Document:

Solaris Power Cells, Inc.: Exhibit 10.1 - Filed by newsfilecorp.com

SOLARIS POWER CELLS, INC. 
2013 EQUITY INCENTIVE
PLAN 

1.       
Purpose; Eligibility. 

1.1              General
Purpose. The name of this plan is Solaris Power Cells, Inc. 2013 Equity
Incentive Plan (the “Plan”). The purposes of the Plan are to (a) enable
Solaris Power Cells, Inc., a Nevada corporation (the “Company”), and any
Affiliate to attract and retain the types of Employees, Consultants and
Directors who will contribute to the Company’s long range success; (b) provide
incentives that align the interests of Employees, Consultants and Directors with
those of the shareholders of the Company; and (c) promote the success of the
Company’s business. 

1.2             
Eligible Award Recipients. The persons eligible to receive Awards are the
Employees, Consultants and Directors of the Company and its Affiliates and such
other individuals designated by the Committee who are reasonably expected to
become Employees, Consultants and Directors after the receipt of Awards. 

1.3             
Available Awards. Awards that may be granted under the Plan include: (a)
Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation
Rights, (d) Restricted Awards and (e) Performance Compensation Awards. 

2.       
Definitions.

           
“Affiliate” means a corporation or other entity that, directly
or through one or more intermediaries, controls, is controlled by or is under
common control with, the Company. 

           
“Applicable Laws” means the requirements related to or implicated by the
administration of the Plan under applicable state corporate law, United States
federal and state securities laws, the Code, any stock exchange or quotation
system on which the shares of Common Stock are listed or quoted, and the
applicable laws of any foreign country or jurisdiction where Awards are granted
under the Plan. 

           
“Award” means any right granted under the Plan, including an Incentive
Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a
Restricted Award, or a Performance Compensation Award. 

           
“Award Agreement” means a written agreement, contract, certificate or
other instrument or document evidencing the terms and conditions of an
individual Award granted under the Plan which may, in the discretion of the
Company, be transmitted electronically to any Participant. Each Award Agreement
shall be subject to the terms and conditions of the Plan. 

           
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), such “person” shall be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning. 

-2-

           
“Board” means the Board of Directors of the Company, as
constituted at any time. 

           
“Cause” means: With respect to any Employee or Consultant: 

	 	(a) 	
      If the Employee or Consultant is a party to an employment
      or service agreement with the Company or its Affiliates and such agreement
      provides for a definition of Cause or other similar term, the definition
      contained therein; or

	 	 	 
	 	(b) 	
      If no such agreement exists, or if such agreement does
      not define Cause or other similar term: (i) the commission of, or plea of
      guilty or no contest to, a felony or a crime involving moral turpitude or
      the commission of any other act involving willful malfeasance or material
      fiduciary breach with respect to the Company or an Affiliate; (ii) conduct
      that results in or is reasonably likely to result in harm to the
      reputation or business of the Company or any of its Affiliates; (iii)
      gross negligence or willful misconduct with respect to the Company or an
      Affiliate; or (iv) material violation of state or federal securities
      laws.

With respect to any Director, a
determination by a majority of the disinterested Board members that the Director
has engaged in any of the following: 

	 	(a) 	
      malfeasance in office;

	 	 	 
	 	(b) 	
      gross misconduct or neglect;

	 	 	 
	 	(c) 	
      false or fraudulent misrepresentation inducing the
      director’s appointment;

	 	 	 
	 	(d) 	
      wilful conversion of corporate funds; or

	 	 	 
	 	(e) 	
      repeated failure to participate in Board meetings on a
      regular basis despite having received proper notice of the meetings in
      advance.

The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to
whether a Participant has been discharged for Cause. 

           
“Code” means the Internal Revenue Code of 1986, as it may be amended from
time to time. Any reference to a section of the Code shall be deemed to include
a reference to any regulations promulgated thereunder. 

           
“Committee” means the Board or a committee of one or more members of the
Board appointed by the Board to administer the Plan in accordance with Section
3.3 and Section 3.4. 

           
“Common Stock” means the common stock, $0.001 par value per share, of the
Company, the preferred stock, $0.001 par value per share, of the Company, or
such other securities of the Company as may be designated by the Committee from
time to time in substitution thereof. 

           
“Company” means Solaris Power Cells, Inc., a Nevada corporation,
and any successor thereto. 

-3-

           
“Consultant” means any individual who is engaged by the Company
or any Affiliate to render consulting or advisory services. 

           
“Continuous Service” means that the Participant’s service with
the Company or an Affiliate, whether as an Employee, Consultant or Director, is
not interrupted or terminated. The Participant’s Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant’s Continuous Service; provided further that if any Award is
subject to Section 409A of the Code, this sentence shall only be given effect to
the extent consistent with Section 409A of the Code. For example, a change in
status from an Employee of the Company to a Director of an Affiliate will not
constitute an interruption of Continuous Service. The Committee or its delegate,
in its sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal or family
leave of absence. 

           
“Covered Employee” has the same meaning as set forth in Section
162(m)(3) of the Code, as interpreted by Internal Revenue Service. 

           
“Director” means a member of the Board. 

           
“Disability” means that the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment; provided, however, for purposes of determining
the term of an Incentive Stock Option pursuant to Section 6.9 hereof, the term
Disability shall have the meaning ascribed to it under Section 22(e)(3) of the
Code. The determination of whether an individual has a Disability shall be
determined under procedures established by the Committee. Except in situations
where the Committee is determining Disability for purposes of the term of an
Incentive Stock Option pursuant to Section 6.9 hereof within the meaning of
Section 22(e)(3) of the Code, the Committee may rely on any determination that a
Participant is disabled for purposes of benefits under any long-term disability
plan maintained by the Company or any Affiliate in which a Participant
participates. 

           
“Disqualifying Disposition” has the meaning set forth in Section
13.11. 

           
“Effective Date” shall mean the date as of which this Plan is
adopted by the Board. 

           
“Employee” means any person, including an Officer or Director,
employed by the Company or an Affiliate; provided, that, for purposes of
determining eligibility to receive Incentive Stock Options, an Employee shall
mean an employee of the Company or a parent or subsidiary corporation within the
meaning of IRC Section 424. Mere service as a Director or payment of a
director’s fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an Affiliate. 

           
“Exchange Act” means the Securities Exchange Act of 1934, as
amended. 

           
“Fair Market Value” means, as of any date, the value of the
Common Stock as determined below. If the Common Stock is listed or quoted on any
established stock exchange or public market, including without limitation, the
New York Stock Exchange, the NASDAQ Stock Market, the OTC Bulletin Board
operated by the Financial Industry Regulatory Authority, or one of marketplaces
operated by the OTC Markets Group, the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were
reported the closing price on the date immediately preceding such date) as
quoted on such exchange or public market on the day of determination, as
reported in the source as the Committee deems reliable. In the absence of an
established market for the Common Stock, the Fair Market Value shall be
determined in good faith by the Committee and such determination shall be
conclusive and binding on all persons. 

-4-

           
“Free Standing Rights” has the meaning set forth in Section
7.1(a). 

           
“Good Reason” means: 

	 	(a) 	
      If an Employee or Consultant is a party to an employment
      or service agreement with the Company or its Affiliates and such agreement
      provides for a definition of Good Reason or other similar term, the
      definition contained therein; or

	 	 	 
	 	(b) 	
      If no such agreement exists or if such agreement does not
      define Good Reason, the occurrence of one or more of the following without
      the Participant’s express written consent, which circumstances are not
      remedied by the Company within thirty (30) days of its receipt of a
      written notice from the Participant describing the applicable
      circumstances (which notice must be provided by the Participant within
      ninety (90) days of the Participant’s knowledge of the applicable
      circumstances): (i) any material, adverse change in the Participant’s
      duties, responsibilities, authority, title, status or reporting structure;
      combined with (ii) a material reduction in the Participant’s base salary
      or bonus opportunity.

           
“Grant Date” means the date on which the Committee adopts a
resolution, or takes other appropriate action, expressly granting an Award to a
Participant that specifies the key terms and conditions of the Award or, if a
later date is set forth in such resolution, then such date as is set forth in
such resolution. 

           
“Incentive Stock Option” means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code. 

           
“Incumbent Directors” means individuals who, on the Effective
Date, constitute the Board, provided that any individual becoming a Director
subsequent to the Effective Date whose election or nomination for election to
the Board was approved by a vote of at least two- thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
Director without objection to such nomination) shall be an Incumbent Director.
No individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to Directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Director. 

           
“Negative Discretion” means the discretion authorized by the
Plan to be applied by the Committee to eliminate or reduce the size of a
Performance Compensation Award in accordance with Section 7.3(d)(iv) of the
Plan; provided, that, the exercise of such discretion would not cause the
Performance Compensation Award to fail to qualify as “performance- based
compensation” under Section 162(m) of the Code. 

           
“Non-Employee Director” means a Director who is a “non-employee
director” within the meaning of Rule 16b-3. 

-5-

           
“Non-qualified Stock Option” means an Option that by its terms
does not qualify or is not intended to qualify as an Incentive Stock Option.

           
“Officer” means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder. 

           
“Option” means an Incentive Stock Option or a Non-qualified
Stock Option granted pursuant to the Plan. 

           
“Optionholder” means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option. 

           
“Option Exercise Price” means the price at which a share of
Common Stock may be purchased upon the exercise of an Option. 

           
“Outside Director” means a Director who is an “outside director”
within the meaning of Section 162(m) of the Code and Treasury Regulations
Section 1.162 -27(e)(3) or any successor to such statute and regulation. 

           
“Participant” means an eligible person to whom an Award is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Award. 

           
“Performance Compensation Award” means any Award designated by
the Committee as a Performance Compensation Award pursuant to Section 7.3 of the
Plan. 

           
“Performance Criteria” means the criterion or criteria that the
Committee shall select for purposes of establishing the Performance Goal(s) for
a Performance Period with respect to any Performance Compensation Award under
the Plan. The Performance Criteria that will be used to establish the
Performance Goal(s) shall be based on the attainment of specific levels of
performance of the Company (or Affiliate, division, business unit or operational
unit of the Company) and shall be limited to the following: 

	 	(a) 	
      net earnings or net income (before or after
  taxes);

	 	 	 
	 	(b) 	
      basic or diluted earnings per share (before or after
      taxes);

	 	 	 
	 	(c) 	
      net revenue or net revenue growth;

	 	 	 
	 	(d) 	
      gross revenue;

	 	 	 
	 	(e) 	
      gross profit or gross profit growth;

	 	 	 
	 	(f) 	
      net operating profit (before or after taxes);

	 	 	 
	 	(g) 	
      return on assets, capital, invested capital, equity, or
      sales;

	 	 	 
	 	(h) 	
      cash flow (including, but not limited to, operating cash
      flow, free cash flow, and cash flow return on capital);

	 	 	 
	 	(i) 	
      earnings before or after taxes, interest, depreciation
      and/or amortization;

	 	 	 
	 	(j) 	
      gross or operating margins;

-6-

	 	(k) 	
      improvements in capital structure;

	 	 	 
	 	(l) 	
      budget and expense management;

	 	 	 
	 	(m) 	
      productivity ratios;

	 	 	 
	 	(n) 	
      economic value added or other value added
      measurements;

	 	 	 
	 	(o) 	
      share price (including, but not limited to, growth
      measures and total shareholder return);

	 	 	 
	 	(p) 	
      expense targets;

	 	 	 
	 	(q) 	
      margins;

	 	 	 
	 	(r) 	
      operating efficiency;

	 	 	 
	 	(s) 	
      working capital targets;

	 	 	 
	 	(t) 	
      enterprise value;

	 	 	 
	 	(u) 	
      safety record; and

	 	 	 
	 	(v) 	
      completion of acquisitions or business
  expansion.

Any one or more of the Performance Criteria may be used on an
absolute or relative basis to measure the performance of the Company and/or an
Affiliate as a whole or any division, business unit or operational unit of the
Company and/or an Affiliate or any combination thereof, as the Committee may
deem appropriate, or as compared to the performance of a group of comparable
companies, or published or special index that the Committee, in its sole
discretion, deems appropriate, or the Committee may select Performance Criterion
(o) above as compared to various stock market indices. The Committee also has
the authority to provide for accelerated vesting of any Award based on the
achievement of Performance Goals pursuant to the Performance Criteria specified
in this paragraph. To the extent required under Section 162 (m) of the Code, the
Committee shall, within the first 90 days of a Performance Period (or, if longer
or shorter, within the maximum period allowed under Section 162(m) of the Code),
define in an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period. In the event that
applicable tax and/or securities laws change to permit the Committee discretion
to alter the governing Performance Criteria without obtaining shareholder
approval of such changes, the Committee shall have sole discretion to make such
changes without obtaining shareholder approval. 

           
“Performance Formula” means, for a Performance Period, the one
or more objective formulas applied against the relevant Performance Goal to
determine, with regard to the Performance Compensation Award of a particular
Participant, whether all, some portion but less than all, or none of the
Performance Compensation Award has been earned for the Performance Period. 

-7-

            “Performance Goals” means, for a Performance Period, the one or
more goals established by the Committee for the Performance Period based upon
the Performance Criteria. The Committee is authorized at any time during the
first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under
Section 162(m) of the Code), or at any time thereafter (but only to the extent
the exercise of such authority after such period would not cause the Performance
Compensation Awards granted to any Participant for the Performance Period to
fail to qualify as “performance-based compensation” under Section 162(m) of the
Code), in its sole and absolute discretion, to adjust or modify the calculation
of a Performance Goal for such Performance Period to the extent permitted under
Section 162(m) of the Code in order to prevent the dilution or enlargement of
the rights of Participants based on the following events: 

	 	(a) 	
      asset write-downs;

	 	 	 
	 	(b) 	
      litigation or claim judgments or settlements;

	 	 	 
	 	(c) 	
      the effect of changes in tax laws, accounting principles,
      or other laws or regulatory rules affecting reported results;

	 	 	 
	 	(d) 	
      any reorganization and restructuring programs;

	 	 	 
	 	(e) 	
      extraordinary nonrecurring items as described in
      Accounting Principles Board Opinion No. 30 (or any successor or
      pronouncement thereto) and/or in management’s discussion and analysis of
      financial condition and results of operations appearing in the Company’s
      annual report to shareholders for the applicable year;

	 	 	 
	 	(f) 	
      acquisitions or divestitures;

	 	 	 
	 	(g) 	
      any other specific unusual or nonrecurring events, or
      objectively determinable category thereof;

	 	 	 
	 	(h) 	
      foreign exchange gains and losses; and

	 	 	 
	 	(i) 	
      a change in the Company’s fiscal
year.

           
“Performance Period” means the one or more periods of time not
less than one fiscal quarter in duration, as the Committee may select, over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant’s right to and the payment of a Performance
Compensation Award. 

-8-

           
“Permitted Transferee” means: 

	 	(a) 	
      a member of the Optionholder’s immediate family (child,
      stepchild, grandchild, parent, stepparent, grandparent, spouse, former
      spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
      daughter-in-law, brother-in-law, or sister- in-law, including adoptive
      relationships), any person sharing the Optionholder’s household (other
      than a tenant or employee), a trust in which these persons have more than
      50% of the beneficial interest, a foundation in which these persons (or
      the Optionholder) control the management of assets, and any other entity
      in which these persons (or the Optionholder) own more than 50% of the
      voting interests;

	 	 	 
	 	(b) 	
      third parties designated by the Committee in connection
      with a program established and approved by the Committee pursuant to which
      Participants may receive a cash payment or other consideration in
      consideration for the transfer of a Non-qualified Stock Option;
  and

	 	 	 
	 	(c) 	
      such other transferees as may be permitted by the
      Committee in its sole discretion.

           
“Plan” means this Solaris Power Cells, Inc. 2013 Equity
Incentive Plan, as amended and/or amended and restated from time to time. 

           
“Related Rights” has the meaning set forth in Section 7.1(a).

           
“Restricted Award” means any Award granted pursuant to Section
7.2(a). 

           
“Restricted Period” has the meaning set forth in Section 7.2(a)
.. 

           
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time. 

           
“Securities Act” means the Securities Act of 1933, as amended.

           
“Stock Appreciation Right” means the right pursuant to an Award
granted under Section 7.1 to receive, upon exercise, an amount payable in cash
or shares equal to the number of shares subject to the Stock Appreciation Right
that is being exercised multiplied by the excess of (a) the Fair Market Value of
a share of Common Stock on the date the Award is exercised, over (b) the
exercise price specified in the Stock Appreciation Right Award Agreement. 

           
“Stock for Stock Exchange” has the meaning set forth in Section
6.3. 

           
“Ten Percent Shareholder” means a person who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates. 

