constitute the percentage of issued and outstanding
shares of stock, percentage of membership interests, percentage of partnership
interests or percentage of beneficial interest of the respective issuers
thereof indicated on such Schedule;


 


(ii)                                  it is the record and beneficial
owner of the Pledged Equity Interests free of all Liens, rights or claims of
other Persons other than Permitted Liens;


 


(iii)                               without limiting the generality of Section 4.1(a)(v),
no consent of any Person including any other general or limited partner, any
other member


 


14





















 


of a limited liability company, any
other shareholder or any other trust beneficiary is necessary in connection
with the creation or perfection of the security interest of the Secured Party
in any Pledged Equity Interests or the exercise by the Secured Party of the
voting or other rights provided for in this Agreement or the exercise of
remedies in respect thereof;


 


(iv)                              none of the Pledged LLC Interests
nor Pledged Partnership Interests are or represent interests in issuers that
are:  (a) registered as investment
companies, (b) are dealt in or traded on securities exchanges or markets
or (c) have opted to be treated as securities under the UCC of any
jurisdiction;


 


(v)                                 Schedule A of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth under the heading “Pledged Debt” all of the Pledged Debt owned
by any Debtor and all of such Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default and constitutes all of
the issued and outstanding inter-company Indebtedness evidenced by an
instrument or certificated security of the respective issuers thereof owing to
such Debtor;


 


(vi)                              Schedule A of the Diligence
Certificate sets forth under the headings “Securities Accounts,” “Deposit
Accounts,” and “Commodities Accounts,” respectively, all of the Securities
Accounts, Deposit Accounts and Commodities Accounts in which each Debtor has an
interest.  Each Debtor is the sole
entitlement holder of each such Securities Account, Deposit Account and
Commodities Account, and such Debtor has not consented to, and is not otherwise
aware of, any Person having “control” (as defined in the UCC) over, or any
other interest in, any such Securities Account, Deposit Account or Commodity
Account, or any securities or other property credited thereto (other than
Secured Party and the Credit Facility Secured Party); and


 


(vii)                           The Secured Party has valid and
enforceable control agreements with all Persons with whom each Debtor has
Deposit Accounts or with all securities intermediaries maintaining any
Securities Accounts of, or on behalf of, such Debtor.  As to other Collateral in which perfection of
a security interest may be obtained by control, all actions have been taken so
as to ensure that the Secured Party has control of such Collateral, other than
as permitted hereby in the absence of an Event of Default.


 


(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full:


 


(i)                                     in the event it acquires rights in
any Investment Related Property after the date hereof, it shall deliver to the
Secured Party a completed Supplement to Security Agreement, substantially in
the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto,


 


15





















 


reflecting such new Investment
Related Property and all other Investment Related Property.  Notwithstanding the foregoing, it is
understood and agreed that the security interest of the Secured Party shall
attach to all Investment Related Property immediately upon any Debtor’s
acquisition of rights therein and shall not be affected by the failure of any
Debtor to deliver a supplement to Schedule A of the Diligence Certificate
as required hereby;


 


(ii)                                  except as provided in the next
sentence, in the event such Debtor receives any dividends, interest or
distributions on any Investment Related Property, or any securities or other
property upon the merger, consolidation, liquidation or dissolution of any
issuer of any Investment Related Property, then (a) such dividends,
interest or distributions and securities or other property shall be included in
the definition of Collateral without further action and (b) such Debtor
shall immediately take all steps, if any, necessary, or advisable and
commercially reasonable to ensure the validity and perfection of the Secured
Party over such Investment Related Property (including, without limitation,
delivery thereof to the Secured Party);


 


(iii)                               it shall comply with all of its
obligations under any partnership or limited liability company agreement or
limited liability company agreement relating to Pledged Partnership Interests
or Pledged LLC Interests and shall enforce all of its rights with respect to
any Investment Related Property related to Persons that are not Subsidiary
Guarantors;


 


(iv)                              each Debtor consents to the grant by
each other Debtor of a security interest in all Investment Related Property to
the Secured Party and, without limiting the foregoing, consents to the transfer
of any Pledged Partnership Interest and any Pledged LLC Interest to the Secured
Party or its nominee following an Event of Default and to the substitution of
the Secured Party or its nominee as a partner in any partnership or as a member
in any limited liability company with all the rights and powers related
thereto;


 


(v)                                 with respect to any Investment
Related Property consisting of Securities Accounts or Securities Entitlements,
it shall cause the securities intermediary maintaining such Securities Account
or Securities Entitlement to enter into an agreement substantially in the form
of Exhibit B hereto pursuant to which the securities intermediary
shall agree to comply with the Secured Party’s “entitlement orders” without
further consent by such Debtor.  With
respect to any Investment Related Property that is a “Deposit Account”, it
shall cause the depositary institution maintaining such account to enter into
an agreement substantially in the form of Exhibit C hereto,
pursuant to which the Secured Party shall have both sole dominion and control
over such Deposit Account and “control” (within the meaning of Section 9-104
of the UCC) over such Deposit Account.  
Such Debtor shall have entered into such control agreement or agreements
with respect to: (i) any Securities Accounts, Securities Entitlements or
Deposit Accounts that


 


16





















 


exist on the Issue Date and (ii) any
Securities Accounts, Securities Entitlements or Deposit Accounts that are
created or acquired after the Issue Date, as of or prior to the deposit or
transfer of any such Securities Entitlements or funds, whether constituting
moneys or investments, into such Securities Accounts or Deposit Accounts (provided,
however, that no Debtor shall be obligated to comply with the terms of
this clause (v) with respect to any Deposit Account or Securities Account
if the average closing balance for a period of five consecutive Business Days
of such Deposit Account or Securities Account, when taken together with the
average closing balance for such period of all other Deposit Accounts and
Securities Accounts of all of the Debtors (including such Debtor) with respect
to which such terms have not been complied with, does not exceed $500,000 in the
aggregate); and


 


(vi)                              with respect to any Investment
Related Property in which it currently has rights, it shall have complied with
the provisions of this Section on or before the Closing Date and with
respect to any Investment Related Property hereafter acquired by such Debtor it
shall comply with the provisions of this Section immediately upon
acquiring rights therein, in each case in form and substance satisfactory to
the Secured Party.   With respect to any
Investment Related Property that is represented by a certificate or that is an “instrument”
(other than any Investment Related Property credited to a Securities Account)
it shall cause such certificate or instrument to be delivered to the Secured
Party, indorsed in blank by an “effective indorsement” (as defined in Section 8-107
of the UCC), regardless of whether such certificate constitutes a “certificated
security” for purposes of the UCC.   With
respect to any Investment Related Property that is an “uncertificated security”
for purposes of the UCC (other than any “uncertificated securities” credited to
a Securities Account), it shall cause the issuer of such uncertificated
security to register the Secured Party as the registered owner thereof on the
books and records of the issuer.