3.      
 Administration.

3.1                    
Authority of Committee. The Plan shall be administered initially by the
Board, except that the Board may, in its discretion, establish a committee
composed of two (2) or more members of the Board to administer the Plan, which committee
may be an executive, compensation or other committee, including a separate
committee especially created for this purpose. Subject to the terms of the Plan,
the Committee’s charter and Applicable Laws, and in addition to other express
powers and authorization conferred by the Plan, the Committee shall have the
authority: 

-9-

	 	(a) 	
      to construe and interpret the Plan and apply its
      provisions;

	 	 	 
	 	(b) 	
      to promulgate, amend, and rescind rules and regulations
      relating to the administration of the Plan;

	 	 	 
	 	(c) 	
      to authorize any person to execute, on behalf of the
      Company, any instrument required to carry out the purposes of the
    Plan;

	 	 	 
	 	(d) 	
      to delegate its authority to one or more Officers of the
      Company with respect to Awards that do not involve Covered Employees or
      “insiders” within the meaning of Section 16 of the Exchange Act;

	 	 	 
	 	(e) 	
      to determine when Awards are to be granted under the Plan
      and the applicable Grant Date;

	 	 	 
	 	(f) 	
      from time to time to select, subject to the limitations
      set forth in this Plan, those Participants to whom Awards shall be
      granted;

	 	 	 
	 	(g) 	
      to determine the number of shares of Common Stock to be
      made subject to each Award;

	 	 	 
	 	(h) 	
      to determine whether each Option is to be an Incentive
      Stock Option or a Non- qualified Stock Option;

	 	 	 
	 	(i) 	
      to prescribe the terms and conditions of each Award,
      including, without limitation, the exercise price and medium of payment
      and vesting provisions, and to specify the provisions of the Award
      Agreement relating to such grant;

	 	 	 
	 	(j) 	
      to designate an Award (including a cash bonus) as a
      Performance Compensation Award and to select the Performance Criteria that
      will be used to establish the Performance Goals;

	 	 	 
	 	(k) 	
      to amend any outstanding Awards, including for the
      purpose of modifying the time or manner of vesting, or the term of any
      outstanding Award; provided, however, that if any such amendment impairs a
      Participant’s rights or increases a Participant’s obligations under his or
      her Award or creates or increases a Participant’s federal income tax
      liability with respect to an Award, such amendment shall also be subject
      to the Participant’s consent;

	 	 	 
	 	(l) 	
      to determine the duration and purpose of leaves of
      absences which may be granted to a Participant without constituting
      termination of their employment for purposes of the Plan, which periods
      shall be no shorter than the periods generally applicable to Employees
      under the Company’s employment policies;

-10-

	 	(m) 	
      to make decisions with respect to outstanding Awards that
      may become necessary upon a change in corporate control or an event that
      triggers anti- dilution adjustments;

	 	 	 
	 	(n) 	
      to interpret, administer, reconcile any inconsistency in,
      correct any defect in and/or supply any omission in the Plan and any
      instrument or agreement relating to, or Award granted under, the Plan;
      and

	 	 	 
	 	(o) 	
      to exercise discretion to make any and all other
      determinations which it determines to be necessary or advisable for the
      administration of the Plan.

The Committee also may modify the purchase price or the
exercise price of any outstanding Award, provided that if the modification
effects a repricing, shareholder approval shall be required before the repricing
is effective. 

3.2                    
Committee Decisions Final. All decisions made by the Committee pursuant
to the provisions of the Plan shall be final and binding on the Company and the
Participants, unless such decisions are determined by a court having
jurisdiction to be arbitrary and capricious. 

3.3                    
Delegation. The Committee, or if no Committee has been appointed, the
Board, may delegate administration of the Plan to a committee or committees of
one or more members of the Board, and the term “Committee” shall apply to
any person or persons to whom such authority has been delegated. The Committee
shall have the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board or the Committee shall thereafter be to the committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. The members of the Committee shall be appointed by
and serve at the pleasure of the Board. From time to time, the Board may
increase or decrease the size of the Committee, add additional members to,
remove members (with or without cause) from, appoint new members in substitution
therefor, and fill vacancies, however caused, in the Committee. The Committee
shall act pursuant to a vote of the majority of its members or, in the case of a
Committee comprised of only two members, the unanimous consent of its members,
whether present or not, or by the written consent of the majority of its members
and minutes shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the limitations prescribed by the Plan and the
Board, the Committee may establish and follow such rules and regulations for the
conduct of its business as it may determine to be advisable. 

3.4                    
Committee Composition. If the Board establishes a committee to administer
the Plan, except as otherwise determined by the Board, the Committee shall
consist solely of two or more Non-Employee Directors who are also Outside
Directors. The Board shall have discretion to determine whether or not it
intends to comply with the exemption requirements of Rule 16b-3 and/or Section
162(m) of the Code. However, if the Board intends to satisfy such exemption
requirements, with respect to Awards to any Covered Employee and with respect to
any insider subject to Section 16 of the Exchange Act, the Committee shall be a
compensation committee of the Board that at all times consists solely of two or
more Non-Employee Directors who are also Outside Directors. Within the scope of
such authority, the Board or the Committee may (a) delegate to a committee of
one or more members of the Board who are not Outside Directors the authority to
grant Awards to eligible persons who are either (i) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Award or (ii) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code or (b) delegate to a
committee of one or more members of the Board who are not Non-Employee Directors
the authority to grant Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act. Nothing herein shall create an inference that an
Award is not validly granted under the Plan in the event Awards are granted
under the Plan by a compensation committee of the Board that does not at all
times consist solely of two or more Non-Employee Directors who are also Outside
Directors. 

-11-

3.5                    
  Indemnification. In addition to such other rights of indemnification as
they may have as Directors or members of the Committee, and to the extent
allowed by Applicable Laws, the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney’s fees, actually incurred in
connection with any action, suit or proceeding or in connection with any appeal
therein, to which the Committee may be party by reason of any action taken or
failure to act under or in connection with the Plan or any Award granted under
the Plan, and against all amounts paid by the Committee in settlement thereof
(provided, however, that the settlement has been approved by the Company, which
approval shall not be unreasonably withheld) or paid by the Committee in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee did not act in good faith and in a manner which
such person reasonably believed to be in the best interests of the Company, or
in the case of a criminal proceeding, had no reason to believe that the conduct
complained of was unlawful; provided, however, that within 60 days after
institution of any such action, suit or proceeding, such Committee shall, in
writing, offer the Company the opportunity at its own expense to handle and
defend such action, suit or proceeding. 

4.       
Shares Subject to the Plan.

4.1                    
Subject to adjustment in accordance with Section 11, a total of 10,000,000
shares of Common Stock shall be available for the grant of Awards under the
Plan. During the terms of the Awards, the Company shall keep available at all
times the number of shares of Common Stock required to satisfy such Awards. 

4.2                     Shares
of Common Stock available for distribution under the Plan may consist, in whole
or in part, of authorized and unissued shares, treasury shares or shares
reacquired by the Company in any manner. 

4.3                     Any
shares of Common Stock subject to an Award that is canceled, forfeited or
expires prior to exercise or realization, either in full or in part, shall again
become available for issuance under the Plan. Notwithstanding anything to the
contrary contained herein: shares subject to an Award under the Plan shall not
again be made available for issuance or delivery under the Plan if such shares
are (a) shares tendered in payment of an Option, (b) shares delivered or
withheld by the Company to satisfy any tax withholding obligation, or (c) shares
covered by a stock-settled Stock Appreciation Right or other Awards that were
not issued upon the settlement of the Award. 

5.       
Eligibility.

5.1                     Eligibility
for Specific Awards. Incentive Stock Options may be granted only to
Employees. Awards other than Incentive Stock Options may be granted to
Employees, Consultants and Directors and those individuals whom the Committee
determines are reasonably expected to become Employees, Consultants and
Directors following the Grant Date. 

-12-

5.2                    
  Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted
an Incentive Stock Option unless the Option Exercise Price is at least 110% of
the Fair Market Value of the Common Stock at the Grant Date and the Option is
not exercisable after the expiration of five years from the Grant Date. 

6.       
Option Provisions.

           
Each Option granted under the Plan shall be evidenced by an Award
Agreement. Each Option so granted shall be subject to the conditions set forth
in this Section 6, and to such other conditions not inconsistent with the Plan
as may be reflected in the applicable Award Agreement. All Options shall be
separately designated Incentive Stock Options or Non-qualified Stock Options at
the time of grant, and, if certificates are issued, a separate certificate or
certificates will be issued for shares of Common Stock purchased on exercise of
each type of Option. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if an Option designated as an
Incentive Stock Option fails to qualify as such at any time or if an Option is
determined to constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code and the terms of such Option do not satisfy the
requirements of Section 409A of the Code. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions: 

6.1                     Term.
Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders, no
Incentive Stock Option shall be exercisable after the expiration of 10 years
from the Grant Date. The term of a Non-qualified Stock Option granted under the
Plan shall be determined by the Committee; provided, however, no Non-qualified
Stock Option shall be exercisable after the expiration of 10 years from the
Grant Date. 

6.2                    
Exercise Price of an Incentive Stock Option. Subject to the provisions of
Section 5.2 regarding Ten Percent Shareholders, the Option Exercise Price of
each Incentive Stock Option shall be not less than 100% of the Fair Market Value
of the Common Stock subject to the Option on the Grant Date. Notwithstanding the
foregoing, an Incentive Stock Option may be granted with an Option Exercise
Price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code. 

6.3                    
Consideration. The Option Exercise Price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (a) in cash or by certified or bank check at
the time the Option is exercised or (b) in the discretion of the Committee, upon
such terms as the Committee shall approve, the Option Exercise Price may be
paid: (i) by delivery to the Company of other Common Stock, duly endorsed for
transfer to the Company, with a Fair Market Value on the date of delivery equal
to the Option Exercise Price (or portion thereof) due for the number of shares
being acquired, or by means of attestation whereby the Participant identifies
for delivery specific shares of Common Stock that have an aggregate Fair Market
Value on the date of attestation equal to the Option Exercise Price (or portion
thereof) and receives a number of shares of Common Stock equal to the difference
between the number of shares thereby purchased and the number of identified
attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a
“cashless” exercise program established with a broker; (iii) by reduction in the
number of shares of Common Stock otherwise deliverable upon exercise of such Option with a Fair
Market Value equal to the aggregate Option Exercise Price at the time of
exercise; (iv) any combination of the foregoing methods; or (v) in any other
form of legal consideration that may be acceptable to the Committee. Unless
otherwise specifically provided in the Option, the exercise price of Common
Stock acquired pursuant to an Option that is paid by delivery (or attestation)
to the Company of other Common Stock acquired, directly or indirectly from the
Company, shall be paid only by shares of the Common Stock of the Company that
have been held for more than six months (or such longer or shorter period of
time required to avoid a charge to earnings for financial accounting purposes).
Notwithstanding the foregoing, during any period for which the Common Stock is
publicly traded an exercise by a Director or Officer that involves or may
involve a direct or indirect extension of credit or arrangement of an extension
of credit by the Company, directly or indirectly, in violation of Section 402(a)
of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award
under this Plan. 

-13-

6.4                    
  Transferability of an Incentive Stock Option. An Incentive Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option. 

6.5                    
Transferability of a Non-qualified Stock Option. A Non-qualified Stock
Option may, in the sole discretion of the Committee, be transferable to a
Permitted Transferee, upon written approval by the Committee to the extent
provided in the Award Agreement. If the Non- qualified Stock Option does not
provide for transferability, then the Non-qualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option. 

6.6                    
Vesting of Options. Each Option may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not, be equal.
The Option may be subject to such other terms and conditions on the time or
times when it may be exercised (which may be based on performance or other
criteria) as the Committee may deem appropriate. The vesting provisions of
individual Options may vary. No Option may be exercised for a fraction of a
share of Common Stock. The Committee may, but shall not be required to, provide
for an acceleration of vesting and exercisability in the terms of any Award
Agreement upon the occurrence of a specified event. 

6.7                    
Termination of Continuous Service. Unless otherwise provided in an Award
Agreement or in an employment agreement the terms of which have been approved by
the Committee, in the event an Optionholder’s Continuous Service terminates
(other than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination) but only within such period
of time ending on the earlier of (a) the date three months following the
termination of the Optionholder’s Continuous Service or (b) the expiration of
the term of the Option as set forth in the Award Agreement; provided that, if
the termination of Continuous Service is by the Company for Cause, all
outstanding Options (whether or not vested) shall immediately terminate and
cease to be exercisable. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the
Award Agreement, the Option shall terminate. 

-14-

6.8                     Extension
of Termination Date. An Optionholder’s Award Agreement may also provide that
if the exercise of the Option following the termination of the Optionholder’s
Continuous Service for any reason would be prohibited at any time because the
issuance of shares of Common Stock would violate the registration requirements
under the Securities Act or any other state or federal securities law or the
rules of any securities exchange or interdealer quotation system, then the
Option shall terminate on the earlier of (a) the expiration of the term of the
Option in accordance with Section 6.1 or (b) the expiration of a period after
termination of the Participant’s Continuous Service that is three months after
the end of the period during which the exercise of the Option would be in
violation of such registration or other securities law requirements. 

6.9                    
Disability of Optionholder. Unless otherwise provided in an Award
Agreement, in the event that an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination), but only within such period of time
ending on the earlier of (a) the date 12 months following such termination or
(b) the expiration of the term of the Option as set forth in the Award
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified herein or in the Award Agreement, the Option
shall terminate. 

6.10                   
Death of Optionholder. Unless otherwise provided in an Award Agreement,
in the event an Optionholder’s Continuous Service terminates as a result of the
Optionholder’s death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death, but only within the period ending on the
earlier of (a) the date 12 months following the date of death or (b) the
expiration of the term of such Option as set forth in the Award Agreement. If,
after the Optionholder’s death, the Option is not exercised within the time
specified herein or in the Award Agreement, the Option shall terminate. 

6.11                   
Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds $100,000, the Options or portions thereof which exceed
such limit (according to the order in which they were granted) shall be treated
as Non-qualified Stock Options. 

7.       
Provisions of Awards Other Than Options.

7.1         
           Stock
Appreciation Rights. 

	 	(a) 	
      General. Each Stock Appreciation Right granted
      under the Plan shall be evidenced by an Award Agreement. Each Stock
      Appreciation Right so granted shall be subject to the conditions set forth
      in this Section 7.1, and to such other conditions not inconsistent with
      the Plan as may be reflected in the applicable Award Agreement. Stock
      Appreciation Rights may be granted alone (“Free Standing Rights”)
      or in tandem with an Option granted under the Plan (“Related
      Rights”).

-15-

	 	(b) 	
      Grant Requirements. Any Related Right that relates
      to a Non-qualified Stock Option may be granted at the same time the Option
      is granted or at any time thereafter but before the exercise or expiration
      of the Option. Any Related Right that relates to an Incentive Stock Option
      must be granted at the same time the Incentive Stock Option is
    granted.

	 	 	 
	 	(c) 	
      Term of Stock Appreciation Rights. The term of a
      Stock Appreciation Right granted under the Plan shall be determined by the
      Committee; provided, however, no Stock Appreciation Right shall be
      exercisable later than the tenth anniversary of the Grant Date.

	 	 	 
	 	(d) 	
      Vesting of Stock Appreciation Rights. Each Stock
      Appreciation Right may, but need not, vest and therefore become
      exercisable in periodic installments that may, but need not, be equal. The
      Stock Appreciation Right may be subject to such other terms and conditions
      on the time or times when it may be exercised as the Committee may deem
      appropriate. The vesting provisions of individual Stock Appreciation
      Rights may vary. No Stock Appreciation Right may be exercised for a
      fraction of a share of Common Stock. The Committee may, but shall not be
      required to, provide for an acceleration of vesting and exercisability in
      the terms of any Stock Appreciation Right upon the occurrence of a
      specified event.

	 	 	 
	 	(e) 	
      Exercise and Payment. Upon exercise of a Stock
      Appreciation Right, the holder shall be entitled to receive from the
      Company an amount equal to the number of shares of Common Stock subject to
      the Stock Appreciation Right that is being exercised multiplied by the
      excess of (i) the Fair Market Value of a share of Common Stock on the date
      the Award is exercised, over (ii) the exercise price specified in the
      Stock Appreciation Right or related Option. Payment with respect to the
      exercise of a Stock Appreciation Right shall be made on the date of
      exercise. Payment shall be made in the form of shares of Common Stock
      (with or without restrictions as to substantial risk of forfeiture and
      transferability, as determined by the Committee in its sole discretion),
      cash or a combination thereof, as determined by the Committee.

	 	 	 
	 	(f) 	
      Exercise Price. The exercise price of a Free
      Standing Stock Appreciation Right shall be determined by the Committee. A
      Related Right granted simultaneously with or subsequent to the grant of an
      Option and in conjunction therewith or in the alternative thereto shall
      have the same exercise price as the related Option, shall be transferable
      only upon the same terms and conditions as the related Option, and shall
      be exercisable only to the same extent as the related Option; provided,
      however, that a Stock Appreciation Right, by its terms, shall be
      exercisable only when the Fair Market Value per share of Common Stock
      subject to the Stock Appreciation Right and related Option exceeds the
      exercise price per share thereof and no Stock Appreciation Rights may be
      granted in tandem with an Option unless the Committee determines that the
      requirements of Section 7.1(b) are satisfied.

	 	 	 
	 	(g) 	
      Reduction in the Underlying Option Shares. Upon
      any exercise of a Related Right, the number of shares of Common Stock for
      which any related Option shall be exercisable shall be reduced by the
      number of shares for which the Stock Appreciation Right has been
      exercised. The number of shares of Common
Stock for which a Related Right shall be exercisable shall be
      reduced upon any exercise of any related Option by the number of shares of
  Common Stock for which such Option has been exercised.

-16-

	7.2 	
      Restricted Awards.

	 	(a) 	
      General. A Restricted Award is an Award of actual
      shares of Common Stock (“Restricted Stock”) or hypothetical Common
      Stock units (“Restricted Stock Units”) having a value equal to the
      Fair Market Value of an identical number of shares of Common Stock, which
      may, but need not, provide that such Restricted Award may not be sold,
      assigned, transferred or otherwise disposed of, pledged or hypothecated as
      collateral for a loan or as security for the performance of any obligation
      or for any other purpose for such period (the “Restricted Period”)
      as the Committee shall determine. Each Restricted Award granted under the
      Plan shall be evidenced by an Award Agreement. Each Restricted Award so
      granted shall be subject to the conditions set forth in this Section 7.2,
      and to such other conditions not inconsistent with the Plan as may be
      reflected in the applicable Award Agreement.

	 	 	 	 
	 	(b) 	
      Restricted Stock and Restricted Stock
  Units.

	 	 	 	 
	 		(i) 	
      Each Participant granted Restricted Stock shall execute
      and deliver to the Company an Award Agreement with respect to the
      Restricted Stock setting forth the restrictions and other terms and
      conditions applicable to such Restricted Stock. If the Committee
      determines that the Restricted Stock shall be held by the Company or in
      escrow rather than delivered to the Participant pending the release of the
      applicable restrictions, the Committee may require the Participant to
      additionally execute and deliver to the Company (A) an escrow agreement
      satisfactory to the Committee, if applicable and (B) the appropriate blank
      stock power with respect to the Restricted Stock covered by such
      agreement. If a Participant fails to execute an agreement evidencing an
      Award of Restricted Stock and, if applicable, an escrow agreement and
      stock power, the Award shall be null and void. Subject to the restrictions
      set forth in the Award, the Participant generally shall have the rights
      and privileges of a shareholder as to such Restricted Stock, including the
      right to vote such Restricted Stock and the right to receive dividends;
      provided that, any cash dividends and stock dividends with respect to the
      Restricted Stock shall be withheld by the Company for the Participant’s
      account, and interest may be credited on the amount of the cash dividends
      withheld at a rate and subject to such terms as determined by the
      Committee. The cash dividends or stock dividends so withheld by the
      Committee and attributable to any particular share of Restricted Stock
      (and earnings thereon, if applicable) shall be distributed to the
      Participant in cash or, at the discretion of the Committee, in shares of
      Common Stock having a Fair Market Value equal to the amount of such
      dividends, if applicable, upon the release of restrictions on such share
      and, if such share is forfeited, the Participant shall have no right to
      such dividends.

	 	 	 	 
	 		(ii) 	
      The terms and conditions of a grant of Restricted Stock
      Units shall be reflected in an Award Agreement. No shares of Common Stock
      shall be issued at the time a Restricted Stock
Unit is granted, and the Company will not be required to set aside a fund for
the payment of any such Award. A Participant shall have no voting rights with
respect to any Restricted Stock Units granted hereunder. At the discretion of
the Committee, each Restricted Stock Unit (representing one share of Common
Stock) may be credited with cash and stock dividends paid by the Company in
respect of one share of Common Stock (“Dividend Equivalents”). Dividend
Equivalents shall be withheld by the Company for the Participant’s account, and
interest may be credited on the amount of cash Dividend Equivalents withheld at
a rate and subject to such terms as determined by the Committee. Dividend
Equivalents credited to a Participant’s account and attributable to any
particular Restricted Stock Unit (and earnings thereon, if applicable) shall be
distributed in cash or, at the discretion of the Committee, in shares of Common
Stock having a Fair Market Value equal to the amount of such Dividend
Equivalents and earnings, if applicable, to the Participant upon settlement of
such Restricted Stock Unit and, if such Restricted Stock Unit is forfeited, the
Participant shall have no right to such Dividend Equivalents. 

-17-

	 	(c) 	
      Restrictions

	 	 	 	 
	 		(i) 	
      Restricted Stock awarded to a Participant shall be
      subject to the following restrictions until the expiration of the
      Restricted Period, and to such other terms and conditions as may be set
      forth in the applicable Award Agreement: (A) if an escrow arrangement is
      used, the Participant shall not be entitled to delivery of the stock
      certificate; (B) the shares shall be subject to the restrictions on
      transferability set forth in the Award Agreement; (C) the shares shall be
      subject to forfeiture to the extent provided in the applicable Award
      Agreement; and (D) to the extent such shares are forfeited, the stock
      certificates shall be returned to the Company, and all rights of the
      Participant to such shares and as a shareholder with respect to such
      shares shall terminate without further obligation on the part of the
      Company.

	 	 	 	 
	 		(ii) 	
      Restricted Stock Units awarded to any Participant shall
      be subject to (A) forfeiture until the expiration of the Restricted
      Period, and satisfaction of any applicable Performance Goals during such
      period, to the extent provided in the applicable Award Agreement, and to
      the extent such Restricted Stock Units are forfeited, all rights of the
      Participant to such Restricted Stock Units shall terminate without further
      obligation on the part of the Company and (B) such other terms and
      conditions as may be set forth in the applicable Award
Agreement.

	 	 	 	 
	 		(iii) 	
      The Committee shall have the authority to remove any or
      all of the restrictions on the Restricted Stock and Restricted Stock Units
      whenever it may determine that, by reason of changes in Applicable Laws or
      other changes in circumstances arising after the date the Restricted Stock
      or Restricted Stock Units are granted, such action is
  appropriate.

-18-

	 	(d) 	
      Restricted Period. With respect to Restricted
      Awards, the Restricted Period shall commence on the Grant Date and end at
      the time or times set forth on a schedule established by the Committee in
      the applicable Award Agreement.

No Restricted Award may be granted or settled for a fraction of
a share of Common Stock. The Committee may, but shall not be required to,
provide for an acceleration of vesting in the terms of any Award Agreement upon
the occurrence of a specified event. 

	 	(e) 	
      Delivery of Restricted Stock and Settlement of
      Restricted Stock Units. Upon the expiration of the Restricted Period
      with respect to any shares of Restricted Stock, the restrictions set forth
      in Section 7.2(c) and the applicable Award Agreement shall be of no
      further force or effect with respect to such shares, except as set forth
      in the applicable Award Agreement. If an escrow arrangement is used, upon
      such expiration, the Company shall deliver to the Participant, or his or
      her beneficiary, without charge, the stock certificate evidencing the
      shares of Restricted Stock which have not then been forfeited and with
      respect to which the Restricted Period has expired (to the nearest full
      share) and any cash dividends or stock dividends credited to the
      Participant’s account with respect to such Restricted Stock and the
      interest thereon, if any. Upon the expiration of the Restricted Period
      with respect to any outstanding Restricted Stock Units, the Company shall
      deliver to the Participant, or his or her beneficiary, without charge, one
      share of Common Stock for each such outstanding Restricted Stock Unit
      (“Vested Unit”) and cash equal to any Dividend Equivalents credited
      with respect to each such Vested Unit in accordance with Section
      7.2(b)(ii) hereof and the interest thereon or, at the discretion of the
      Committee, in shares of Common Stock having a Fair Market Value equal to
      such Dividend Equivalents and the interest thereon, if any; provided,
      however, that, if explicitly provided in the applicable Award Agreement,
      the Committee may, in its sole discretion, elect to pay cash or part cash
      and part Common Stock in lieu of delivering only shares of Common Stock
      for Vested Units. If a cash payment is made in lieu of delivering shares
      of Common Stock, the amount of such payment shall be equal to the Fair
      Market Value of the Common Stock as of the date on which the Restricted
      Period lapsed with respect to each Vested Unit.

	 	 	 
	 	(f) 	
      Stock Restrictions. Each certificate representing
      Restricted Stock awarded under the Plan shall bear a legend in such form
      as the Company deems appropriate.

7.3                    
Performance Compensation Awards. 

	 	(a) 	
      General. The Committee shall have the authority,
      at the time of grant of any Award described in this Plan (other than
      Options and Stock Appreciation Rights granted with an exercise price equal
      to or greater than the Fair Market Value per share of Common Stock on the
      Grant Date), to designate such Award as a Performance Compensation Award
      in order to qualify such Award as “performance-based compensation” under
      Section 162(m) of the Code. In addition, the Committee shall have the
      authority to make an Award of a cash bonus to any Participant and
      designate such Award as a Performance Compensation Award in order to
      qualify such Award as “performance-based compensation” under Section
      162(m) of the Code.

-19-

	 	(b) 	
      Eligibility. The Committee will, in its sole
      discretion, designate within the first 90 days of a Performance Period
      (or, if longer or shorter, within the maximum period allowed under Section
      162(m) of the Code) which Participants will be eligible to receive
      Performance Compensation Awards in respect of such Performance Period.
      However, designation of a Participant eligible to receive an Award
      hereunder for a Performance Period shall not in any manner entitle the
      Participant to receive payment in respect of any Performance Compensation
      Award for such Performance Period. The determination as to whether or not
      such Participant becomes entitled to payment in respect of any Performance
      Compensation Award shall be decided solely in accordance with the
      provisions of this Section 7.3. Moreover, designation of a Participant
      eligible to receive an Award hereunder for a particular Performance Period
      shall not require designation of such Participant eligible to receive an
      Award hereunder in any subsequent Performance Period and designation of
      one person as a Participant eligible to receive an Award hereunder shall
      not require designation of any other person as a Participant eligible to
      receive an Award hereunder in such period or in any other
period.

	 	 	 	 
	 	(c) 	
      Discretion of Committee with Respect to Performance
      Compensation Awards. With regard to a particular Performance Period,
      the Committee shall have full discretion to select the length of such
      Performance Period (provided any such Performance Period shall be not less
      than one fiscal quarter in duration), the type(s) of Performance
      Compensation Awards to be issued, the Performance Criteria that will be
      used to establish the Performance Goal(s), the kind(s) and/or level(s) of
      the Performance Goal(s) that is (are) to apply to the Company and the
      Performance Formula. Within the first 90 days of a Performance Period (or,
      if longer or shorter, within the maximum period allowed under Section
      162(m) of the Code), the Committee shall, with regard to the Performance
      Compensation Awards to be issued for such Performance Period, exercise its
      discretion with respect to each of the matters enumerated in the
      immediately preceding sentence of this Section 7.3(c) and record the same
      in writing.

	 	 	 	 
	 	(d) 	
      Payment of Performance Compensation
  Awards

	 	 	 	 
	 		(i) 	
      Condition to Receipt of Payment. Unless otherwise
      provided in the applicable Award Agreement, a Participant must be employed
      by the Company on the last day of a Performance Period to be eligible for
      payment in respect of a Performance Compensation Award for such
      Performance Period.

	 	 	 	 
	 		(ii) 	
      Limitation. A Participant shall be eligible to
      receive payment in respect of a Performance Compensation Award only to the
      extent that: (A) the Performance Goals for such period are achieved; and
      (B) the Performance Formula as applied against such Performance Goals
      determines that all or some portion of such Participant’s Performance
      Compensation Award has been earned for the Performance Period.

	 	 	 	 
	 		(iii) 	
      Certification. Following the completion of a
      Performance Period, the Committee shall review and certify in writing
      whether, and to what extent, the Performance Goals for the Performance
      Period have been achieved and, if so, calculate and certify in writing the
      amount of the Performance Compensation Awards earned for the period based upon the
      Performance Formula. The Committee shall then determine the actual size of
      each Participant’s Performance Compensation Award for the Performance
      Period and, in so doing, may apply Negative Discretion in accordance with
Section 7.3(d)(iv) hereof, if and when it deems appropriate.

-20-

	 	(iv) 	
      Use of Discretion. In determining the actual size
      of an individual Performance Compensation Award for a Performance Period,
      the Committee may reduce or eliminate the amount of the Performance
      Compensation Award earned under the Performance Formula in the Performance
      Period through the use of Negative Discretion if, in its sole judgment,
      such reduction or elimination is appropriate. The Committee shall not have
      the discretion to (A) grant or provide payment in respect of Performance
      Compensation Awards for a Performance Period if the Performance Goals for
      such Performance Period have not been attained or (B) increase a
      Performance Compensation Award above the maximum amount payable under
      Section 7.3(d)(i) of the Plan.

	 	 	 
	 	(v) 	
      Timing of Award Payments. Performance Compensation
      Awards granted for a Performance Period shall be paid to Participants as
      soon as administratively practicable following completion of the
      certifications required by this Section 7.3.

8.       
Securities Law Compliance.

           
Each Award Agreement shall provide that no shares of Common Stock shall
be purchased or sold thereunder unless and until (a) any then applicable
requirements of state or federal laws and regulatory agencies have been fully
complied with to the satisfaction of the Company and its counsel and (b) if
required to do so by the Company, the Participant has executed and delivered to
the Company a letter of investment intent in such form and containing such
provisions as the Committee may require. The Company shall use reasonable
efforts to seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to grant Awards and
to issue and sell shares of Common Stock upon exercise of the Awards; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act the Plan, any Award or any Common Stock issued or issuable
pursuant to any such Award. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
Common Stock under the Plan, the Company shall be relieved from any liability
for failure to issue and sell Common Stock upon exercise of such Awards unless
and until such authority is obtained. 

9.        Use
of Proceeds from Stock.

            Proceeds
from the sale of Common Stock pursuant to Awards, or upon exercise thereof,
shall constitute general funds of the Company. 

10.     
Miscellaneous.

10.1                 
Acceleration of Exercisability and Vesting. The Committee shall have the
power to accelerate the time at which an Award may first be exercised or the
time during which an Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Award stating the time at which it
may first be exercised or the time during which it will vest. 

-21-

10.2                 
  Shareholder Rights. Except as provided in the Plan or an Award Agreement,
no Participant shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject to such Award
unless and until such Participant has satisfied all requirements for exercise of
the Award pursuant to its terms and no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions of other rights for which the record date is prior to the date
such Common Stock certificate is issued, except as provided in Section 11
hereof. 

10.3                
 No Employment or Other Service Rights. Nothing in the Plan
or any instrument executed or Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Award was granted or shall affect the
right of the Company or an Affiliate to terminate (a) the employment of an
Employee with or without notice and with or without Cause or (b) the service of
a Director pursuant to the By-laws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be. 

10.4                
 Transfer; Approved Leave of Absence. For purposes of the
Plan, no termination of employment by an Employee shall be deemed to result from
either (a) a transfer to the employment of the Company from an Affiliate or from
the Company to an Affiliate, or from one Affiliate to another, or (b) an
approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the Employee’s right to reemployment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Committee otherwise so provides
in writing, in either case, except to the extent inconsistent with Section 409A
of the Code if the applicable Award is subject thereto. 

10.5                 
Withholding Obligations. To the extent provided by the terms of
an Award Agreement and subject to the discretion of the Committee, the
Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Common Stock under an Award by any of
the following means (in addition to the Company’s right to withhold from any
compensation paid to the Participant by the Company) or by a combination of such
means: (a) tendering a cash payment; (b) authorizing the Company to withhold
shares of Common Stock from the shares of Common Stock otherwise issuable to the
Participant as a result of the exercise or acquisition of Common Stock under the
Award, provided, however, that no shares of Common Stock are withheld with a
value exceeding the minimum amount of tax required to be withheld by law; or (c)
delivering to the Company previously owned and unencumbered shares of Common
Stock of the Company. 

11.      
Adjustments Upon Changes in Stock.

            In
the event of changes in the outstanding Common Stock or in the capital structure
of the Company by reason of any stock or extraordinary cash dividend, stock
split, reverse stock split, an extraordinary corporate transaction such as any
recapitalization, reorganization, merger, consolidation, combination, exchange,
or other relevant change in capitalization occurring after the Grant Date of any
Award, Awards granted under the Plan and any Award Agreements, the exercise
price of Options and Stock Appreciation Rights and the maximum number of shares of Common Stock subject to all Awards stated
in Section 4 will be equitably adjusted or substituted, as to the number, price
or kind of a share of Common Stock or other consideration subject to such Awards
to the extent necessary to preserve the economic intent of such Award. In the
case of adjustments made pursuant to this Section 11, unless the Committee
specifically determines that such adjustment is in the best interests of the
Company or its Affiliates, the Committee shall, in the case of Incentive Stock
Options, ensure that any adjustments under this Section 11 will not constitute a
modification, extension or renewal of the Incentive Stock Options within the
meaning of Section 424(h)(3) of the Code and in the case of Non-qualified Stock
Options, ensure that any adjustments under this Section 11 will not constitute a
modification of such Non-qualified Stock Options within the meaning of Section
409A of the Code. Any adjustments made under this Section 11 shall be made in a
manner which does not adversely affect the exemption provided pursuant to Rule
16b-3 under the Exchange Act. Further, with respect to Awards intended to
qualify as “performance-based compensation” under Section 162(m) of the Code,
any adjustments or substitutions will not cause the Company to be denied a tax
deduction on account of Section 162(m) of the Code. The Company shall give each
Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes. 

-22-

12.      Amendment of the
Plan and Awards.

12.1                
 Amendment of Plan. The Board at any time, and from time to
time, may amend or terminate the Plan. However, except as provided in Section 11
relating to adjustments upon changes in Common Stock and Section 12.3, no
amendment shall be effective unless approved by the shareholders of the Company
to the extent shareholder approval is necessary to satisfy any Applicable Laws.
At the time of such amendment, the Board shall determine, upon advice from
counsel, whether such amendment will be contingent on shareholder approval. 

12.2                
 Shareholder Approval. The Board may, in its sole
discretion, submit any other amendment to the Plan for shareholder approval,
including, but not limited to, amendments to the Plan intended to satisfy the
requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on
corporate deductibility of compensation paid to certain executive officers. 

12.3                
 Contemplated Amendments. It is expressly contemplated that
the Board may amend the Plan in any respect the Board deems necessary or
advisable to provide eligible Employees, Consultants and Directors with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options or to
the nonqualified deferred compensation provisions of Section 409A of the Code
and/or to bring the Plan and/or Awards granted under it into compliance
therewith. 

12.4                 
No Impairment of Rights. Rights under any Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(a) the Company requests the consent of the Participant and (b) the Participant
consents in writing. 

12.5                
 Amendment of Awards. The Committee at any time, and from
time to time, may amend the terms of any one or more Awards; provided, however,
that the Committee may not affect any amendment which would otherwise constitute
an impairment of the rights under any Award unless (a) the Company requests the
consent of the Participant and (b) the Participant consents in writing. 

-23-

13.      General
Provisions. 

13.1                
 Forfeiture Events. The Committee may specify in an Award
Agreement that the Participant’s rights, payments and benefits with respect to
an Award shall be subject to reduction, cancellation, forfeiture or recoupment
upon the occurrence of certain events, in addition to applicable vesting
conditions of an Award. Such events may include, without limitation, breach of
non-competition, non-solicitation, confidentiality, or other restrictive
covenants that are contained in the Award Agreement or otherwise applicable to
the Participant, a termination of the Participant’s Continuous Service for
Cause, or other conduct by the Participant that is detrimental to the business
or reputation of the Company and/or its Affiliates. 

13.2                 
Clawback. Notwithstanding any other provisions in this Plan, any
Award which is subject to recovery under any law, government regulation or stock
exchange listing requirement, will be subject to such deductions and clawback as
may be required to be made pursuant to such law, government regulation or stock
exchange listing requirement (or any policy adopted by the Company pursuant to
any such law, government regulation or stock exchange listing requirement). 

13.3                
 Other Compensation Arrangements. Nothing contained in this
Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to shareholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases. 

13.4                 
Sub-plans. The Committee may from time to time establish
sub-plans under the Plan for purposes of satisfying blue sky, securities, tax or
other laws of various jurisdictions in which the Company intends to grant
Awards. Any sub-plans shall contain such limitations and other terms and
conditions as the Committee determines are necessary or desirable. All sub-
plans shall be deemed a part of the Plan, but each sub-plan shall apply only to
the Participants in the jurisdiction for which the sub-plan was designed. 