 


(c)                                  Voting and
Distributions.


 


(i)                                     So long as no Event of Default shall
have occurred and be continuing, and subject to applicable Gaming Laws, each
Debtor shall be entitled to exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Investment Related
Property or any part thereof for any purpose not inconsistent with the terms of
this Agreement or the Indenture.


 


(ii)                                  Upon the occurrence and during the
continuation of an Event of Default subject to Section 7.6:


 


(A)                              all rights of each Debtor to
exercise or refrain from exercising the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant hereto shall cease
and all such rights shall thereupon become vested in the Secured Party who


 


17





















 


shall thereupon have the sole right
to exercise such voting and other consensual rights; and


 


(B)                                in order to permit the Secured Party
to exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other distributions
which it may be entitled to receive hereunder: (1) each Debtor shall
promptly execute and deliver (or cause to be executed and delivered) to the
Secured Party all proxies, dividend payment orders and other instruments as the
Secured Party may from time to time reasonably request and (2) each Debtor
acknowledges that the Secured Party may utilize the power of attorney set forth
in Section 6.


 


4.5                               Intellectual Property.


 


(a)                                  Representations
and Warranties.  Except as disclosed in Schedule B
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time), each Debtor hereby represents and warrants, on
the Issue Date, that:


 


(i)                                     Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth a true and complete list of (i) all active United States
and foreign registrations of and applications for Patents, Trademarks, and
Copyrights owned by each Debtor and (ii) all Patent Licenses, Trademark
Licenses and Copyright Licenses material to the business of such Debtor;


 


(ii)                                  it is the sole and exclusive owner
of the entire right, title, and interest in and to all Intellectual Property
listed as “owned” by such Debtor on Schedule B of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time), and owns or has the valid right to use all other Intellectual Property
used in or necessary to conduct its business, free and clear of all Liens,
claims, encumbrances and licenses, except for Permitted Liens and the licenses
set forth on Schedule B of the Diligence Certificate (as each may be
amended or supplemented from time to time);


 


(iii)                               to each Debtor’s knowledge, all
Intellectual Property is valid and enforceable; no holding, decision, or
judgment has been rendered in any action or proceeding before any court or
administrative authority challenging the validity of, such Debtor’s right to
register, or such Debtor’s rights to own or use, any Intellectual Property and
no such action or proceeding is pending or, to the best of such Debtor’s
knowledge, threatened;


 


(iv)                              all registrations and applications
for Copyrights, Patents and Trademarks are standing in the name of each Debtor,
and none of the Trademarks, Patents, Copyrights or Trade Secret Collateral has
been licensed by any Debtor to any affiliate or third party, except as
disclosed on Schedule B


 


18





















 


of the Diligence Certificate (as each
may be amended or supplemented from time to time); and


 


(v)                                 there is no effective UCC financing
statement or other document or instrument now executed, or on file or recorded
in any public office that has not been released or terminated, granting a
security interest in or otherwise encumbering any part of the Intellectual
Property, other than in favor of the Secured Party.


 


(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full:


 


(i)                                     it shall promptly (but in no event
more than thirty (30) days after any Debtor obtains knowledge thereof) report
to the Secured Party (i) the filing of any application to register any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, or any state registry or foreign counterpart of
the foregoing (whether such application is filed by such Debtor or through any
agent, employee, licensee, or designee thereof) and (ii) the registration
of any Intellectual Property by any such office, in each case by executing and
delivering to the Secured Party a completed Supplement to Security Agreement,
substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto;


 


(ii)                                  it shall, promptly upon the
reasonable request of the Secured Party, execute and deliver to the Secured
Party any document required to acknowledge, confirm, register, record, or
perfect the Secured Party’s interest in any part of the Intellectual Property,
whether now owned or hereafter acquired;


 


(iii)                               it shall hereafter use commercially
reasonable efforts (which shall not require the payment of cash to, or the
reimbursement of fees and expenses of, the counterparty to any such contract or
the making of any material concessions under any such contract) so as not to
permit the inclusion in any contract to which it hereafter becomes a party of
any provision that could or might in any way materially impair or prevent the
creation of a security interest in, or the assignment of, such Debtor’s rights
and interests in any property included within the definitions of any
Intellectual Property acquired under such contracts;


 


4.6                               Commercial Tort Claims.


 


(a)                                  Representations
and Warranties.  Each Debtor hereby represents
and warrants, on the Issue Date, that Schedule E of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth all Commercial Tort Claims of each Debtor.


 


(b)                                 Covenants
and Agreements.  Each Debtor hereby
covenants and agrees that until the Secured Obligations have been paid in full,
with respect to any Commercial Tort Claim hereafter arising it shall deliver to
the Secured Party a completed Supplement to Security Agreement, substantially


 


19





















 


in the
form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto, identifying such new Commercial Tort Claims.


 


4.7                               Judgments.


 


(a)                                  Representations
and Warranties.  Each Debtor hereby represents
and warrants, on the Issue Date, that Schedule E of the Diligence
Certificate (as such schedule may be amended or supplemented from time to
time) sets forth all judgments in favor of each Debtor.


 


(b)                                 Covenants
and Agreements.  Each Debtor hereby covenants
and agrees that until the Secured Obligations have been paid in full, with
respect to any judgment hereafter arising in its favor it shall deliver to the
Secured Party a completed Supplement to Security Agreement, substantially in
the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, identifying such new judgments.


 


5.                                      FURTHER ASSURANCES; ADDITIONAL
DEBTORS


 


5.1                               Further Assurances.


 


(a)                                  Each Debtor
agrees that from time to time until the Secured Obligations have been paid in
full, at the expense of such Debtor, that it shall promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary, or desirable and commercially reasonable, in order to create and/or
maintain the validity, perfection or priority of and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, each Debtor
shall:


 


(i)                                     execute and file such financing or
continuation statements, or amendments thereto, and execute and deliver such
other agreements, instruments, endorsements, powers of attorney or notices, as
may be necessary or desirable, in order to perfect and preserve the security
interests granted or purported to be granted hereby;


 


(ii)                                  take all actions necessary to ensure
the recordation of appropriate evidence of the Liens and security interest
granted hereunder in the Intellectual Property with any intellectual property
registry in which said Intellectual Property is registered or in which an
application for registration is pending including, without limitation, the
United States Patent and Trademark Office, the United States Copyright Office,
the various Secretaries of State, and the foreign counterparts on any of the
foregoing;


 


(iii)                               at any reasonable time, upon request
by the Secured Party, exhibit the Collateral to and allow inspection of the
Collateral by the Secured Party, or persons designated by the Secured Party;
and


 


(iv)                              at the Secured Party’s reasonable
request and subject to the Intercreditor Agreement, appear in and defend any
action or proceeding that may affect the Secured Party’s security interest in
all or any part of the Collateral.


 


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(b)                                 Each Debtor
hereby authorizes the Secured Party to file, until the Secured Obligations have
been paid in full, a Record or Records, including, without limitation, UCC
financing or continuation statements, and amendments thereto, in all
jurisdictions and with all filing offices as the Secured Party may determine,
in its sole discretion, are necessary or advisable to perfect the security
interest granted to the Secured Party herein. 
Such UCC financing statements may describe the Collateral in the same
manner as described herein or may contain an indication or description of
collateral that describes such property in any other manner as the Secured
Party may determine, in its sole discretion, is necessary, advisable or prudent
to ensure the perfection of the security interest in the Collateral granted to
the Secured Party herein, including, without limitation, describing such
property as “all assets other than the excluded assets” or other substantially
similar descriptions.  Each Debtor shall
furnish to the Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party may reasonably request, all in
reasonable detail.


 


(c)                                  Each Debtor
hereby authorizes the Secured Party to modify this Agreement after obtaining
such Debtor’s approval of or signature to such modification by amending Schedule B
of the Diligence Certificate (as such schedule may be amended or
supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Debtor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Debtor no longer has or claims any right, title or interest


 


(d)                                 Unless (i) the
Secured Party shall have failed to comply with Section 9-513(c) of
the UCC with respect to any Debtor, (ii) otherwise permitted under Section 4.1(b)(iii)(b) to
ensure the continued effectiveness of any UCC financing statement relating to
such Debtor or (iii) otherwise required under Section 5.1(a) to
ensure the continued effectiveness of any UCC financing statement relating to
such Debtor or perfect the security interest of the Secured Party hereunder in
any Collateral of such Debtor, such Debtor agrees not to file any termination
statements, amendments, corrections or supplements relative to the UCC
financing statements filed in connection with this Agreement without the prior
written consent of the Secured Party.


 


5.2                               Additional
Debtors.  From time to time
subsequent to the date hereof, Subsidiary Guarantors (as defined in the
Indenture) may become additional Debtors pursuant to the terms of the
Indenture, by executing a Supplement to Security Agreement, substantially in
the form attached hereto as Exhibit A.  Upon delivery of any such counterpart
agreement to the Secured Party, notice of which is hereby waived by Debtors, (a) each
additional Debtor shall be a Debtor and shall be as fully a party hereto as if
additional Debtor were an original signatory hereto and (b) the
supplemental schedules thereto shall be incorporated into and become a part of
and supplement the respective schedules to this Agreement; and each reference
to such Schedules shall mean and be a reference to such Schedules as
supplemented pursuant to each Supplement to Security Agreement.  Each Debtor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Debtor hereunder, nor by any election of
Secured Party not to cause any Restricted Subsidiary of the Company to become
an additional Debtor hereunder.  This
Agreement shall be fully effective as to any Debtor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Debtor hereunder.


 


6.                                      ATTORNEY-IN-FACT


 


6.1                               Power
of Attorney.  Each Debtor hereby
irrevocably appoints the Secured Party (such appointment being coupled with an
interest) as such Debtor’s attorney-in-fact, with full authority in the


 


21





















 


place and stead of such Debtor and in the name of such
Debtor, the Secured Party, from time to time in its discretion to take any
action and to execute any instrument that it may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement and the Intercreditor
Agreement, including, without limitation, the following:


 


(a)                                  upon the
occurrence and during the continuance of any Event of Default, to obtain and
adjust insurance required to be maintained by such Debtor pursuant to the
Indenture;


 


(b)                                 upon the
occurrence and during the continuance of any Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;


 


(c)                                  upon the
occurrence and during the continuance of any Event of Default, to receive,
endorse and collect any drafts or other instruments, documents and chattel
paper in connection with clause (b) above subject in all respects to the
rights of any lender under the Credit Agreement to receive, endorse and collect
the same;


 


(d)                                 upon the
occurrence and during the continuance of any Event of Default, to file any
claims or take any action or institute any proceedings necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of the Secured Party with respect to any of the Collateral;


 


(e)                                  to prepare
and file any UCC financing statements against such Debtor as debtor;


 


(f)                                    to prepare,
sign, and file for recordation in any intellectual property registry,
appropriate evidence of the lien and security interest granted herein in the
Intellectual Property in the name of such Debtor as assignor;


 


(g)                                 to take or
cause to be taken all actions necessary to perform or comply or cause performance
or compliance with the terms of this Agreement, including, without limitation,
access to pay or discharge taxes or Liens (other than Permitted Liens) levied
or placed upon or threatened against the Collateral, the legality or validity
thereof and the amounts necessary to discharge the same, any such payments made
by the Secured Party to become obligations of such Debtor to the Secured Party,
due and payable immediately without demand;


 


(h)                                 upon the
occurrence and during the continuance of any Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Secured Party
were the absolute owner thereof for all purposes, and to do, at the Secured
Party’s option and such Debtor’s expense, at any time or from time to time, all
acts and things that the Secured Party deems reasonably necessary to protect,
preserve or realize upon the Collateral and the Secured Party’s security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Debtor might do; and


 


(i)                                     upon the
occurrence and during the continuance of any Event of Default, to enforce all
Supporting Obligations with respect to any Collateral.