13.5                
 Deferral of Awards. The Committee may establish one or
more programs under the Plan to permit selected Participants the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Participant to payment or receipt of shares of Common Stock or other
consideration under an Award. The Committee may establish the election
procedures, the timing of such elections, the mechanisms for payments of, and
accrual of interest or other earnings, if any, on amounts, shares or other
consideration so deferred, and such other terms, conditions, rules and
procedures that the Committee deems advisable for the administration of any such
deferral program. 

13.6                 
Unfunded Plan. The Plan shall be unfunded. Neither the Company,
the Board nor the Committee shall be required to establish any special or
separate fund or to segregate any assets to assure the performance of its
obligations under the Plan. 

13.7                
 Delivery. Upon exercise of a right granted under this
Plan, the Company shall issue Common Stock or pay any amounts due within a
reasonable period of time thereafter. Subject to any statutory or regulatory
obligations the Company may otherwise have, for purposes of this Plan, 30 days
shall be considered a reasonable period of time. 

13.8                
 No Fractional Shares. No fractional shares of Common Stock
shall be issued or delivered pursuant to the Plan. The Committee shall determine
whether cash, additional Awards or other securities or property shall be issued or paid in lieu
of fractional shares of Common Stock or whether any fractional shares should be
rounded, forfeited or otherwise eliminated. 

-24-

13.9                
 Other Provisions. The Award Agreements authorized under
the Plan may contain such other provisions not inconsistent with this Plan,
including, without limitation, restrictions upon the exercise of the Awards, as
the Committee may deem advisable. 

13.10               
 Section 409A. The Plan is intended to comply with Section
409A of the Code to the extent subject thereto, and, accordingly, to the maximum
extent permitted, the Plan shall be interpreted and administered to be in
compliance therewith. Any payments described in the Plan that are due within the
“short-term deferral period” as defined in Section 409A of the Code shall not be
treated as deferred compensation unless Applicable Laws require otherwise.
Notwithstanding anything to the contrary in the Plan, to the extent required to
avoid accelerated taxation and tax penalties under Section 409A of the Code,
amounts that would otherwise be payable and benefits that would otherwise be
provided pursuant to the Plan during the six (6) month period immediately
following the Participant’s termination of Continuous Service shall instead be
paid on the first payroll date after the six-month anniversary of the
Participant’s separation from service (or the Participant’s death, if earlier).
Notwithstanding the foregoing, neither the Company nor the Committee shall have
any obligation to take any action to prevent the assessment of any excise tax or
penalty on any Participant under Section 409A of the Code and neither the
Company nor the Committee will have any liability to any Participant for such
tax or penalty. 

13.11                
Disqualifying Dispositions. Any Participant who shall make a
“disposition” (as defined in Section 424 of the Code) of all or any portion of
shares of Common Stock acquired upon exercise of an Incentive Stock Option
within two years from the Grant Date of such Incentive Stock Option or within
one year after the issuance of the shares of Common Stock acquired upon exercise
of such Incentive Stock Option (a “Disqualifying Disposition”) shall be
required to immediately advise the Company in writing as to the occurrence of
the sale and the price realized upon the sale of such shares of Common Stock.

13.12                
Section 16. It is the intent of the Company that the Plan
satisfy, and be interpreted in a manner that satisfies, the applicable
requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act
so that Participants will be entitled to the benefit of Rule 16b-3, or any other
rule promulgated under Section 16 of the Exchange Act, and will not be subject
to short-swing liability under Section 16 of the Exchange Act. Accordingly, if
the operation of any provision of the Plan would conflict with the intent
expressed in this Section 13.12, such provision to the extent possible shall be
interpreted and/or deemed amended so as to avoid such conflict. 

13.13               
 Section 162(m). To the extent the Committee issues any
Award that is intended to be exempt from the deduction limitation of Section
162(m) of the Code, the Committee may, without shareholder or grantee approval,
amend the Plan or the relevant Award Agreement retroactively or prospectively to
the extent it determines necessary in order to comply with any subsequent
clarification of Section 162(m) of the Code required to preserve the Company’s
federal income tax deduction for compensation paid pursuant to any such Award.

13.14               
 Beneficiary Designation. Each Participant under the Plan
may from time to time name any beneficiary or beneficiaries by whom any right
under the Plan is to be exercised in case of such Participant’s death. Each
designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the
Committee and shall be effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime. 

-25-

13.15               
 Expenses. The costs of administering the Plan shall be
paid by the Company. 

13.16               
 Severability. If any of the provisions of the Plan or any
Award Agreement is held to be invalid, illegal or unenforceable, whether in
whole or in part, such provision shall be deemed modified to the extent, but
only to the extent, of such invalidity, illegality or unenforceability and the
remaining provisions shall not be affected thereby. 

13.17                
Plan Headings. The headings in the Plan are for purposes of
convenience only and are not intended to define or limit the construction of the
provisions hereof. 

13.18                
Non-Uniform Treatment. The Committee’s determinations under the
Plan need not be uniform and may be made by it selectively among persons who are
eligible to receive, or actually receive, Awards. Without limiting the
generality of the foregoing, the Committee shall be entitled to make non-uniform
and selective determinations, amendments and adjustments, and to enter into
non-uniform and selective Award Agreements. 

14.      Effective Date
of Plan.

            The
Plan shall become effective as of the Effective Date, but no Award shall be
exercised (or, in the case of a stock Award, shall be granted) unless and until
the Plan has been approved by the shareholders of the Company, which approval
shall be within twelve (12) months before or after the date the Plan is adopted
by the Board. 

15.      Termination or
Suspension of the Plan.

            The
Plan shall terminate automatically on October 23, 2023. No Award shall be
granted pursuant to the Plan after such date, but Awards theretofore granted may
extend beyond that date. The Board may suspend or terminate the Plan at any
earlier date pursuant to Section 12.1 hereof. No Awards may be granted under the
Plan while the Plan is suspended or after it is terminated. Unless the Company
determines to submit Section 7.3 of the Plan and the definition of “Performance
Goal” and “Performance Criteria” to the Company’s shareholders at the first
shareholder meeting that occurs in the fifth year following the year in which
the Plan was last approved by shareholders (or any earlier meeting designated by
the Board), in accordance with the requirements of Section 162(m) of the Code,
and such shareholder approval is obtained, then no further Performance
Compensation Awards shall be made to Covered Employees under Section 7.3 after
the date of such annual meeting, but the Plan may continue in effect for Awards
to Participants not in accordance with Section 162(m) of the Code. 

16.      Choice of
Law.

            The
law of the State of Nevada shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of law rules. 

As adopted by the Board of Directors of Solaris Power Cells,
Inc. on October 23, 2013.Exhibit 10.1

 

Execution Version

 

INCREMENTAL JOINDER AGREEMENT

 

Dated as of November 25, 2013

 

among

 

BALLY TECHNOLOGIES, INC.

 

as the Borrower

 

and

 

CERTAIN SUBSIDIARIES OF BALLY TECHNOLOGIES, INC.

 

as Loan Parties

 

and

 

BANK OF AMERICA, N.A.

 

as Administrative Agent

 

and

 

THE INCREMENTAL TERM LENDERS PARTY HERETO

 

WELLS FARGO SECURITIES, LLC
 J.P. MORGAN SECURITIES LLC
 MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
 GOLDMAN SACHS BANK USA
 and
 UNION BANK, N.A.

 

as Joint Lead Arrangers and Joint Book Managers

 

 

INCREMENTAL JOINDER AGREEMENT

 

THIS INCREMENTAL JOINDER AGREEMENT (this “Agreement”), dated as of November 25, 2013, is among BALLY TECHNOLOGIES, INC., a Nevada corporation (the “Borrower”), each Subsidiary of the Borrower listed on the signature pages hereto (together with the Borrower, the Acquired Company, SHFL International, LLC and SHFL Properties LLC, the “Loan Parties”), the Incremental Term B Lenders set forth in Schedule 1 hereto (the “Incremental Term B Lenders”), the Lead Arrangers listed on the signature pages hereto (the “Lead Arrangers”) and Bank of America, N.A., as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders under the Credit Agreement.

 

PRELIMINARY STATEMENTS:

 

(1)           The Borrower, the lenders party thereto and the Administrative Agent are parties to the Second Amended and Restated Credit Agreement dated as of April 19, 2013 (as subsequently amended by Amendment No. 1 on August 27, 2013) (the “Credit Agreement”).  Capitalized terms not otherwise defined in this Agreement have the same meanings as specified in the Credit Agreement.  Each reference herein to Subsidiaries of the Borrower or to Loan Parties shall mean and refer to the Subsidiaries of the Borrower and to Loan Parties after giving effect to the Acquisition (which, in the case of Loan Parties, shall include the Acquired Company and each one of its Subsidiaries that is required to become a Loan Party pursuant to the terms of the Credit Agreement).

 

(2)           The Borrower has requested that each Incremental Term B Lender provide a term loan commitment in the principal amount set forth opposite its name in Schedule 1 hereto in an aggregate principal amount of $1,100,000,000 (each such commitment, a “Term B Loan Commitment” and, collectively, the “Term B Loan Commitments”, and such Incremental Term Loans, the “Term B Loans”), and the Incremental Term B Lenders are willing to provide such Term B Loan Commitments and Term B Loans, subject in each case to the terms and conditions set forth herein.

 

(3)           The Loan Parties, the Incremental Term B Lenders and the Administrative Agent are entering into this Agreement in order to provide Incremental Term Loans to the Borrower in accordance with Section 2.15 of the Credit Agreement.

 

SECTION 1.        New Commitments and New Loans.  Pursuant to Section 2.15 of the Credit Agreement, and subject to the satisfaction of the conditions set forth in Section 3 hereof:

 

(a)     Each Incremental Term B Lender agrees, severally and not jointly, to make a single loan to the Borrower on the Acquisition Closing Date in a principal amount not to exceed its respective Term B Loan Commitment.

 

(b)     The Administrative Agent hereby approves of the Incremental Term B Lenders as “Incremental Term Lenders” for all purposes under the Credit Agreement and approves of the terms of the Term B Loans as set forth in Section 2 hereof.

 

SECTION 2.        Terms of the Term B Loans.  Pursuant to Section 2.15 of the Credit Agreement, the terms of the Term B Loans shall be as follows:

 

(a)   The aggregate principal amount of the Term B Loans and Term B Loan Commitments shall be $1,100,000,000.

 

(b)   The Maturity Date with respect to the Term B Loans shall be the date that is seven (7) years following the Acquisition Closing Date.

 

 

(c)   The Borrower shall pay to the Administrative Agent, for the account of the Incremental Term B Lenders, on the last Business Day of each March, June, September and December occurring prior to the Maturity Date of the Term B Loans, a principal amount of the Term B Loans (as adjusted from time to time pursuant to Section 2.05 of the Credit Agreement) equal to 0.25% of the original aggregate principal amount of the Term B Loans, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.

 

(d)   The Applicable Margin with respect to the Term B Loans shall be 3.25% per annum in the case of any Eurodollar Rate Loan that is a Term B Loan and 2.25% for any Base Rate Loan that is a Term B Loan.

 

(e)   Solely for the purposes of calculation of interest payable in respect of Term B Loans, the term “Base Rate” shall mean, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate”, (c) the Eurodollar Rate plus 1.00% and (d) 2.00%.  The “prime rate” is a rate set by Bank of America, N.A. based upon various factors including Bank of America, N.A.’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such prime rate announced by Bank of America, N.A. shall take effect at the opening of business on the day specified in the public announcement of such change.

 

(f)    Solely for the purposes of calculation of interest payable in respect of Term B Loans, the term “Eurodollar Rate” shall mean (a) for any Interest Period with respect to a Eurodollar Rate Loan, the higher of (i) 1.00% per annum and (ii) the rate per annum equal to the London Interbank Offered Rate (“LIBOR”) or a comparable or successor rate, which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, and (b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two London Banking Days prior to such date for Dollar deposits with a term of one month commencing that day; provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection with any rate set forth in this definition, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.

 

(g)   With respect to Obligations related to the Term B Loans, the term “Default Rate” shall mean (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans under the Term B Facility plus (iii) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum.

 

(h)   Notwithstanding anything herein or in the Credit Agreement to the contrary, in the event that, on or prior to the date which is six (6) months after the Acquisition Closing Date, there occurs (i) any Repricing Event or (ii) in connection with a Repricing Event constituting an amendment or conversion of Term B Loans, any Incremental Term Lender (as defined in the Credit Agreement) is required to assign its Term B Loans pursuant to the last paragraph of Section 10.01 of the Credit Agreement, the Borrower shall on the date of such Repricing Event pay to the Administrative Agent, for the account of each Incremental Term Lender (as defined in the Credit Agreement) with such Term B Loans that are subject to such Repricing Event or are required to be so assigned, a fee equal to 1.00% of the principal amount of the Term B Loans subject to such Repricing Event or required to be so assigned.

 

2

 

For purposes of this Section 2(h), “Repricing Event” shall mean (i) any prepayment or repayment of Term B Loans with the proceeds of, or any conversion or amendment (by way of amendment, amendment and restatement, mandatory assignment or otherwise) of Term B Loans into, any new or replacement tranche of term loans bearing interest with an “effective yield” less than the “effective yield” applicable to Term B Loans being prepaid or (ii) any repricings of the Term B Loans (whether pursuant to an amendment, amendment and restatement, mandatory assignment or otherwise) that reduces the “effective yield” applicable to the Term B Loans (with the “effective yield” in each case being determined after taking into account upfront fees, interest rate spreads, interest rate benchmarks floors and original interest discount (with original issue discount being equated to interest based on an assumed four-year life to maturity) but excluding the effect of any arrangement, structuring, syndication or other fees payable in connection therewith that are not shared with all lenders or holders of such new or replacement loans and without taking into account any fluctuations in the Eurodollar Rate or comparable rate).

 

(i)    Each (a) prepayment of Term B Loans from the proceeds of any Refinancing Term Facility shall be applied to the principal repayment installments thereof on a pro rata basis and (b) other prepayment of Term B Loans pursuant to the provisions of Section 2.05(b) of the Credit Agreement shall be applied to the principal repayment installments of the Term B Facility on a pro rata basis.

 

(j)    On the Acquisition Closing Date, the Borrower shall pay to the Administrative Agent for the account of each Incremental Term B Lender an upfront fee in the amount of 0.50% of the Term B Loan Commitments of such Incremental Term B Lender on such date.

 

(k)   The aggregate Term B Loan Commitments shall be automatically and permanently reduced to zero on the Acquisition Closing Date to the extent not funded on such date.

 

(l)    All other terms not described herein and relating to the Term B Loans shall be the same as the terms of the Term A Loans, except to the extent otherwise set forth in the Credit Agreement.

 

SECTION 3.        Conditions to Effectiveness.  Each Incremental Term B Lender agrees to make its respective Term B Loans to the Borrower in an aggregate principal amount not to exceed its Term B Loan Commitment on and as of the date (the “Acquisition Closing Date”) on which the following conditions shall have been satisfied:

 

(a)   The Administrative Agent shall have received from each party hereto either (i) an original counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy or .pdf transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement (followed promptly by original counterparts to be delivered to the Administrative Agent).

 

(b)   The Administrative Agent shall have received a favorable written opinion, on behalf of itself and the Lenders, of (i) Gibson, Dunn & Crutcher LLP, counsel to the Loan Parties as to matters of New York law and California law, (ii) Fennemore Craig, P.C., counsel to the Borrower and certain of the Loan Parties as to matters of Nevada law and (iii) Faegre Baker Daniels LLP, counsel to the Borrower and certain other Loan Parties as to matters of Minnesota law, each such opinion (A) dated the Acquisition Closing Date, (B) addressed to the Administrative Agent and the Lenders, (C) covering the Borrower and each Loan Party that is organized under the laws of Nevada, New York, California and Minnesota and (D) otherwise customary in form and substance for Acquisition Related Transactions of the type contemplated hereby and reasonably satisfactory to the Administrative Agent.

 

3

 

(c)   The Administrative Agent shall have received in the case of each Loan Party each of the items referred to in clauses (i), (ii), (iii) and (iv) below:

 

(i)            a copy of the certificate or articles of incorporation, certificate of limited partnership or certificate of formation, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State (or other similar official) of the jurisdiction of its organization, and a certificate as to the good standing (to the extent such concept or a similar concept exists under the laws of such jurisdiction) of each such Loan Party as of a recent date from such Secretary of State (or other similar official) in its jurisdiction of organization;

 

(ii)           a certificate of the Secretary or Assistant Secretary (or similar officer) of each Loan Party dated the Acquisition Closing Date and certifying:

 

(A)          that attached thereto is a true and complete copy of the by-laws (or partnership agreement, limited liability operating agreement or other equivalent governing documents) of such Loan Party as in effect on the Acquisition Closing Date and at all times since the date of the resolutions described in clause (B) below;

 

(B)          that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of such Loan Party (or its managing general partner or managing member) authorizing the execution, delivery and performance of this Agreement and any other Loan Document to which such Loan Party is party and, in the case of the Borrower, the borrowing of Term B Loans, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Acquisition Closing Date;

 

(C)          that the certificate or articles of incorporation, certificate of limited partnership or certificate of formation of such Loan Party has not been amended since the date of the last amendment thereto disclosed pursuant to clause (i) above;

 

(D)          as to the incumbency and specimen signature of each officer executing this Agreement or any other document delivered in connection herewith on behalf of such Loan Party; and

 

(E)           as to the absence of any pending proceeding for the dissolution or liquidation of such Loan Party or, to the knowledge of such person, threatening the existence of such Loan Party;

 

(iii)          certification of a director or another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing the certificate delivered pursuant to Section 3(c)(ii) hereof; and

 

4

 

(iv)          a certificate of a Responsible Officer of the Borrower as to satisfaction of the conditions set forth in Sections 3(j), 3(k), 3(m) and 3(q) hereof.