 


6.2                               No
Duty on the Part of Secured Party. 
The powers conferred on the Secured Party hereunder are solely to
protect the interests of the Secured Party in the Collateral and shall not
impose any duty upon the Secured Party to exercise any such powers.  The Secured Party shall be accountable only
for amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its


 


22





















 


officers,
directors, employees or agents shall be responsible to any Debtor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.


 


7.                                      REMEDIES


 


7.1                               Generally.


 


(a)                                  If any Event
of Default shall have occurred and be continuing, the Secured Party may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it at law or in equity,
all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) to collect, enforce
or satisfy any Secured Obligations then owing, whether by acceleration or
otherwise, and also may pursue any of the following separately, successively or
simultaneously:


 


(i)                                     require any Debtor to, and each
Debtor hereby agrees that it shall at its expense and promptly upon request of
the Secured Party forthwith, assemble all or part of the Collateral as directed
by the Secured Party and make it available to the Secured Party at a place to
be designated by the Secured Party that is reasonably convenient to both
parties;


 


(ii)                                  enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process;


 


(iii)                               prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent the Secured
Party deems appropriate;


 


(iv)                              without notice except as specified
below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive
basis) or otherwise dispose of the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Secured Party’s offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as the Secured Party may
deem commercially reasonable; and


 


(b)                                 The Secured
Party may be a purchaser of any or all of the Collateral at any public or, to
the extent permitted under the UCC, private sale in accordance with the UCC and
the Secured Party, as Secured Party for and representative of the Holders,
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any such
sale made in accordance with the UCC, to use and apply any of the Secured
Obligations of such Debtor as a credit on account of the purchase price for any
Collateral payable by the Secured Party at such sale.  To the extent provided under the UCC or other
applicable law, each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Debtor and Debtor hereby waives (to the extent permitted by applicable law)
all rights of redemption stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted until payment in full of the Obligations.  Each Debtor agrees that, to the extent notice
of sale shall be required by law, at least ten (10) days notice to such
Debtor of the time and place of any public or private sale shall constitute
reasonable notification.  The Secured
Party shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given.  The
Secured Party may


 


23





















 


adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor and by notice to the Company, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned.  Each Debtor hereby waives any
claims against the Secured Party arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if the Secured
Party accepts the first offer received and does not offer such Collateral to
more than one offeree.  If the proceeds
of any sale or other disposition of the Collateral of any Debtor are insufficient
to pay all the Secured Obligations of such Debtor, such Debtor shall be liable
for the deficiency and the fees of any attorneys employed by the Secured Party
to collect such deficiency.  Each Debtor
further agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to the Secured Party, that the Secured Party has no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section shall be specifically
enforceable against such Debtor, and such Debtor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated
maturities.  Nothing in this Section shall
in any way alter the rights of the Secured Party hereunder.


 


(c)                                  The Secured
Party may sell the Collateral following the occurrence and during the
continuance of an Event of Default without giving any warranties as to the
Collateral.  The Secured Party may
specifically disclaim or modify, in its sole discretion, any warranties of
title or the like as to any Collateral. 
This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of any of the Collateral.  The Secured Party may comply with any
applicable state or federal law requirements in connection with a disposition
of the Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.  Leasing and licensing of Collateral by the
Secured Party to third Persons are types of sales permitted hereunder.


 


(d)                                 If the
Secured Party sells any of the Collateral of any Debtor on credit, the Secured
Obligations of such Debtor will be credited only with payments actually made by
the purchaser and received by the Secured Party and applied to the indebtedness
of the purchaser.  In the event the
purchaser fails to pay for the Collateral, the Secured Party may resell the
Collateral.


 


(e)                                  The Secured
Party shall have no obligation to marshal any of the Collateral.


 


(f)                                    All amounts
and proceeds (including checks and other instruments) received by any Debtor in
respect of amounts due to such Debtor in respect of the Collateral or any
portion thereof following the occurrence and during the continuance of an Event
of Default shall be received in trust for the benefit of the Secured Party
hereunder, shall be segregated from other funds of such Debtor and shall be
forthwith paid over or delivered (subject to the Intercreditor Agreement to the
extent then in effect) to the Secured Party in the same form as so received
(with any necessary endorsement) to be held as cash Collateral and applied as
provided by Section 7.5 following the occurrence and during the
continuance of an Event of Default.  Upon
demand from the Secured Party following the occurrence and during the
continuance of an Event of Default, Debtors shall not adjust, settle or compromise
the amount or payment of any such amount or release wholly or partly any
obligor with respect thereto or allow any credit or discount thereon.


 


7.2                               Application
of Proceeds.  Except as expressly
provided elsewhere in this Agreement, all Proceeds received by the Secured
Party in respect of any sale, any collection from, or other realization upon
all or any part of the Collateral of any Debtor shall be applied in full or in
part by the Secured Party against the Secured Obligations of such Debtor in the
order specified in Section 6.10 of the Indenture.