 

(d)   The Administrative Agent shall have received (i) a perfection certificate with respect to the Loan Parties dated the Acquisition Closing Date and duly executed by a Responsible Officer of each Loan Party, (ii) the results of a search of the Uniform Commercial Code filings (or equivalent filings) made with respect to the Loan Parties in the states (or other jurisdictions) of formation of such Persons, in each case as indicated on such perfection certificate, together with copies of the financing statements (or similar documents) disclosed by such search, and intellectual property searches at the United States Copyright Office and the United States Patent and Trademark Office, and accompanied by evidence reasonably satisfactory to the Administrative Agent that the Liens indicated in any such financing statement or search result (or similar document) would be permitted as of the Acquisition Closing Date under Section 7.01 of the Credit Agreement or have been (or will be) released or terminated on the Acquisition Closing Date.

 

(e)   The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 6.07 of the Credit Agreement, each of which shall be endorsed or otherwise amended, after use of commercially reasonable efforts by the Borrower, to name the Administrative Agent as additional insured on all liability policies and as loss payee on property policies, pursuant to endorsements in form and substance reasonably satisfactory to the Administrative Agent (such endorsements, the “Endorsements”); provided, that, to the extent the Administrative Agent has not received the Endorsements as of the Acquisition Closing Date after the Borrower’s having used commercially reasonable efforts to obtain the same, then the Borrower shall deliver (or cause to be delivered) the Endorsements to the Administrative Agent not later than ninety (90) days after the Acquisition Closing Date (which period may be extended by the Administrative Agent in its reasonable discretion).

 

(f)    The Administrative Agent shall have received a solvency certificate, executed by the chief financial officer of the Borrower, in the form attached hereto as Exhibit A attesting to the Solvency of the Borrower and the Loan Parties (including the Acquired Company) on a consolidated basis both before and after giving effect to the Acquisition Related Transactions.

 

(g)   The Administrative Agent shall have a perfected first priority Lien in all of the Collateral, to the extent such Collateral can be perfected by (1) delivery of certificates representing Equity Interests in respect of any Domestic Subsidiaries directly owned by a Loan Party, (2) the filing of a financing statement or (3) the recordation of any intellectual property security agreement with the United States Patent and Trademark Office or the United States Copyright Office.  Without limiting the generality of the foregoing, the Administrative Agent shall have received:

 

(i)            a counterpart of each applicable Collateral Document (other than Mortgages), or amendments or joinders thereto, duly executed by each Loan Party that is to be a party thereto, which shall be in full force and effect on the Acquisition Closing Date and, if applicable, be filed or in form for filing or recording in all filing or recording offices that the Administrative Agent may deem necessary or desirable in order to create a valid Lien on the property described therein on the Acquisition Closing Date;

 

(ii)           certificates representing the Pledged Collateral in respect of Domestic Subsidiaries referred to in the Pledge Agreement, accompanied by undated stock powers executed in blank and all instruments evidencing Indebtedness constituting Collateral indorsed in blank;

 

5

 

(iii)          a counterpart of each intellectual property security agreement, filed or in form suitable for filing or recording with the United States Patent and Trademark Office or the United States Copyright Office, as applicable; and

 

(iv)          proper financing statements filed or in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Security Agreements, covering the Collateral described in the Security Agreements.

 

(h)   The Administrative Agent shall have received a counterpart to the Guaranty, duly executed and delivered by the Acquired Company and each Subsidiary of the Acquired Company that is required to become a Guarantor.

 

(i)    The Borrower shall have used commercially reasonable efforts to execute and deliver (or cause each applicable Guarantor to execute and deliver) (A) (i) a Mortgage or amendment to any existing Mortgage with respect to any real property owned by a Loan Party and required to be included in the Collateral and (ii) other documents and instruments as may be required to grant the Administrative Agent a first priority perfected Lien on all assets and property of any Loan Party (other than Excluded Collateral), including, with respect to the Mortgages, affidavits, flood hazard certificates and title insurance (including endorsements, reinsurance and/or coinsurance), each in forms and amounts reasonably satisfactory to the Administrative Agent; provided, that, to the extent the Borrower has not executed and delivered a Mortgage (or amendment to any existing Mortgage) or such other documents and instruments, in each case, in accordance with the preceding sentence as of the date hereof, the Borrower shall execute and deliver (or cause to be executed and delivered by the applicable Loan Party) not later than sixty (60) days after the Acquisition Closing Date such Mortgage (or amendment to any existing Mortgage) or such other documents and instruments, in each case, in form and substance reasonably satisfactory to the Administrative Agent and (B) such documents, assignments or other instruments required to update the record owner of any intellectual property owned by any Loan Party registered at the United States Patent and Trademark Office or the United States Copyright Office to reflect a prior name change of such Loan Party and provide satisfactory evidence of the same to the Administrative Agent; provided, that, to the extent such Loan Party has not executed and delivered any such documents, assignments or instruments as of the date hereof, within sixty (60) days of the Acquisition Closing Date (or such longer period as the Administrative Agent may agree in its sole discretion), Borrower shall (or cause the applicable Loan Party to) update the record owner of any intellectual property owned by any Loan Party registered at the United States Patent and Trademark Office or the United States Copyright Office, as applicable, to reflect a prior name change of such Loan Party and provide satisfactory evidence of the same to the Administrative Agent. The Borrower shall use commercially reasonable efforts, within sixty (60) days of the Acquisition Closing Date, to execute and file with the United States Patent and Trademark office or the United States Copyright Office, as applicable, any assignment, release, instrument or other document (and shall use commercially reasonable efforts to procure the cooperation of third parties as necessary in order to obtain or complete such assignment, release, instrument or other document) necessary to (i) evidence the transfer of record ownership from a third party to a Loan Party, (ii) release (or evidence the release of) any Liens (other than Permitted Liens), or (iii) otherwise establish a clear chain of title, as applicable, for certain registered intellectual property agreed by the Borrower and the Administrative Agent prior to the date hereof.

 

6

 

(j)    Since July 15, 2013, there shall not have occurred a Company Material Adverse Effect. “Company Material Adverse Effect” means any change, effect, development or circumstance which, individually or in the aggregate, has resulted in, or would reasonably be expected to result in, a material adverse effect on the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that changes, effects, developments or circumstances to the extent resulting from, directly or indirectly, the following shall be excluded from the determination of Company Material Adverse Effect:  (i) any change, effect, development or circumstance in any of the industries or markets in which the Company or its Subsidiaries operate; (ii) any change in any Law or GAAP (or changes in interpretations or enforcement of any Law or GAAP) applicable to the Company or any of its Subsidiaries or any of their respective properties or assets; (iii) changes in general economic, regulatory or political conditions or the financial, credit or securities markets in general (including changes in interest or exchange rates, stock, bond and/or debt prices); (iv) any acts of God, natural disasters, earthquakes, hurricanes, terrorism, armed hostilities, sabotage, war or any escalation or worsening thereof; (v) the negotiation, execution, announcement or the consummation of the Acquisition Agreement or the Acquisition Related Transactions contemplated thereby (including the impact of any of the foregoing on relationships with customers, suppliers, licensors, employees or regulators (including any Gaming Authority), and any suit, action or proceeding arising therefrom or in connection therewith); (vi) any action taken as expressly permitted or required by the Acquisition Agreement (it being understood and agreed that actions taken by the Company or its Subsidiaries pursuant to its obligations under Section 6.1 of the Acquisition Agreement to conduct its business in the ordinary course pursuant to the first paragraph of Section 6.1 of the Acquisition Agreement shall not be excluded in determining whether a Company Material Adverse Effect has occurred) or any action taken at the written direction of Parent or Merger Sub; (vii) any changes in the market price or trading volume of the Company Common Stock, any changes in credit ratings or any failure (in and of itself) by the Company or its Subsidiaries to meet internal, analysts’ or other earnings estimates, budgets, plans, forecasts or financial projections of its revenues, earnings or other financial performance or results of operations (but not excluding any change, effect, development or circumstance giving rise to any such change or failure to the extent such change, effect, development or circumstance is not otherwise excluded pursuant to this definition); or (viii) changes, effects, developments or circumstances arising from or relating to the identity of Parent or Merger Sub or Parent’s ability to obtain the Gaming Approvals; provided, further, that, with respect to clauses (i), (ii), (iii), and (iv), the impact of such change, effect, development or circumstance, is not disproportionately adverse to the Company and its Subsidiaries, taken as a whole, relative to other companies in the industries in which the Company and its Subsidiaries operate (each capitalized term used in the definition of Company Material Adverse Effect (other than the defined term Acquisition Agreement) has the meaning given to such term in the Acquisition Agreement as in effect on July 15, 2013).

 

(k)   The Acquisition will have been consummated substantially simultaneously with the funding of the Term B Loans on the Acquisition Closing Date in accordance with the terms of the Acquisition Agreement without giving effect to any amendment, waiver, modification or consent thereunder by the Borrower (including, without limitation, any waiver of any condition precedent to the closing thereunder) that is or would be materially adverse to the Incremental Term B Lenders, without the consent of the Lead Arrangers, such consent not to be unreasonably withheld; it being agreed that (i) any decrease in excess of 10% in the consideration paid in connection with the Acquisition shall constitute a change materially adverse to the Incremental Term B Lenders unless approved by the Lead Arrangers, and any decrease of less than 10% of the consideration paid shall be applied to reduce the Term B Loans and (ii) any amendment, waiver, modification or consent relating to the definition of “Company Material Adverse Effect” or Section 4.10 in the Acquisition Agreement as in effect on July 15, 2013 shall be deemed to be materially adverse to the Incremental Term B Lenders.

 

7

 

(l)    After giving effect to the Acquisition Related Transactions, neither the Borrower, nor any of its Subsidiaries shall have outstanding any Indebtedness or preferred stock other than (i) the Term B Loans and the loans and other extensions of credit under the Credit Agreement and (ii) other Indebtedness permitted to remain outstanding pursuant to Section 7.02 of the Credit Agreement, and the Lead Arrangers shall have received customary pay-off letters or other evidence reasonably satisfactory to the Lead Arrangers of the repayment of any other Indebtedness.

 

(m)  Since July 15, 2013, without the consent of all Lead Arrangers, neither the Borrower nor any of its Subsidiaries shall have incurred any Indebtedness (other than the Term B Loans pursuant to this Agreement) pursuant to Section 2.14 or Section 2.15 of the Credit Agreement as in effect on July 15, 2013.

 

(n)   The Lead Arrangers have received (i) copies of audited consolidated financial statements for the Borrower and its Subsidiaries for the most recent three fiscal years ended more than 90 days prior to the Acquisition Closing Date and quarterly unaudited financial statements for the first three quarterly periods ended since the last audited financial statements and more than 45 days prior to the Acquisition Closing Date; (ii) copies of audited consolidated financial statements for the Acquired Company and its Subsidiaries for the most recent three fiscal years ended more than 90 days prior to the Acquisition Closing Date and quarterly unaudited financial statements for the first three quarterly periods ended since the last audited financial statements and more than 45 days prior to the Acquisition Closing Date; (iii) a pro forma consolidated balance sheet and related pro forma consolidated income statements of the Borrower and its Subsidiaries (based on the financial statements of the Borrower and the Acquired Company referred to in clauses (i) and (ii) above) as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days prior to the Acquisition Closing Date (or, if the most recently completed fiscal period is the end of a fiscal year, ended at least 90 days before the Acquisition Closing Date), prepared after giving pro forma effect to the Acquisition Related Transactions as if the Acquisition Related Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such other financial statements) (prepared in accordance with Regulation S-X under the Securities Act of 1933, as amended, and all other rules and regulations of the SEC under such Securities Act, and including other adjustments reasonably acceptable to the Lead Arrangers); and (iv) projections prepared by management of balance sheets, income statements and cashflow statements of the Borrower and its Subsidiaries (after giving pro forma effect to the Acquisition), which will be quarterly for the first year after the Acquisition Closing Date and annually thereafter for the term of the Term B Loans.  With respect to the matters described in sub-section (i) and (ii) above, the filing of the required financial statements on Form 10-K and Form 10-Q by the Borrower or the Acquired Company, as the case may be, shall satisfy the foregoing requirements.

 

(o)   The Lead Arrangers shall have received, at least five (5) business days prior to the Acquisition Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act.

 

(p)   All fees and expenses due to the Incremental Term B Lenders, the Lead Arrangers, the Administrative Agent and counsel to the Lead Arrangers and the Administrative Agent, including all fees and expenses due under the Fee Letter dated July 15, 2013 and made between the Borrower and the Lead Arrangers, will have been paid, to the extent an invoice therefor was presented at least two business days prior to the Acquisition Closing Date (or such later date as the Borrower may agree).

 

8

 

(q)   The Specified Representations shall be true and correct in all material respects (or, if qualified by materiality or material adverse effect, in all respects).

 

SECTION 4.        Reference to and Effect on the Credit Agreement; Confirmation of Guarantors.  (a)  On and after the effectiveness of this Agreement, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by, and after giving effect to, this Agreement.

 

(b)   Each Loan Document, after giving effect to this Agreement, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed, except that, on and after the effectiveness of this Agreement, each reference in each of the Loan Documents (including the Security Agreements and the other Collateral Documents) to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by, and after giving effect to, this Agreement, and each reference to “Lender” therein shall, for the avoidance of doubt, include each Incremental Term Lender (as defined in the Credit Agreement), including the Incremental Term B Lenders.  Without limiting the generality of the foregoing, the Collateral Documents (in the case of the Mortgages, after giving effect to any amendments thereto required to give effect to the Term B Loans) and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, as amended by, and after giving effect to, this Agreement (in the case of the Mortgages, subject to any limitations contained in the Mortgages on maximum indebtedness or maximum indebtedness permitted to be secured thereby), in each case subject to the terms thereof.

 

(c)   Each Loan Party hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Documents) and confirms that (in the case of the Mortgages, if any after giving effect to any amendments required to give effect to the Term B Loans) such liens and security interests continue to secure the Obligations under the Loan Documents, including, without limitation, all Obligations resulting from or incurred pursuant to the Term B Loans (in the case of the Mortgages, subject to any limitations contained in the Mortgages on maximum indebtedness or maximum indebtedness permitted to be secured thereby), in each case subject to the terms thereof and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to the Guaranty, including, without limitation, all Obligations resulting from or incurred pursuant to the Term B Loans.

 

(d)   The execution, delivery and effectiveness of this Agreement shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender, the Administrative Agent or any other Person under any of the Loan Documents, or constitute a waiver of any provision of any of the Loan Documents.

 

(e)   This Agreement is a Loan Document.

 

SECTION 5.        Incremental Term B Lenders.

 

(a)   Each Incremental Term B Lender (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 3 hereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) represents and warrants that its name set forth on its signature page hereto is its legal name; (iv) confirms that it is not the Borrower or any of its Subsidiaries or an Affiliate of any of them; (v) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto, and, without limiting the generality of the foregoing, appoints the Administrative Agent to act as its agent for the purpose of acquiring, holding, and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure the Obligations, together with such powers and discretion as are reasonably incidental thereto; (vi) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vii) attaches any U.S. Internal Revenue Service forms required under Article III of the Credit Agreement.

 

9

 

(b)   On and after the Acquisition Closing Date, each of the Incremental Term B Lenders shall be a party to the Credit Agreement as a Lender, shall be bound thereby, and shall have all of the rights and obligations of a Lender thereunder.  All notices and other communications provided for hereunder or under the Loan Documents to any Incremental Term B Lender shall be to its address as set forth in the administrative questionnaire it has furnished to the Administrative Agent.

 

SECTION 6.        Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 3. Delivery of an executed counterpart to this Agreement by facsimile or .pdf transmission (or other electronic transmission pursuant to procedures approved by the Administrative Agent) shall be effective as delivery of a manually signed original.

 

SECTION 7.        Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

SECTION 8.        Miscellaneous. The provisions of Section 10.14(b), (c) and (d) and Section 10.15 of the Credit Agreement are incorporated herein mutatis mutandis, and the parties hereto hereby agree that such provisions shall apply to this Agreement with the same force and effect as if set forth herein in their entirety.

 

SECTION 9.        Consent.  Effective on the date hereof, (i) that certain patent assignment dated September 26, 2008 shall be amended and restated in the form attached hereto as Exhibit B (as so amended, the “Amended Patent Security Agreement”), (ii) that certain trademark assignment dated September 26, 2008 shall be amended and restated in the form attached hereto as Annex C (as so amended, the “Amended Trademark Security Agreement”) and (iii) that certain copyright security and pledge agreement dated September 26, 2008 shall be amended and restated in the form attached hereto as Annex D (as so amended, the “Amended Copyright Security Agreement”), and each Person executing this Agreement in its capacity as a “Lender” under the Credit Agreement hereby agrees and consents to the amendment and restatement of the foregoing agreements.

 

[remainder of page intentionally left blank]

 

10

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

 

	
 
    	
BALLY   TECHNOLOGIES, INC.
    
	
 
    	
as   Borrower
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Neil Davidson
    
	
 
    	
 
    	
Name:   Neil Davidson
    
	
 
    	
 
    	
Title:   Senior Vice President, Chief Financial Officer and Treasurer
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
ARCADE   PLANET, INC.,
    
	
 
    	
a   California corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING INTERNATIONAL, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
ALLIANCE   HOLDING COMPANY,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
SIERRA   DESIGN GROUP,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
CASINO   ELECTRONICS, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
COMPUDIGM   SERVICES, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Neil Davidson
    
	
 
    	
 
    	
Name:   Neil Davidson
    
	
 
    	
 
    	
Title:   Treasurer
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
BALLY   GAMING SERVICES, LLC,
    
	
 
    	
a   Nevada limited liability gaming company
    
	
 
    	
 
    
	
 
    	
 
    	
By: B.G.I. GAMING & SYSTEMS, S. DE R.L. DE C.V.,   the Sole Member of BALLY GAMING SERVICES, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By: BALLY GAMING, INC., the Managing Member of   B.G.I. GAMING & SYSTEMS, S. DE R.L. DE C.V.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Neil Davidson
    
	
 
    	
 
    	
Name:   Neil Davidson
    
	
 
    	
 
    	
Title:   Treasurer
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
BANK   OF AMERICA, N.A.
    
	
 
    	
as   Administrative Agent and, for purposes of Section 9,
    
	
 
    	
a   Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Anthony W. Kell
    
	
 
    	
 
    	
Name:   Anthony W. Kell
    
	
 
    	
 
    	
Title:   Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brian D. Corum
    
	
 
    	
 
    	
Name:   Brian D. Corum
    
	
 
    	
 
    	
Title:   Managing Director
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
WELLS FARGO BANK, NATIONAL   ASSOCIATION
    
	
 
    	
as   Incremental Term B Lender and, for purposes of Section 9, a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mitchell Broth
    
	
 
    	
 
    	
Name:   Mitchell Broth
    
	
 
    	
 
    	
Title:   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS   FARGO SECURITIES, LLC
    
	
 
    	
as   a Lead Arranger
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Westley White
    
	
 
    	
 
    	
Name:   Westley White
    
	
 
    	
 
    	
Title:   Vice President
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
J.P. MORGAN SECURITIES LLC
    
	
 
    	
as a Lead Arranger
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chris Lingenfelter
    
	
 
    	
 
    	
Name: Chris Lingenfelter
    
	
 
    	
 
    	
Title: Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JPMORGAN CHASE BANK, N.A.
    
	
 
    	
for purposes of Section 9, a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeff Bailard
    
	
 
    	
 
    	
Name: Jeff Bailard
    
	
 
    	
 
    	
Title: Executive Director
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
MERRILL   LYNCH, PIERCE, FENNER & SMITH INCORPORATED
    
	
 
    	
as   a Lead Arranger
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   William A. Bowen, Jr.
    
	
 
    	
 
    	
Name:   William A. Bowen, Jr.
    
	
 
    	
 
    	
Title:   MD
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
GOLDMAN SACHS BANK USA
    
	
 
    	
as a Lead Arranger and, for purposes of Section 9,   a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Ehudin
    
	
 
    	
 
    	
Name: Robert Ehudin
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

	
 
    	
UNION BANK, N.A.
    
	
 
    	
as a Lead Arranger and, for purposes of Section 9,   a Lender
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Pierre Bury
    
	
 
    	
 
    	
Name: Pierre Bury
    
	
 
    	
 
    	
Title: Vice President
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

Schedule 1

 

	
Incremental Term B Lenders
    	
 
    	
Term B Loan Commitments
    	
 
    
	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
1,100,000,000.00
    	
 
    
	
TOTAL
    	
 
    	
$
    	
1,100,000,000.00
    	
 
    

 

[Signature Page for Incremental Joinder Agreement]

 

 

Exhibit A

 

FORM OF SOLVENCY CERTIFICATE

 

[Date]

 

This Solvency Certificate is being executed and delivered pursuant to Section 3(f) of the certain Incremental Joinder Agreement, dated as of [  ], 2013, among BALLY TECHNOLOGIES, INC., a Nevada corporation (the “Borrower”), each Subsidiary of the Borrower listed on the signature pages thereto (together with the Borrower, the “Loan Parties”), the Incremental Term B Lenders listed on the signature pages thereto (the “Incremental Term B Lenders”), and Bank of America, N.A. (“Bank of America”), as administrative agent (in such capacity, the “Administrative Agent”) under that certain Second Amended and Restated Credit Agreement dated as of April 19, 2013 (as subsequently amended by Amendment No. 1 on August 27, 2013) (as so amended, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders party thereto from time to time, and Bank of America, as the Administrative Agent, Swing Line Lender and L/C Issuer.  Capitalized terms not otherwise defined in this Agreement have the same meanings as specified in the Credit Agreement.

 

I, [·], the Chief Financial Officer of the Borrower, in such capacity and not in an individual capacity, hereby certify as follows:

 

1.                                      I am generally familiar with the businesses and assets of the Borrower and its Subsidiaries, taken as a whole, and have made such investigation and inquiries as to the financial condition of the Borrower and its Subsidiaries as are necessary and prudent for the purposes of providing this Solvency Certificate and I am duly authorized to execute this Solvency Certificate on behalf of the Borrower pursuant to the Credit Agreement; and

 

2.                                      As of the date hereof and after giving effect to the Acquisition Related Transactions and the incurrence of the indebtedness and obligations being incurred in connection with the Credit Agreement and the Acquisition Related Transactions, that:

 

(a)                                 the fair value of the property of the Borrower and its Subsidiaries, on a consolidated basis, is greater than the total amount of liabilities, including contingent liabilities, of the Borrower and its Subsidiaries, on a consolidated basis;

 

(b)                               the present fair salable value of the assets of the Borrower and its Subsidiaries, on a consolidated basis, is not less than the amount that will be required to pay the probable liabilities of the Borrower and its Subsidiaries, on a consolidated basis, on their debts as they become absolute and matured;

 

(c)                                the Borrower and its Subsidiaries do not intend to, and do not believe that they will, incur debts or liabilities beyond the ability of the Borrower and its Subsidiaries, on a consolidated basis, to pay such debts and liabilities as they mature;

 

(d)                               the Borrower and its Subsidiaries are not engaged in business or a transaction, and is not about to engage in business or a transaction, for which the property of the Borrower and its Subsidiaries, on a consolidated basis, would constitute an unreasonably small capital; and

 

 

(e)                               the Borrower and its Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business.

 

For the purposes hereof, the amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

[Remainder of page intentionally left blank]

 

 

IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first written above.

 

	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:   Chief Financial Officer
    
				

 

 

Exhibit B

 

Form of Amended Patent Security Agreement

 

 

Execution Version

 

AMENDED AND RESTATED PATENT SECURITY AGREEMENT

 

This AMENDED AND RESTATED PATENT SECURITY AGREEMENT (this “Agreement”) dated as of November 25, 2013, is made by Bally Technologies, Inc., a Nevada corporation (“Borrower”) and each of its subsidiaries listed on the signature pages hereto (each a “Subsidiary Grantor”, and together with Borrower and each other Person who may become a party hereto pursuant to Section 8 of this Agreement, the “Grantors”), in favor of Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), for the benefit of the Secured Parties under the Credit Agreement referred to below, with reference to the following facts:

 

RECITALS

 

A.                                    Pursuant to that certain Credit Agreement, dated as of September 26, 2008, among Borrower, the Lenders referred to therein, and the Administrative Agent (as from time to time amended, restated, extended, renewed, modified or supplemented), the Grantors executed and delivered that certain Patent Assignment, dated as of September 26, 2008 (as from time to time amended, restated, extended, renewed, modified or supplemented, the “Existing Patent Assignment”).

 

B.                                    Borrower has entered into that certain Second Amended and Restated Credit Agreement, dated as of April 19, 2013, among Borrower, the Lenders referred to therein, and the Administrative Agent (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, 2013, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), and accordingly the parties hereto desire to amend and restate the Existing Patent Assignment pursuant to this Agreement.  This Agreement is one of the Loan Documents referred to in the Credit Agreement.

 

C.                                    The Subsidiary Grantors have guaranteed the obligations of Borrower pursuant to the Credit Agreement.

 

D.                                    Pursuant to the Credit Agreement, the Lenders had made, and are making, certain credit facilities available to Borrower.  Additionally, as contemplated by the Credit Agreement, from time to time, certain Secured Parties may enter into Secured Cash Management Agreements and/or Secured Hedge Agreements with the Borrower and/or the Grantors.

 

E.                                     As a condition to the continued availability of such credit facilities, Secured Cash Management Agreements and Secured Hedge Agreements, the Grantors are required to enter into this Agreement to pledge certain Collateral (as hereinafter defined) to the Administrative Agent for the benefit of the Secured Parties as herein provided.

 

F.                                      The Grantors expect to realize direct and indirect benefits as the result of the availability of (i) the aforementioned credit facilities to the Borrower and (ii) the aforementioned Secured Cash Management Agreements and Secured Cash Hedge Agreements, as the result of financial or business support which will be provided to the Grantors by Borrower and each other Grantor.

 

 

AGREEMENT

 

NOW, THEREFORE, in order to induce the Lenders to extend and maintain the aforementioned credit facilities to Borrower and the Secured Parties to extend and maintain the financial accommodations under the Secured Cash Management Agreements and Secured Hedge Agreements, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Grantors hereby jointly and severally represent, warrant, covenant and agree as follows:

 

1.                                      Definitions.  Terms defined in the Credit Agreement and not otherwise defined in this Agreement shall have the meanings defined for those terms in the Credit Agreement.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Agreement” means this Amended and Restated Patent Security Agreement, and any extensions, modifications, renewals, restatements, supplements or amendments hereof, including, without limitation, any documents or agreements by which additional Grantors become party hereto.

 

“Collateral” means and includes all of the following: (a) all of the Grantors’ now-existing, or hereafter acquired, right, title, and interest in and to all of the Grantors’ patents, together with all applications, registrations, and recordings relating to the foregoing in the United States Patent and Trademark Office (“USPTO”) or in any similar office or agency of the United States, any State thereof, or any political subdivision thereof, or in any other countries, and all reissues, divisions, continuations, continuations-in-part, extensions, reexaminations and renewals thereof, including those patents, applications, registrations and recordings described in Schedule 1 hereto (the “Patents”); (b) all patentable inventions and improvements thereto; (c) all licenses and sublicenses of Patents, to the extent that there exists no prohibition as a matter of law or pursuant to such agreements governing such license or sublicense on the transfer thereof for security as contemplated by this Agreement; (d) any and all proceeds of any of the foregoing, including license fees, royalties, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto;  and (e) the right to sue or otherwise recover for past, present and future infringement or other violation of the Patents or any licenses with respect thereto.

 

“Grantors” means those Persons mentioned in the preamble to this Agreement and those entities that become parties hereto as provided in Section 6.12 of the Credit Agreement or Section 8 hereof, and each of them, and any one or more of them, jointly and severally.

 

“Secured Obligations” means (a) in the case of Borrower, any and all present and future Obligations of any type or nature of Borrower arising under or relating to the Credit Agreement, the Secured Cash Management Agreements, the Secured Hedge Agreements and the Loan Documents or any one or more of them and (b) in the case of the Subsidiary Grantors, all present and future Obligations of any type or nature of the Subsidiary Grantors, or any one or more of them, arising under or relating to the Guaranty or any other Loan Documents, or with respect to any Secured Cash Management Agreement or any Secured Hedge Agreement or any one or more of them; provided, that in the case of each Grantor (other than Borrower), the Secured Obligations of such Grantor shall exclude any Excluded Swap Obligations of such Grantor.

 

2

 

2.                                      Grant of Security Interest.  For valuable consideration, the Grantors and each of them hereby jointly and severally pledge and grant to the Administrative Agent (for and on behalf of the Secured Parties) a security interest, to secure the prompt and indefeasible payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations, and each of them, in and to all of the presently existing and hereafter acquired Collateral.  This Agreement is a continuing and irrevocable agreement and all the rights, powers, privileges and remedies hereunder shall apply to any and all Secured Obligations, including those arising under successive transactions which shall either continue the Secured Obligations, increase or decrease them and notwithstanding the bankruptcy of any Grantor or any other event or proceeding affecting any Grantor.

 

3.                                      Representations, Warranties and Covenants.  The Grantors, and each of them, represent, warrant and agree that:

 

(a)                                 All of the existing Collateral is valid and subsisting in full force and effect, and the Grantors have good and marketable title thereto, and the right and power to grant the security interests granted hereunder. The Grantors will, at their expense, perform all acts and execute all documents necessary to maintain the existence of the Collateral as valid and subsisting, including, without limitation, the filing of any maintenance fees or affidavits.  The Collateral is not subject to any Liens or licenses of any nature whatsoever, whether recorded or unrecorded, except as permitted by the Credit Agreement.

 

(b)                                 As of the date hereof, none of the Grantors owns any Patents registered, or subject to pending applications, in the USPTO other than those against which the Administrative Agent already has perfected a security interest pursuant to the Existing Patent Assignment, or those described in Schedule 1.

 

(c)                                  Upon the delivery of any report supplementing Schedule 5.17 to the Credit Agreement made pursuant to Section 6.02(j) of the Credit Agreement, the applicable Grantor shall execute and deliver to the Administrative Agent, in form and detail reasonably satisfactory to the Administrative Agent and suitable for filing with the USPTO, a supplement to this Agreement substantially in the form of Exhibit A hereto evidencing the grant to the Administrative Agent of a security interest in any Patents reflected on such report supplementing Schedule 5.17 to the Credit Agreement. Each Grantor authorizes the Administrative Agent to modify this Agreement by amending Schedule 1 to include any new Patents, and any patent renewal of any Grantor applied for and or otherwise obtained hereafter.

 

(d)                                 No Grantor has abandoned any of the Patents, and no Grantor will do any act, or omit to do any act, whereby the Patents may become abandoned, canceled, invalidated, or unenforceable,  where such abandonment, cancellation, invalidation, or unenforceability may constitute a Material Adverse Effect.  Each Grantor shall notify the Administrative Agent promptly if it knows, or has reason to know, of any reason why any application, registration, or recording may become abandoned, canceled, invalidated, or unenforceable, and if as a result thereof, a Material Adverse Effect may result.

 

3

 

(e)                                  The Grantors will render any assistance, as the Administrative Agent may reasonably determine is necessary, to the Administrative Agent in any proceeding before the USPTO, any federal or state court, or any similar office or agency in the United States, or any State therein, or any other country, to protect the Administrative Agent’s security interest in the Patents.

 

(f)                                   The Grantors assume all responsibility and liability arising from the use of the Patents, and each Grantor hereby indemnifies and holds the Administrative Agent and each of the Secured Parties harmless from and against any claim, suit, loss, damage, or expense (including reasonable attorneys’ fees) arising out of any alleged defect in any product manufactured, promoted, or sold by any Grantor (or any Affiliate or Subsidiary thereof) in connection with any Patents or out of the manufacture, promotion, labeling, sale, or advertisement of any such product by any Grantor or any Affiliate or Subsidiary thereof.

 

(g)                                  The Grantors shall promptly notify the Administrative Agent in writing of any adverse determination in any proceeding in the USPTO or any other foreign or domestic Governmental Agency, court or body, regarding any Grantor’s ownership of any of the Patents.  In the event of any material infringement of any of the Patents by a third party, the Grantors shall promptly notify the Administrative Agent of such infringement and sue for and diligently pursue damages for such infringement unless it is in the best interest of the Grantors not to pursue such proceeding.  In the event that the Grantors elect not to pursue any rights that might apply to the applicable Grantor in connection with the infringement, the Grantors will notify the Administrative Agent of such election.

 

(h)                                 Each Grantor shall, at its sole expense, do, make, execute and deliver all such additional and further acts, things, assurances, and instruments, in each case in form and substance satisfactory to the Administrative Agent, relating to the creation, validity, or perfection of the security interests provided for in this Agreement under 35 U.S.C. Section 261, 15 U.S.C. Section 1051 et seq., the Uniform Commercial Code or other Law of the United States, the State of New York, or of any countries or other States as the Administrative Agent may from time to time reasonably request, and shall take all such other action as the Administrative Agent may reasonably require to more completely vest in and assure to the Administrative Agent its security interest in any of the Collateral, and each Grantor hereby irrevocably authorizes the Administrative Agent or its designee, at such Grantor’s expense, to execute such documents, and file such financing statements with respect thereto with or without such Grantor’s signature, as the Administrative Agent may reasonably deem appropriate.  In the event that any recording or refiling (or the filing of any statement of continuation or assignment of any financing statement) or any other action, is required at any time to protect and preserve such security interest, the Grantors shall, at their sole cost and expense, cause the same to be done or taken at such time and in such manner as may be necessary and as may be reasonably requested by the Administrative Agent.  Each Grantor further authorizes the Administrative Agent to have this or any other similar security agreement recorded or filed with the USPTO or other appropriate federal, state or government office.

 

4

 

(i)                                     Following the Administrative Agent’s request thereof and the applicable Grantor’s failure to perform, the Administrative Agent is hereby irrevocably appointed by each Grantor as its lawful attorney and agent, with full power of substitution to execute and deliver on behalf of and in the name of any or all Grantors, such financing statements and other documents and agreements, and to take such other action as the Administrative Agent may deem necessary for the purpose of perfecting, protecting or effecting the security interests granted herein and effected hereby, and any mortgages or Liens necessary or desirable to implement or effectuate the same, under any applicable Law, and the Administrative Agent is hereby authorized to file on behalf of and in the name of any or all Grantors, at the Grantors’ sole expense, such financing statements, documents and agreements in any appropriate governmental office.

 

(j)                                    The Administrative Agent may, in its sole discretion, pay any amount, or do any act which the Grantors fail to pay or do as required hereunder to preserve, defend, protect, maintain, record, amend, or enforce the Secured Obligations, the Collateral, or the security interest granted hereunder, including, but not limited to, all filing or recording fees, court costs, collection charges, and reasonable attorneys’ fees.  The Grantors will be liable to the Administrative Agent for any such payment, which payment shall be deemed an advance by the Lenders to the Grantors, shall be payable on demand, together with interest at the per annum rate then applicable to Base Rate Advances under the Credit Agreement, or the Default Rate, if applicable, and shall be part of the Secured Obligations.

 

4.                                      Events of Default.  Any “Event of Default” as defined in the Credit Agreement shall constitute an Event of Default hereunder.

 

5.                                      Rights and Remedies.  Upon the occurrence and during the continuance of any such Event of Default, in addition to all other rights and remedies of the Administrative Agent, whether provided under Law, the Credit Agreement or otherwise, the Administrative Agent may enforce its security interest hereunder which may be exercised without notice to, or consent by, any Grantor, except as such notice or consent is expressly provided for hereunder.  Upon such enforcement:

 

(a)                                 the Administrative Agent may use any of the Patents for the sale of goods, completion of work in process, or rendering of services in connection with enforcing any security interest granted to the Administrative Agent by the Grantors.

 

(b)                                 the Administrative Agent may grant such license or licenses relating to the Collateral for such term or terms, on such conditions and in such manner, as the Administrative Agent shall, in its sole discretion, deem appropriate.  Such license or licenses may be general, special, or otherwise, and may be granted on an exclusive or nonexclusive basis throughout all or part of the United States of America, its territories and possessions, and all foreign countries.