 


24





















 


7.3                               Investment Related Property. 
Each Debtor recognizes that, by reason of certain prohibitions contained
in the Securities Act and applicable state securities laws, the Secured Party
may be compelled, with respect to any sale of all or any part of the Investment
Related Property conducted without prior registration or qualification of such
Investment Related Property under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof.  Each Debtor acknowledges that any such
private sale may be at prices and on terms less favorable than those obtainable
through a public sale without such restrictions (including a public offering
made pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances, each Debtor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner and
that the Secured Party shall have no obligation to engage in public sales and
no obligation to delay the sale of any Investment Related Property for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree
to so register it.  If the Secured Party
determines to exercise its right to sell any or all of the Investment Related
Property, upon written request, each Debtor shall and shall cause each issuer
of any Pledged Stock to be sold hereunder, each partnership and each limited
liability company from time to time to furnish to the Secured Party all such
information as the Secured Party may reasonably request in order to determine
the number and nature of interest, shares or other instruments included in the
Investment Related Property which may be sold by the Secured Party in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to
time in effect.  Notwithstanding any
other provision of this Agreement to the contrary, with respect to any deposit
accounts that constitute part of the Collateral, the Secured Party may only
exercise remedies with respect to such deposit accounts at the earliest of (i) the
date that an Event of Default shall be continuing for 180 consecutive days
after the delivery of written notice to the Company of such Event of Default
under the Indenture, (ii) the date on which a declaration of acceleration
has been made under Section 6.2 of the Indenture or an Event of Default
under Section 6.1(a)(xii) or (xiii) of the Indenture has occurred, and (iii) any
other date to the extent permitted under the Intercreditor Agreement at any
time the Intercreditor Agreement is in effect.


 


7.4                               Intellectual Property.


 


(a)                                  Anything
contained herein to the contrary notwithstanding, upon the occurrence and
during the continuation of an Event of Default:


 


(i)                                     the Secured Party shall have the
right (but not the obligation) to bring suit or otherwise commence any action
or proceeding in the name of any Debtor, the Secured Party or otherwise, in the
Secured Party’s sole discretion, to enforce any Intellectual Property, in which
event such Debtor shall, at the request of the Secured Party, do any and all
reasonable, lawful acts and execute any and all documents reasonably required
by the Secured Party in aid of such enforcement and such Debtor shall promptly,
upon demand, reimburse and indemnify the Secured Party as provided in Section 10
hereof in connection with the exercise of its rights under this Section, and,
to the extent that the Secured Party shall elect not to bring suit to enforce
any Intellectual Property as provided in this Section, each Debtor agrees to
use all reasonable measures, whether by action, suit, proceeding or otherwise,
to prevent the commercially material infringement of any of the material
Intellectual Property by others and for that purpose agrees to diligently


 


25





















 


maintain any action, suit or
proceeding against any Person so infringing as shall be reasonably necessary to
prevent such infringement;


 


(ii)                                  upon reasonable written demand from
the Secured Party, each Debtor shall grant, assign, convey or otherwise
transfer to the Secured Party all of such Debtor’s right, title and interest in
and to the Intellectual Property and shall execute and deliver to the Secured
Party such documents as are necessary or appropriate to carry out the intent
and purposes of this Agreement;


 


(iii)                               each Debtor agrees that such an
assignment and/or recording shall be applied to reduce the Secured Obligations
of such Debtor outstanding only to the extent that the Secured Party receives
cash proceeds in respect of the sale of, or other realization upon, the Intellectual
Property of such Debtor;


 


(iv)                              within five (5) Business Days
after written notice from the Secured Party, each Debtor shall make available
to the Secured Party, to the extent within such Debtor’s power and authority,
such personnel in such Debtor’s employ on the date of such Event of Default as
the Secured Party may reasonably designate, by name, title or job
responsibility, to permit such Debtor to continue, directly or indirectly, to
produce, advertise and sell the products and services sold or delivered by such
Debtor under or in connection with the Intellectual Property, such persons to
be available to perform their prior functions on the Secured Party’s behalf and
to be compensated by the Secured Party at such Debtor’s expense on a per diem,
pro-rata basis consistent with the salary and benefit structure applicable to
each as of the date of such Event of Default; and


 


(v)                                 the Secured Party shall have the
right to notify, or require each Debtor to notify, any obligors with respect to
amounts due or to become due to such Debtor in respect of the Intellectual
Property, of the existence of the security interest created herein, to direct
such obligors to make payment of all such amounts directly to the Secured
Party, and, upon such notification and at the expense of such Debtor, to
enforce collection of any such amounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Debtor might have done.


 


(b)                                 If (i) an
Event of Default shall have occurred and, by reason of cure, waiver,
modification, amendment or otherwise, no longer be continuing, (ii) no
other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Secured Party of any rights, title and interests
in and to the Intellectual Property shall have been previously made and shall
have become absolute and effective, and (iv) the Secured Obligations shall
not have become immediately due and payable, upon the written request of any
Debtor, the Secured Party shall promptly execute and deliver to such Debtor, at
such Debtor’s sole cost and expense, such assignments or other transfer as may
be necessary to reassign to such Debtor any such rights, title and interests as
may have been assigned to the Secured Party as aforesaid, subject to any
disposition thereof that may have been made by the Secured Party; provided,
after giving effect to such reassignment, the Secured Party’s security interest
granted


 


26





















 


pursuant
hereto, as well as all other rights and remedies of the Secured Party granted
hereunder, shall continue to be in full force and effect; and provided further,
the rights, title and interests so reassigned shall be free and clear of any
Liens granted by or on behalf of the Secured Party.


 


(c)                                  Solely for
the purpose of enabling the Secured Party to exercise rights and remedies under
this Section 7 following the occurrence and during the continuance of an
Event of Default, each Debtor hereby grants to the Secured Party, to the extent
it has the right to do so, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Debtor), subject, in
the case of Trademarks, to sufficient rights to quality control and inspection
in favor of such Debtor to avoid the risk of invalidation of said Trademarks,
to use, operate under, license, or sublicense any Intellectual Property now
owned or hereafter acquired by such Debtor, and wherever the same may be
located.


 


7.5                               Cash
Proceeds.  Cash Proceeds shall,
following the occurrence and during the continuance of an Event of Default, be
held by such Debtor in trust for the Secured Party, segregated from other funds
of such Debtor, and shall, forthwith upon receipt by such Debtor, unless
otherwise provided pursuant to Section 4.4, be turned over to the Secured
Party in the exact form received by such Debtor (duly indorsed by such Debtor
to the Secured Party, if required).  Any
Cash Proceeds received by the Secured Party (whether from a Debtor or
otherwise), following the occurrence and during the continuance of an Event of
Default, shall be applied by the Secured Party in accordance with Section 7.2.