 

(c)                                  the Administrative Agent may assign, sell, or otherwise dispose of the Collateral, or any part thereof, either with or without special conditions or stipulations, except that the Administrative Agent agrees to provide the Grantors with five (5) days’

 

5

 

prior written notice of any proposed disposition of the Collateral.  The requirement of sending notice conclusively shall be met if such notice is mailed, first class mail, postage prepaid, to Borrower, on behalf of all Grantors.  Each Grantor hereby irrevocably appoints Borrower as its agent for the purpose of receiving notice of sale hereunder, and agrees that such Grantor conclusively shall be deemed to have received notice of sale when notice of sale has been given to Borrower.  Each Grantor expressly waives any right to receive notice of any public or private sale of any Collateral or other security for the Secured Obligations except as expressly provided in this Section 5(c).  The Administrative Agent shall have the power to buy the Collateral, or any part thereof, and the Administrative Agent shall also have the power to execute assurances and perform all other acts which the Administrative Agent may, in the Administrative Agent’s sole discretion, deem appropriate or proper to complete such assignment, sale, or disposition.  In any such event, the Grantors shall be liable for any deficiency.

 

(d)                                 In addition to the foregoing, in order to implement the assignment, sale or other disposition of any of the Collateral pursuant to Section 5(c) hereof, the Administrative Agent may, at any time, execute and deliver, on behalf of the Grantors, and each of them, pursuant to the authority granted in powers of attorney, one or more instruments of assignment of the Patents (or any application, registration, or recording relating thereto), in form suitable for filing, recording, or registration.  The Grantors agree to pay the Administrative Agent, on demand, all costs incurred in any such transfer of the Collateral, including, but not limited to any taxes, fees, and reasonable attorneys’ fees.

 

(e)                                  The Administrative Agent may first apply the proceeds actually received from any such use, license, assignment, sale, or other disposition of Collateral first to the reasonable costs and expenses thereof, including, without limitation, reasonable attorneys’ fees and all legal, travel, and other expenses which may be incurred by the Administrative Agent.  Thereafter, the Administrative Agent may apply any remaining proceeds to such of the Secured Obligations as provided in the Credit Agreement.  The Grantors shall remain liable to the Administrative Agent for any expenses or Secured Obligations remaining unpaid after the application of such proceeds, and the Grantors will pay the Administrative Agent, on demand, any such unpaid amount, together with interest at the rate(s) set forth in the Credit Agreement.

 

(f)                                   Upon request of the Administrative Agent, the Grantors shall supply to the Administrative Agent, or the Administrative Agent’s designee, the Grantors’ knowledge and expertise relating to the manufacture and sale of the products and services relating to the Patents and the Grantors’ customer lists and other records relating to the Patents and the distribution thereof.

 

Nothing contained herein shall be construed as requiring the Administrative Agent to take any such action at any time.  All of the Administrative Agent’s rights and remedies, whether provided under Law, the Credit Agreement, this Agreement, or otherwise, shall be cumulative, and none is exclusive of any right or remedy otherwise provided herein or in any of the other Loan Documents, at law or in equity.  Such rights and remedies may be enforced alternatively, successively, or concurrently.

 

6

 

6.                                      Waivers.

 

(a)                                 Each Grantor hereby waives any and all rights that it may have to a judicial hearing, if any, in advance of the enforcement of any of the Administrative Agent’s rights hereunder, including, without limitation, its rights following any Event of Default and during the continuance thereof to take immediate possession of the Collateral and exercise its rights with respect thereto.

 

(b)                                 The Administrative Agent shall not be required to marshal any present or future security for (including, but not limited to, this Agreement and the Collateral subject to a security interest hereunder), or guaranties of, the Secured Obligations or any of them, or to resort to such security or guaranties in any particular order.  Each Grantor hereby agrees that it will not invoke any Law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Administrative Agent’s rights under this Agreement or any other instrument evidencing any of the Secured Obligations or by which any of such Secured Obligations is secured or guaranteed, and each Grantor hereby irrevocably waives the benefits of all such Laws.

 

(c)                                  Except for notices specifically provided for herein, each Grantor hereby expressly waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description.  With respect both to the Secured Obligations and any collateral therefor, each Grantor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, of any Person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Administrative Agent may deem advisable.  The Administrative Agent shall have no duty as to the protection of the Collateral or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining thereto except as otherwise required by Law.  The Administrative Agent may exercise its rights with respect to the Collateral without resorting or regard to other collateral or sources of reimbursement for liability.  The Administrative Agent shall not be deemed to have waived any of its rights upon or under the Credit Agreement or the Collateral unless such waiver be in writing and signed by the Administrative Agent.  No delay or omission on the part of the Administrative Agent in exercising any right shall operate as a waiver of any right on any future occasion.  All rights and remedies of the Administrative Agent under the Credit Agreement or on the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly or concurrently.

 

7.                                      Costs and Expenses.

 

(a)                                 Without limiting any reimbursement obligations under the Credit Agreement and the other Loan Documents, and without duplication thereof, the Grantors will pay any and all charges, costs and taxes incurred in implementing or subsequently amending this Agreement, including, without limitation, recording and filing fees, appraisal fees, stamp taxes, and reasonable fees and disbursements of each Secured

 

7

 

Party’s counsel incurred by each Secured Party, and fees and time charges for attorneys who may be employees of each Secured Party, in connection with this Agreement, and in the enforcement of this Agreement and in the enforcement or foreclosure of any Liens, security interests or other rights of any Secured Party under this Agreement, or under any other documentation heretofore, now, or hereafter given to any Secured Party in furtherance of the transactions contemplated hereby.

 

(b)                                 The Grantors agree to reimburse each Secured Party for and indemnify it against, any and all losses, expenses and liabilities (including liabilities for penalties) of whatever kind or nature sustained and reasonably incurred in connection with any claim, demand, suit or legal or arbitration proceeding relating to this Agreement, or the exercise of any rights or powers hereunder, including reasonable attorneys’ fees and disbursements, and fees and time charges for attorneys who may be employees of such Secured Party, except losses, expenses and liabilities arising out of such Secured Party’s own gross negligence or willful misconduct.

 

8.                                      Joinder.  Any other Person may become a Grantor hereunder and become bound by the terms and conditions of this Agreement by executing and delivering to the Administrative Agent an Instrument of Joinder substantially in the form attached hereto as Exhibit B, accompanied by such documentation as the Administrative Agent may require to establish the due organization, valid existence and good standing of such Person, its qualification to engage in business in each material jurisdiction in which it is required to be so qualified, its authority to execute, deliver and perform this Agreement, and the identity, authority and capacity of each Responsible Officer thereof authorized to act on its behalf.

 

9.                                      Release of Grantors.  This Agreement and all of the Secured Obligations of the Grantors hereunder shall be released upon termination of the Aggregate Commitments and payment in full of all of the Secured Obligations (other than (A) contingent indemnification obligations as to which no claim has been made and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank of Hedge Bank shall have been made) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made).

 

Additionally, Collateral that is released or is required to be released from the security interest created by this Agreement in order to permit the Grantors to consummate any disposition of stock or assets, merger, consolidation, amalgamation, acquisition, transfer or dividend payment or distribution that the Grantors are permitted to consummate pursuant to the Loan Documents, if any, shall be so released by the Administrative Agent at such times and to the extent necessary or appropriate to permit the Grantors to consummate such permitted transactions promptly following the Administrative Agent’s receipt of written request therefor by the Grantors specifying the purpose for which release is requested and such further certificates or other documents as the Administrative Agent shall request in its reasonable discretion to confirm that the Grantors are permitted to consummate such permitted transaction and to confirm its replacement Lien on appropriate collateral (unless replacement collateral is not required pursuant

 

8

 

to the Loan Documents).  Any request for any permitted release shall be transmitted to the Administrative Agent.

 

Upon such release of the Grantors’ Secured Obligations hereunder, or release of Collateral permitted hereunder, the Administrative Agent shall return any Collateral to the Grantors, or to the Person or Persons legally entitled thereto, and shall endorse, execute, deliver, record and file all instruments and documents, and do all other acts and things, reasonably required for the return of the applicable Collateral to the Grantors, or to the Person or Persons legally entitled thereto, and to evidence or document the release of the Administrative Agent’s and the other Secured Party’s interests in such Collateral arising under this Agreement, all as reasonably requested by, and at the sole expense of, the Grantors.

 

10.                               Continuing Effect.  This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Grantors for liquidation or reorganization, should the Grantors become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Grantors’ assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by the Administrative Agent or any other Secured Party, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part thereof is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

11.                               Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Secured Parties and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent, and any attempted assignment without such consent shall be null and void.  By accepting the benefits of the Loan Documents, each Hedge Bank and Cash Management Bank agrees to be bound by all of the applicable provisions thereof.

 

12.                               Amendments in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by each affected Grantor and the Administrative Agent, subject to any consents required under the Credit Agreement; provided that any provision of this Agreement imposing obligations on any Grantor may be waived by the Administrative Agent in a written instrument executed by the Administrative Agent; provided, further, no such waiver amendment, supplement or modification shall require the consent of any Hedge Bank or Cash Management Bank except as may be expressly provided in the Credit Agreement.

 

13.                               Additional Powers and Authorization.  The Administrative Agent shall be entitled to the benefits accruing to it as the Administrative Agent under the Credit Agreement and the other Loan Documents.  Notwithstanding anything contained herein to the contrary, the Administrative Agent may employ agents, trustees, or attorneys-in-fact and may vest any of

 

9

 

them with any Property (including, without limitation, any Collateral assigned hereunder), title, right or power deemed necessary for the purposes of such appointment.

 

14.                               WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.

 

15.                               SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS.

 

(a)                                 EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, BOROUGH OF MANHATTAN, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE GRANTORS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(b)                                 EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (A) OF

 

10

 

THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)                                  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

16.                               Miscellaneous.

 

(a)                                 The Grantors and the Administrative Agent may from time to time agree in writing to the release of certain of the Collateral from the security interest created hereby.

 

(b)                                 Any notice, request, demand or other communication required or permitted under this Agreement shall be in writing and shall be deemed to be properly given if done in accordance with Section 10.02 of the Credit Agreement.

 

(c)                                  Except as otherwise set forth in the Credit Agreement, the provisions of this Agreement may not be modified, amended, restated or supplemented, whether or not the modification, amendment, restatement or supplement is supported by new consideration, except by a written instrument duly executed and delivered by the Administrative Agent and the Grantors.

 

(d)                                 Except as otherwise set forth in the Credit Agreement or this Agreement, any waiver of the terms and conditions of this Agreement, or any Event of Default and its consequences hereunder or thereunder, and any consent or approval required or permitted by this Agreement to be given, may be made or given with, but only with, the written consent of the Administrative Agent on such terms and conditions as specified in the written instrument granting such waiver, consent or approval.

 

(e)                                  Any failure or delay by the Administrative Agent to require strict performance by the Grantors of any of the provisions, warranties, terms, and conditions contained herein, or in any other agreement, document, or instrument, shall not affect the Administrative Agent’s right to demand strict compliance and performance therewith, and any waiver of any default shall not waive or affect any other default, whether prior or subsequent thereto, and whether of the same or of a different type.  None of the warranties, conditions, provisions, and terms contained herein, or in any other agreement, document, or instrument, shall be deemed to have been waived by any act or knowledge of the Administrative Agent, its agents, officers, or employees, but only by an instrument in writing, signed by an officer of the Administrative Agent and directed to the Grantors, specifying such waiver.

 

11

 

(f)                                   If any term or provision of this Agreement conflicts with any term or provision of the Credit Agreement, the term or provision of the Credit Agreement shall control.

 

(g)                                  If any provision hereof shall be deemed to be invalid by any court, such invalidity shall not affect the remainder of this Agreement.

 

(h)                                 This Agreement supersedes all prior oral and written agreements between the parties hereto on the subject matter hereof.

 

(i)                                     This Agreement shall be binding upon, and for the benefit of, the parties hereto and their respective legal representatives, successors, and assigns.

 

(j)                                    This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement.

 

17.                               Amendment and Restatement of Existing Patent Assignment.  This Agreement constitutes an amendment and restatement of the Existing Patent Assignment in its entirely and the Existing Patent Assignment shall thereafter be and shall be deemed replaced and superseded in all respects by this Agreement.  The execution of this Agreement shall not operate as a novation, waiver of any right, power or remedy of the Administrative Agent or Secured Parties, nor constitute a waiver of any provision of the Existing Patent Assignment.  Each Grantor (i) acknowledges and agrees that this Agreement does not constitute a novation or termination of the “Secured Obligations” under the Existing Patent Assignment or the other Loan Documents as in effect prior to the effective date of the amendment and restatement of the Existing Patent Assignment (the “Restatement Effective Date”) and which remain outstanding as of the Restatement Effective Date, (ii) acknowledges and agrees that the “Secured Obligations” under the Existing Patent Assignment and the other Loan Documents are in all respects continuing (as amended and restated hereby and which are in all respects hereinafter subject to the terms herein), (iii) ratifies and reaffirms all of its payments and performance obligations, contingent or otherwise, under each Loan Document, (iv) and ratifies and reaffirms each of the liens and security interests granted by it to Bank of America, N.A., as administrative agent for the benefit of the secured parties named in (or referred to in) the Existing Patent Assignment, in or pursuant to the Existing Patent Assignment, and confirms and agrees that such liens and security interests are in all respects continuing and in full force and effect and shall continue to secure all of the Secured Obligations, including without limitation, all Obligations under the Credit Agreement and (v) agrees that this Agreement shall in no manner impair or otherwise adversely affect any of such liens and security interests.

 

[Remainder of page intentionally left blank.]

 

12

 

IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly authorized officer as of the date first written above.

 

	
 
    	
“Grantors”
    
	
 
    	
 
    
	
 
    	
BALLY   TECHNOLOGIES, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
ARCADE   PLANET, INC.,
    
	
 
    	
a   California corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING INTERNATIONAL, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
ALLIANCE   HOLDING COMPANY,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
SIERRA   DESIGN GROUP,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
CASINO   ELECTRONICS, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
COMPUDIGM   SERVICES, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Patent Security Agreement

 

 

	
 
    	
BALLY   GAMING SERVICES, LLC,
    
	
 
    	
 
    
	
 
    	
a   Nevada limited liability gaming company
    
	
 
    	
 
    
	
 
    	
By: B.G.I. GAMING & SYSTEMS, S. DE R.L.   DE C.V., the Sole Member of BALLY GAMING SERVICES, LLC
    
	
 
    	
 
    
	
 
    	
By: BALLY GAMING, INC., the Managing Member   of B.G.I. GAMING & SYSTEMS, S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
Address   for the Grantors:
    
	
 
    	
c/o   Bally Technologies, Inc.
    
	
 
    	
6601   South Bermuda Road
    
	
 
    	
Las   Vegas, Nevada 89119
    

 

Amended and Restated Patent Security Agreement

 

 

	
 
    	
SHFL   ENTERTAINMENT, INC.,
    
	
 
    	
a   Minnesota corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Patent Security Agreement

 

 

	
 
    	
SHFL   INTERNATIONAL LLC,
   a Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
By: SHUFFLE MASTER INTERNATIONAL, INC., the   Sole Member of SHFL INTERNATIONAL LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Patent Security Agreement

 

 

	
 
    	
SHFL   PROPERTIES LLC,
   a Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
By: SHFL ENTERTAINMENT, INC., the Sole Member   of SHFL PROPERTIES LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Patent Security Agreement

 

 

	
ACCEPTED   AND AGREED
    
	
AS   OF THE DATE FIRST
    
	
ABOVE   WRITTEN:
    
	
 
    
	
“Administrative   Agent”
    
	
 
    
	
BANK   OF AMERICA, N.A.,
    
	
as   Administrative Agent for the Secured Parties
    
	
 
    
	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    

 

Amended and Restated Patent Security Agreement

 

 

SCHEDULE 1

TO
 AMENDED AND RESTATED PATENT SECURITY AGREEMENT

 

U.S. PATENTS AND PATENT APPLICATIONS

 

	
Title
    	
 
    	
Application
   No.
    	
 
    	
Filing
   Date
    	
 
    	
Patent No.
    	
 
    	
Issue Date
    	
 
    	
Owner
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Amended and Restated Patent Security Agreement

 

 

EXHIBIT A

TO

AMENDED AND RESTATED PATENT SECURITY AGREEMENT

 

SUPPLEMENTAL PATENT SECURITY AGREEMENT

 

THIS SUPPLEMENTAL PATENT SECURITY AGREEMENT (this “Agreement”), dated as of [ · ], is made by each of the signatories hereto indicated as a Grantor (each a “Grantor” and collectively, the “Grantors”) in favor of Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), for the benefit of the Secured Parties under the Credit Agreement (as defined below). Capitalized terms not defined herein have the meanings assigned to them in the Patent Security Agreement (as defined below), and if not defined therein, then in the Credit Agreement (as defined below):

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Second Amended and Restated Credit Agreement, dated as of April 19, 2013, among Borrower, the Lenders referred to therein, and the Administrative Agent (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, 2013, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), Bally Technologies, Inc., a Nevada corporation (“Borrower”) and certain of its subsidiaries, including the  Grantors, executed and delivered that certain Amended and Restated Patent Security Agreement (the “Patent Security Agreement”), dated as of November 25, 2013.