 


7.6                               Regulatory
Matters.  The Secured Party
acknowledges and agrees that the approval of the applicable Gaming Authorities
of this Agreement shall not act or be construed as the approval, either express
or implied, for the Secured Party to take any actions or steps provided for in
this Agreement for which prior approval of such Gaming Authority is required,
without first obtaining such prior and separate approval to the extent then
required by applicable law.


 


8.                                      CONTINUING SECURITY INTEREST;
TRANSFER OF NOTES


 


This Agreement shall create a continuing security
interest in the Collateral and shall remain in full force and effect until the
payment in full of all Secured Obligations, be binding upon each Debtor, its
successors and assigns (except to the extent otherwise provided in the
Indenture), and inure, together with the rights and remedies of the Secured
Party hereunder, to the benefit of the Secured Party and its successors,
transferees and assigns.  Without
limiting the generality of the foregoing, but subject to the terms of the
Indenture, any Holder may assign or otherwise transfer any Note held by it to
any other Person to the extent permitted under the Indenture, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to the Holders.  Upon the payment
in full of all Secured Obligations, the security interest granted hereby shall
terminate hereunder and all rights to the Collateral granted hereunder shall
revert to Debtors.  Upon any such
termination the Secured Party shall, at Debtors’ expense, execute and deliver
to Debtors such documents as Debtors shall reasonably request to evidence such
termination.


 


9.                                      STANDARD OF CARE; SECURED PARTY MAY PERFORM


 


The powers conferred on the Secured Party hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. 
Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. 
The Secured Party shall be deemed to have exercised reasonable care in
the custody and


 


27





















 


preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Secured Party accords its own
property.  Neither the Secured Party nor
any of its directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Debtor or otherwise.  If any Debtor fails to perform any agreement
contained herein, the Secured Party may itself perform, or cause performance
of, such agreement, and the expenses of the Secured Party incurred in
connection therewith shall be payable by each Debtor under Section 11.2
hereof.


 


10.                               INDEMNITY


 


(a)                                  Each Debtor
agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay
and hold harmless each Indemnitee, from and against any and all claims, losses
and liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including without
limitation enforcement of this Agreement), except to the extent such claims,
losses or liabilities result from such Indemnitee’s gross negligence or willful
misconduct as finally and unappeallably determined by a court of competent
jurisdiction, and to pay to the Secured Party promptly following written demand
the amount of any and all reasonable costs and reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents
in accordance with the terms and conditions of the Indenture.


 


(b)                                 The
obligations of each Debtor in this Section 10 shall survive the
termination of this Agreement and the discharge of such Debtor’s other
obligations under this Agreement and the Indenture.


 


11.                               MISCELLANEOUS


 


11.1                        Notices.  Unless
otherwise specifically provided herein, any notice or other communication
herein required or permitted to be given to a Debtor or the Secured Party,
shall be sent to such Person’s address and in the manner as set forth in the
Indenture.


 


11.2                        Expenses.  Debtors
agree to pay promptly all the actual and reasonable costs and expenses of
preparation of the Indenture Documents and any consents, amendments, waivers or
other modifications thereto; all the costs of furnishing all opinions by
counsel for the Debtors; the reasonable fees, expenses and disbursements of
counsel to Secured Party (in each case including allocated costs of internal
counsel) in connection with the negotiation, preparation, execution and
administration of the Indenture Documents and any consents, amendments, waivers
or other modifications thereto and any other documents or matters requested by
Debtors; all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Secured Party, for the benefit of the Holders,
including filing and recording fees, expenses and taxes, stamp or documentary
taxes, search fees, title insurance premiums and reasonable fees, expenses and
disbursements of counsel to Secured Party and of counsel providing any opinions
that Secured Party may reasonably request in respect of the Collateral or the
Liens created pursuant to the Indenture Documents; all the actual costs and
reasonable fees, expenses and disbursements of any auditors, accountants,
consultants or appraisers; all the actual costs and reasonable expenses
(including the reasonable fees, expenses and disbursements of any appraisers,
consultants, advisors and agents employed or retained by Secured Party and its
counsel) in connection with the custody or preservation of any of the
Collateral; and after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys’ fees (including allocated costs of
internal counsel), keeper’s fees and costs of settlement, incurred by Secured
Party in enforcing any Secured Obligations of or in collecting any payments due
from any Debtor hereunder or under the other Indenture Documents by


 


28





















 


reason of an Event of Default (including in connection
with the sale of, collection from, or other realization upon any of the
Collateral) or in connection with any refinancing or restructuring of the
credit arrangements provided hereunder in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy cases or proceedings.


 


11.3                        Subrogation.  Each Debtor further agrees to waive any and
all rights of subrogation it may have against any other Debtor upon the sale or
disposition of all or any portion of the Collateral by Secured Party pursuant
to the terms of this Agreement until all of the Secured Obligations have been
paid in full, and following the payment in full of all Secured Obligations, the
Secured Party agrees that, at such Debtor’s reasonable request, the Secured
Party will execute and deliver to such Debtor appropriate documents necessary
to evidence the transfer by subrogation to such Debtor of an interest in the
Secured Obligations resulting from such payment by such Debtor.


 


11.4                        Debtor
Waivers.  Each Debtor hereby waives
to the fullest extent permitted by applicable law, for the benefit of Secured
Party: (i) any right to require Secured Party, as a condition of payment
or performance by such Debtor, to (A) proceed against any other Debtor or
any other Person, (B) proceed against or exhaust any other security held
from any other Debtor or any other Person, (C) proceed against or have
resort to any balance of any deposit account or credit on the books of Secured
Party attributable to any other Debtor or any other Person, or (D) pursue
any other remedy in the power of Secured Party whatsoever, (ii) any
defense arising by reason of the incapacity, lack of authority or any
disability or other defense of any other Debtor including, without limitation,
any defense based on or arising out of the lack of validity or the
unenforceability of any of the Indenture Documents or any agreement or
instrument relating thereto or by reason of the cessation of the liability of
any other Debtor from any cause other than indefeasible payment in full of the
Secured Obligations; (iii) any defense based upon any statute or rule of
law which provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal; (iv) any
defense based upon Secured Party’s errors or omissions in the administration of
the Indenture Documents, except as a result of the gross negligence, bad faith
or willful misconduct of the Secured Party, (v) (A) any principles or
provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this Agreement and any legal or equitable discharge of such
Debtor’s obligations hereunder, (B) the benefit of any statute of
limitations affecting such Debtor’s liability hereunder or the enforcement
hereof, (C) any rights to set-offs, recoupments and counterclaims, and (D) promptness,
diligence and any requirement that Secured Party protect, secure, perfect or
insure any other security interest or lien or any property subject thereto; (vi) notices,
demands, presentments, protests, notices of dishonor and notices of any action
or inaction, notices of default under the Indenture Documents or any agreement
or instrument related thereto, notices of any renewal, extension or
modification of the Indenture Documents or any agreement related thereto,
notices of any extension of credit to any other Debtor and notices of any of
the matters referred to in this paragraph and any right to consent to any
thereof, and (vii) any defenses or benefits that may be derived from or
afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Agreement.


 


11.5                        Amendments and Waivers


 


(a)                                  Secured
Party’s Consent.  Subject to Section 11.5(b) and
11.5(c) and the terms of the Indenture, no amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Debtor therefrom, shall in any event be effective without the
written concurrence of the Secured Party and, in the case of any such amendment
or modification, by each of the Debtors; provided, that this Agreement
may be modified by the execution of a Supplement to Security Agreement by (i) Subsidiary
Guarantors (as defined in the Indenture) to become parties hereto as Debtors in
accordance with Section 5.2 this Agreement and (ii) existing Debtors
pursuant to Section 4.1(b)(iii),


 


29





















 


4.4(b)(i),
4.5(b)(i), 4.6(b) or 4.7(b), and each other Debtor hereby waives any
requirement of notice of or consent to any such amendment.  Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.


 


(b)                                 Other
Consents.  No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Debtor therefrom, shall amend, modify, terminate or waive any
provision herein as the same applies to Secured Party without the consent of
the Secured Party except as provided in accordance with the Indenture.


 


(c)                                  Waiver.   Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.  No notice to or demand on any
Debtor in any case shall entitle any Debtor to any other or further notice or
demand in similar or other circumstances.


 


11.6                        Successors
and Assigns.   This Agreement shall be binding upon the
parties hereto and their respective successors and assigns including all
persons who become bound as debtor to this Agreement.  No Debtor shall, except as permitted under
the Indenture, assign any right, duty or obligation hereunder. This Agreement
is for the benefit of the Secured Party and for such other Person or Persons as
may from time to time become or be Holders, and this Agreement shall be
transferrable with the same force and effect and to the same extent as the
Secured Obligations may be transferrable, and the Collateral shall secure any
and all of the then existing and thereafter arising Secured Obligations in
favor of such a transferee that has effectuated such transfer in accordance
with the terms of the Indenture, with retroactive rank.


 


11.7                        Independence
of Covenants.  All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.


 


11.8                        Survival
of Representations, Warranties and Agreements.  All representations, warranties and
agreements made herein shall survive the execution and delivery hereof.  Notwithstanding anything herein or implied by
law to the contrary, the agreements of each Debtor set forth in Sections 10 and
11.2 shall survive the payment of the Secured Obligations and the termination
hereof.


 


11.9                        No Waiver;
Remedies Cumulative.  No failure or
delay on the part of the Secured Party in the exercise of any power, right or
privilege hereunder or under any other Indenture Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege.  All
rights, powers and remedies existing under this Agreement and the other
Indenture Documents are cumulative, and not exclusive of, any rights or
remedies otherwise available. Any forbearance or failure to exercise, and any
delay in exercising, any right, power or remedy hereunder shall not impair any
such right, power or remedy or be construed to be a waiver thereof, nor shall
it preclude the further exercise of any such right, power or remedy.  Without limiting the generality of the
foregoing, each Debtor waives any right such Debtor may have to require the
Secured Party and the Holders to pursue any third Person for any of the Secured
Obligations.


 


11.10                 Severability.  In case any provision in or obligation
hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.


 


30





















 


11.11                 Headings.  Section headings herein are included
herein for convenience of reference only and shall not constitute a part hereof
for any other purpose or be given any substantive effect.


 


11.12                 APPLICABLE LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW), EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.


 


11.13                 SUBMISSION TO
JURISDICTION.  ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY DEBTOR ARISING OUT OF OR RELATING HERETO OR ANY
OTHER INDENTURE DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY
OF NEW YORK.  BY EXECUTING AND DELIVERING
THIS AGREEMENT, EACH DEBTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY SUBMITS TO AND ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;  WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;  AGREES THAT SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE DEBTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 11.1; 
AGREES THAT SERVICE AS PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE APPLICABLE DEBTOR IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT; AND AGREES SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE
COURTS OF ANY OTHER JURISDICTION HAVING JURISDICTION OVER SUCH DEBTOR.


 


11.14                 Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one and
the same instrument.


 


11.15                 Gaming Laws.  The Secured Party acknowledges, understands
and agrees that the Gaming 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.


 


(a)                                  If any
consent under the Gaming Laws is required in connection with the taking of any
of the actions which may be taken by the Secured Party in the exercise of its
rights hereunder, then each Debtor agrees to use its commercially reasonable
best efforts to secure such consent and to cooperate with the Secured Party in
obtaining any such consent.  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 Secured
Party may be required to file in order to obtain any necessary approvals under
the Gaming Laws, and if such Debtor fails or refuses to execute such documents,
the Secured Party or the court with jurisdiction may execute such documents on
behalf of such Debtor.


 


31





















 


(b)                                 Notwithstanding
any other provision of this Agreement to the contrary other than as set forth
in Section 7.5, 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.


 


(c)                                  Debtors and
Secured Party each acknowledge that the Gaming Licenses held by the Company are
not part of the Collateral of this Agreement and that, under the above
described legislation and rules promulgated thereunder, Secured Party may
be precluded from or otherwise limited in taking possession of or selling the
Collateral of this Agreement under the Defaults and Remedies provisions of this
Agreement.  Debtors and Secured Party
each also acknowledge that due to various legal restrictions, including,
without limitation, licensing of operators of pari-mutuel wagering facilities
and prior approval of the sale or disposition of assets of a licensed
pari-mutuel wagering operation, the sale of Collateral may be denied by Gaming
Authorities or delayed pending Gaming Authority action or approval.


 


11.16                 Effectiveness.  Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
the Secured Party of written or telephonic notification of such execution and
authorization of delivery thereof.


 


11.17                 Entire Agreement.  This Agreement, the other Indenture Documents
and the Intercreditor Agreement embody the entire agreement and understanding
between the Debtors and the Secured Party and supersede all prior agreements
and understandings between such parties relating to the subject matter hereof
and thereof.  Accordingly, the Indenture
Documents and the Intercreditor Agreement may not be contradicted by evidence
of prior, contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements
between the parties.


 


11.18                 The Mortgages.  In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of
any Mortgage and the terms of such Mortgage are inconsistent with the terms of
this Agreement, then with respect to such Collateral, the terms of such
Mortgage shall be controlling in the case of fixtures and leases, letting and
licenses of, and contracts and agreements relating to real property or leases
of real property and vessels registered with the U.S. Coast Guard, and the
terms of this Agreement shall be controlling in the case of all other
Collateral.


 


11.19                 Indenture Controls.  All terms, covenants, conditions, provisions
and requirements of the Indenture are incorporated by reference in this
Agreement.   In the event of any conflict
or inconsistency between the provisions of this Agreement and those of the
Indenture, including, without limitation, any conflicts or inconsistencies in
any definitions herein or therein, the provisions or definitions of the
Indenture shall govern.


 


11.20                 Trust Indenture Act Controls.  If any provision of this Agreement limits,
qualifies or conflicts with the duties imposed by the Trust Indenture Act of
1939 as in effect on the date of this Agreement, the imposed duties shall
control.


 


32





















 


IN WITNESS WHEREOF, each Debtor
and the Secured Party have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date
first written above.


 


	
   

  	
  DEBTORS:

  
	
   

  	
  DIAMOND
  JO WORTH, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:
   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIAMOND
  JO WORTH CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIAMOND
  JO WORTH HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURED PARTY:

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as Trustee,

  as Secured Party

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   /s/ Richard H. Prokosch

  	
   

  
	
   

  	
   

  	
  Name:
  Richard H. Prokosch

  
	
   

  	
   

  	
  Title:  Vice President

  
					



 





















 


EXHIBIT A


TO PLEDGE AND
SECURITY AGREEMENT


 


FORM OF SUPPLEMENT TO SECURITY AGREEMENT


 


This
SUPPLEMENT TO SECURITY AGREEMENT, dated [                
    , 20    ], is delivered by the
undersigned in favor of U.S. Bank National Association, as Trustee (together
with any successor Trustee pursuant to the terms of the Indenture, the “Secured  Party”), acting
in the capacity of collateral agent for the benefit of itself and the Holders,
pursuant to the Pledge and Security Agreement, dated as of July 15, 2005
(as it may be from time to time amended, restated, modified or supplemented,
the “Security Agreement”), among Diamond Jo
Worth, LLC, a Delaware limited liability company (the “Company”),
Diamond Jo Worth Corp., a Delaware corporation (“DJW Corp.”
and, together with the Company, the “Issuers”),
Diamond Jo Worth Holdings, LLC, a Delaware limited liability company (“Parent”), and each Subsidiary Guarantor (as defined in the
Indenture referred to therein) from time to time party thereto pursuant to Section 5.2
thereof, and the Secured Party. 
Capitalized terms used herein not otherwise defined herein shall have
the meanings ascribed thereto in the Security Agreement.


 


The
undersigned [hereby confirms, as of the date first written above, the grant to
the Secured Party set forth in the Security Agreement](1) [does hereby grant to
the Secured Party a security interest in, all of the undersigned’s right, title
and interest in and to all Collateral to secure the Secured Obligations of the
undersigned, in each case whether now or hereafter existing or in which the undersigned
now has or hereafter acquires an interest and wherever the same may be located](2).  The undersigned hereby further agrees, as of
the date first written above, to [continue to] be bound by all of the terms and
provisions of the Security Agreement, as supplemented by this Supplement to
Security Agreement.  The undersigned
hereby makes all of the representations and warranties set forth in the
Security Agreement, and hereby represents and warrants that the attached
supplements to Schedules accurately and completely set forth all [additional]
information required pursuant to the Security Agreement and hereby agrees that
such Supplements to Schedules shall constitute part of the schedules to the
Security Agreement.


 


IN
WITNESS WHEREOF, the undersigned has caused this Supplement to Security
Agreement to be duly executed and delivered by its duly authorized officer.


 


	
   

  	
  [NAME OF DEBTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Natalie Schramm

  	
   

  
	
   

  	
   

  	
  Name:
  Natalie Schramm

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  



 


 










(1)  Use bracketed language for
existing Debtor.


(2)  Use bracketed language for
new Debtor.


 


A-1





















 


	
  ACCEPTED AND AGREED TO
  BY:

  
	
  U.S. BANK NATIONAL
  ASSOCIATION,

  
	
  as Trustee, as Secured
  Party

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


A-2





















 


EXHIBIT B


TO PLEDGE AND
SECURITY AGREEMENT


 


FORM OF CONTROL AGREEMENT (SECURITIES ACCOUNTS)


 


[ATTACH SECURITIES CONTROL AGREEMENT]


 


B-1





















 


EXHIBIT C


TO PLEDGE AND
SECURITY AGREEMENT


 


FORM OF CONTROL AGREEMENT (DEPOSIT ACCOUNTS)


 


[ATTACH DEPOSIT ACCOUNT CONTROL AGREEMENT]


 


C-1