 

WHEREAS, pursuant to the Patent Security Agreement, the Grantors, among other things, granted a security interest in (a) all of the Grantors’ now-existing, or hereafter acquired, right, title, and interest in and to all of the Grantors’ patents, together with all applications, registrations, and recordings relating to the foregoing in the United States Patent and Trademark Office (“USPTO”) or in any similar office or agency of the United States, any State thereof, or any political subdivision thereof, or in any other countries, and all reissues, divisions, continuations, continuations-in-part, extensions, reexaminations and renewals thereof, including those patents, applications, registrations and recordings described in Schedule 1 hereto (the “Patents”); (b) all patentable inventions and improvements thereto; (c) all licenses and sublicenses of Patents, to the extent that there exists no prohibition as a matter of law or pursuant to such agreements governing such license or sublicense on the transfer thereof for security as contemplated by this Agreement; (d) any and all proceeds of any of the foregoing, including license fees, royalties, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto;  and (e) the right to sue or otherwise recover for past, present and future infringement or other violation of the Patents or any licenses with respect thereto (collectively, the “Collateral”) which includes, without limitation, Collateral of the Grantors acquired after the date of the Patent Security Agreement (the “After-Acquired Patents”); and

 

WHEREAS, pursuant to the Patent Security Agreement, the Grantors agreed to execute and deliver this Agreement with respect to certain After-Acquired Patents in order to record with 

 

 

the United States Patent and Trademark Office the Administrative Agent’s security interest in such After-Acquired Patents.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Grantor hereby agrees with the Administrative Agent as follows:

 

Section 1.              Grant of Security Interest in Patent Collateral.  For valuable consideration, the Grantors and each of them hereby jointly and severally pledge and grant to the Administrative Agent (for and on behalf of the Secured Parties) a security interest, to secure the prompt and indefeasible payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations, and each of them, in and to the After-Acquired Patents described in Schedule 1 attached hereto.

 

Section 2.              Guaranty and Security Agreement.  The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Patent Security Agreement, and each Grantor hereby acknowledges and agrees that the rights and remedies of the Administrative Agent with respect to the security interest in the After-Acquired Patents are more fully set forth in the Patent Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

 

Section 3.              Counterparts.  This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.

 

Section 4.              Governing Law.  This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

 

21

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 

	
 
    	
 
    	
Sincerely,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[ · ]
    
	
 
    	
 
    	
as   a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[ · ]
    
	
 
    	
 
    	
as   a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
ACCEPTED   AND AGREED
    	
 
    	
 
    
	
as   of the date first above written:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Bank   of America, N.A.
    	
 
    	
 
    
	
as   the Administrative Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

[SIGNATURE PAGE TO SUPPLEMENTAL PATENT SECURITY AGREEMENT]

 

 

SCHEDULE 1
 to
 SUPPLEMENTAL PATENT SECURITY AGREEMENT

 

U.S. PATENTS AND PATENT APPLICATIONS

 

	
Title
    	
 
    	
Application
   No.
    	
 
    	
Filing
   Date
    	
 
    	
Patent No.
    	
 
    	
Issue Date
    	
 
    	
Owner
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT B

TO
 AMENDED AND RESTATED PATENT SECURITY AGREEMENT

 

INSTRUMENT OF JOINDER

 

THIS INSTRUMENT OF JOINDER (“Joinder”) is executed as of                                     ,                 , by                                                 , a                                                        (“Joining Party”), and delivered to Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), pursuant to the Amended and Restated Patent Security Agreement dated as of November 25, 2013, made by each of the Grantors listed on the signature pages thereto and certain other Grantors party thereto from time to time in favor of the Administrative Agent for the benefit of the Secured Parties (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Patent Security Agreement”).  Terms used but not defined in this Joinder shall have the meanings defined for those terms in the Patent Security Agreement.

 

RECITALS

 

(A)          The  Patent Security Agreement was made by the Grantors in favor of the Administrative Agent for the benefit of the Secured Parties in accordance with that certain Second Amended and Restated Credit Agreement dated as of April 19, 2013 (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), by and among Bally Technologies, Inc., a Nevada corporation (“Borrower”), the Lenders therein named and Bank of America, N.A., as the Administrative Agent.

 

(B)          Joining Party has become a Subsidiary of Borrower, and as such is required pursuant to Section 6.12 of the Credit Agreement to become a Grantor under the Patent Security Agreement.

 

(C)          Joining Party expects to realize direct and indirect benefits as a result of the availability to Borrower of the Loans under the Credit Agreement and the availability of financing accommodations to the Loan Parties under the Secured Cash Management Agreements and Secured Hedge Agreements.

 

NOW THEREFORE, Joining Party agrees as follows:

 

AGREEMENT

 

(1)           By this Joinder, Joining Party becomes a “Grantor” under and pursuant to Section 8 of the  Patent Security Agreement.  Joining Party agrees that, upon its execution hereof, it will become a Grantor under the  Patent Security Agreement with respect to the Secured Obligations, and will be bound by all terms, conditions, and duties applicable to a Grantor under the  Patent Security Agreement.  Without limiting the foregoing, the Joining Party hereby pledges and grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, and a continuing lien on, all of the Collateral of the Joining Party, wherever located and whether 

 

 

now owned or existing or at any time hereafter acquired by the Joining Party or in which the Joining Party now has or at any time in the future may acquire any right, title or interest, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations. Each reference to a “Grantor” in the Patent Security Agreement shall be deemed to include the Joining Party.

 

(2)           The Joining Party represents and warrants that the representations and warranties made by it as a Grantor under the Patent Security Agreement (giving effect to this Joinder and to any supplements to the schedules thereto delivered in connection herewith) are true and correct in all material respects on and as of the date hereof (with all references to “the date hereof” contained in the Patent Security Agreement being references to the date of this Joinder with respect to the Joining Party).

 

(3)           The Joining Party hereby represents and warrants that set forth on Schedule I attached hereto is a true and correct schedule of all of Grantors’ Patents registered, or subject to pending applications, in the USPTO as of the date hereof.

 

(4)           Except as expressly supplemented hereby, the Patent Security Agreement shall remain in full force and effect.

 

(5)           This Joinder shall be governed by, and construed in accordance with, the law of the State of New York.

 

(6)           The effective date of this Joinder is                   ,             .

 

	
 
    	
 
    	
“Joining   Party”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
a
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
BANK   OF AMERICA, N.A,
    	
 
    	
 
    
	
as   Administrative Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

SCHEDULE 1

TO
 INSTRUMENT OF JOINDER

 

U.S. PATENTS AND PATENT APPLICATIONS

 

	
Title
    	
 
    	
Application
   No.
    	
 
    	
Filing
   Date
    	
 
    	
Patent No.
    	
 
    	
Issue Date
    	
 
    	
Owner
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

Exhibit C

 

Form of Amended Trademark Security Agreement

 

 

Execution Version

 

AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT

 

This AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT (this “Agreement”) dated as of November 25, 2013, is made by Bally Technologies, Inc., a Nevada corporation (“Borrower”) and each of its subsidiaries listed on the signature pages hereto (each a “Subsidiary Grantor”, and together with Borrower and each other Person who may become a party hereto pursuant to Section 8 of this Agreement, the “Grantors”), in favor of Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), for the benefit of the Secured Parties under the Credit Agreement referred to below, with reference to the following facts:

 

RECITALS

 

A.                                    Pursuant to that Certain Credit Agreement, dated as of September 26, 2008, among Borrower, the Lenders referred to therein, and the Administrative Agent (as from time to time amended, restated, extended, renewed, modified or supplemented), the Grantors executed and delivered that certain Trademark Assignment, dated as of September 26, 2008 (as from time to time amended, restated, extended, renewed, modified or supplemented, the “Existing Trademark Assignment”).

 

B.                                    Borrower has entered into that certain Second Amended and Restated Credit Agreement dated as of April 19, 2013 among Borrower, the Lenders referred to therein, and the Administrative Agent (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, 2013, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), and accordingly the parties hereto desire to amend and restate the Existing Trademark Assignment pursuant to this Agreement.  This Agreement is one of the Loan Documents referred to in the Credit Agreement.

 

C.                                    The Subsidiary Grantors have guaranteed the obligations of Borrower pursuant to the Credit Agreement.

 

D.                                    Pursuant to the Credit Agreement, the Lenders had made, and are making, certain credit facilities available to Borrower.  Additionally, as contemplated by the Credit Agreement, from time to time, certain Secured Parties may enter into Secured Cash Management Agreements and/or Secured Hedge Agreements with the Borrower and/or the Grantors.

 

E.                                     As a condition to the continued availability of such credit facilities, Secured Cash Management Agreements and Secured Hedge Agreements, the Grantors are required to enter into this Agreement to pledge certain Collateral (as hereinafter defined) to the Administrative Agent for the benefit of the Secured Parties as herein provided.

 

F.                                      The Grantors expect to realize direct and indirect benefits as the result of the availability of (i) the aforementioned credit facilities to the Borrower and (ii) the aforementioned Secured Cash Management Agreements and Secured Cash Hedge Agreements, as the result of financial or business support which will be provided to the Grantors by Borrower and each other Grantor.

 

 

AGREEMENT

 

NOW, THEREFORE, in order to induce the Lenders to extend and maintain the aforementioned credit facilities to Borrower and the Secured Parties to extend and maintain the financial accommodations under the Secured Cash Management Agreements and Secured Hedge Agreements, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Grantors hereby jointly and severally represent, warrant, covenant and agree as follows:

 

1.                                      Definitions.  Terms defined in the Credit Agreement and not otherwise defined in this Agreement shall have the meanings defined for those terms in the Credit Agreement.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Agreement” means this Amended and Restated Trademark Security Agreement, and any extensions, modifications, renewals, restatements, supplements or amendments hereof, including, without limitation, any documents or agreements by which additional Grantors become party hereto.

 

“Collateral” means and includes all of the following: (a) all of the Grantors’ now-existing, or hereafter acquired, right, title, and interest in and to all of the Grantors’ trademarks, trade names, trade styles, trade dress, logos and service marks; all prints and labels on which said trademarks, trade names, trade styles, and service marks appear, have appeared, or will appear, and all designs and general intangibles of a like nature; all applications, registrations, and recordings relating to the foregoing in the United States Patent and Trademark Office (“USPTO”) or in any similar office or agency of the United States, any State thereof, or any political subdivision thereof, or in any other countries, and all reissues, extensions, and renewals thereof, including those trademark registrations and applications described in Schedule 1 hereto (the “Trademarks”); (b) the goodwill of the business symbolized by each of the Trademarks, including, without limitation, all customer lists and other records relating to the distribution of products or services bearing the Trademarks; (c) all licenses and sublicenses of Trademarks, to the extent that there exists no prohibition as a matter of law or pursuant to such agreements governing such license or sublicense on the transfer thereof for security as contemplated by this Agreement; (d) any and all proceeds of any of the foregoing, including license fees, royalties, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto; and (e) the right to sue or otherwise recover for past, present and future infringement or other violation of the Trademarks or any licenses with respect thereto. Notwithstanding anything herein to the contrary, in no event shall the Collateral include or the security interest granted under Section 2 hereof attach to any “intent-to-use” application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law.

 

2

 

“Grantors” means those Persons mentioned in the preamble to this Assignment and those entities that become parties hereto as provided in Section 6.12 of the Credit Agreement or Section 8 hereof, and each of them, and any one or more of them, jointly and severally.

 

“Secured Obligations” means (a) in the case of Borrower, any and all present and future Obligations of any type or nature of Borrower arising under or relating to the Credit Agreement, the Secured Cash Management Agreements, the Secured Hedge Agreements and the Loan Documents or any one or more of them and (b) in the case of the Subsidiary Grantors, all present and future Obligations of any type or nature of the Subsidiary Grantors, or any one or more of them, arising under or relating to the Guaranty or any other Loan Documents, or with respect to any Secured Cash Management Agreement or any Secured Hedge Agreement or any one or more of them; provided, that in the case of each Grantor (other than the Borrower), the Secured Obligations of such Grantor shall exclude any Excluded Swap Obligations of such Grantor.

 

2.                                      Grant of Security Interest.  For valuable consideration, the Grantors and each of them hereby jointly and severally pledge and grant to the Administrative Agent (for and on behalf of the Secured Parties) a security interest, to secure the prompt and indefeasible payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations, and each of them, in and to all of the presently existing and hereafter acquired Collateral.  This Agreement is a continuing and irrevocable agreement and all the rights, powers, privileges and remedies hereunder shall apply to any and all Secured Obligations, including those arising under successive transactions which shall either continue the Secured Obligations, increase or decrease them and notwithstanding the bankruptcy of any Grantor or any other event or proceeding affecting any Grantor.

 

3.                                      Representations, Warranties and Covenants.  The Grantors, and each of them, represent, warrant and agree that:

 

(a)                                 All of the existing Collateral is valid and subsisting in full force and effect, and the Grantors have good and marketable title thereto, and the right and power to grant the security interests granted hereunder.  The Grantors will, at their expense, perform all acts and execute all documents necessary to maintain the existence of the Collateral as valid and subsisting, including, without limitation, the filing of any maintenance fees or affidavits.  The Collateral is not subject to any Liens or licenses of any nature whatsoever, whether recorded or unrecorded, except as permitted by the Credit Agreement.

 

(b)                                 As of the date hereof, none of the Grantors owns any Trademarks registered, or subject to pending applications, in the USPTO, other than those against which the Administrative Agent has already perfected a security interest pursuant to the Existing Trademark Assignment, or those described in Schedule 1.

 

(c)                                  Upon the delivery of any report supplementing Schedule 5.17 to the Credit Agreement made pursuant to Section 6.02(j) of the Credit Agreement, the applicable Grantor shall execute and deliver to the Administrative Agent a supplement to this Agreement substantially in the form of Exhibit A hereto granting the Administrative Agent a security interest in any Trademarks reflected on such report supplementing

 

3

 

Schedule 5.17 to the Credit Agreement.  Each Grantor authorizes the Administrative Agent to modify this Agreement by amending Schedule 1 to include any new Trademark, and any Trademark renewal of any Grantor applied for and or otherwise obtained hereafter.

 

(d)                                 No Grantor has abandoned any of the Trademarks, and no Grantor will do any act, or omit to do any act, whereby the Trademarks may become abandoned, canceled, invalidated, or unenforceable, where such abandonment, cancellation, invalidation, or unenforceability, may constitute a Material Adverse Effect.  Each Grantor shall notify the Administrative Agent promptly if it knows, or has reason to know, of any reason why any application, registration, or recording may become abandoned, canceled, invalidated, or unenforceable, and if as a result thereof, a Material Adverse Effect may result.

 

(e)                                  The Grantors will render any assistance, as the Administrative Agent may reasonably determine is necessary, to the Administrative Agent in any proceeding before the USPTO, any federal or state court, or any similar office or agency in the United States, or any State therein, or any other country, to protect the Administrative Agent’s security interest in the Trademarks.

 

(f)                                   The Grantors assume all responsibility and liability arising from the use of the Trademarks, and each Grantor hereby indemnifies and holds the Administrative Agent and each of the Secured Parties harmless from and against any claim, suit, loss, damage, or expense (including reasonable attorneys’ fees) arising out of any alleged defect in any product manufactured, promoted, or sold by any Grantor (or any Affiliate or Subsidiary thereof) in connection with any Trademark or out of the manufacture, promotion, labeling, sale, or advertisement of any such product by any Grantor or any Affiliate or Subsidiary thereof.

 

(g)                                  The Grantors shall promptly notify the Administrative Agent in writing of any adverse determination in any proceeding in the USPTO or any other foreign or domestic Governmental Agency, court or body, regarding any Grantor’s ownership of any of the Trademarks.  In the event of any material infringement of any of the Trademarks by a third party, the Grantors shall promptly notify the Administrative Agent of such infringement and sue for and diligently pursue damages for such infringement unless it is in the best interest of the Grantors not to pursue such proceeding.  In the event that the Grantors elect not to pursue any rights that might apply to the applicable Grantor in connection with the infringement, the Grantors will notify the Administrative Agent of such election.

 

(h)                                 Each Grantor shall, at its sole expense, do, make, execute and deliver all such additional and further acts, things, assurances, and instruments, in each case in form and substance satisfactory to the Administrative Agent, relating to the creation, validity, or perfection of the security interests provided for in this Agreement under 35 U.S.C. Section 261, 15 U.S.C. Section 1051 et seq., the Uniform Commercial Code or other Law of the United States, the State of New York, or of any countries or other States as the Administrative Agent may from time to time reasonably request, and shall take all such

 

4

 

other action as the Administrative Agent may reasonably require to more completely vest in and assure to the Administrative Agent its security interest in any of the Collateral, and each Grantor hereby irrevocably authorizes the Administrative Agent or its designee, at such Grantor’s expense, to execute such documents, and file such financing statements with respect thereto with or without such Grantor’s signature, as the Administrative Agent may reasonably deem appropriate.  In the event that any recording or refiling (or the filing of any statement of continuation or assignment of any financing statement) or any other action, is required at any time to protect and preserve such security interest, the Grantors shall, at their sole cost and expense, cause the same to be done or taken at such time and in such manner as may be necessary and as may be reasonably requested by the Administrative Agent.  Each Grantor further authorizes the Administrative Agent to have this or any other similar security agreement recorded or filed with the USPTO or other appropriate federal, state or government office.

 

(i)                                     Following the Administrative Agent’s request thereof and the applicable Grantor’s failure to perform, the Administrative Agent is hereby irrevocably appointed by each Grantor as its lawful attorney and agent, with full power of substitution to execute and deliver on behalf of and in the name of any or all Grantors, such financing statements and other documents and agreements, and to take such other action as the Administrative Agent may deem necessary for the purpose of perfecting, protecting or effecting the security interests granted herein and effected hereby, and any mortgages or Liens necessary or desirable to implement or effectuate the same, under any applicable Law, and the Administrative Agent is hereby authorized to file on behalf of and in the name of any or all Grantors, at the Grantors’ sole expense, such financing statements, documents and agreements in any appropriate governmental office.

 

(j)                                    The Administrative Agent may, in its sole discretion, pay any amount, or do any act which the Grantors fail to pay or do as required hereunder to preserve, defend, protect, maintain, record, amend, or enforce the Secured Obligations, the Collateral, or the security interest granted hereunder, including, but not limited to, all filing or recording fees, court costs, collection charges, and reasonable attorneys’ fees.  The Grantors will be liable to the Administrative Agent for any such payment, which payment shall be deemed an advance by the Lenders to the Grantors, shall be payable on demand, together with interest at the per annum rate then applicable to Base Rate Advances under the Credit Agreement, or the Default Rate, if applicable, and shall be part of the Secured Obligations.

 

4.                                      Events of Default.  Any “Event of Default” as defined in the Credit Agreement shall constitute an Event of Default hereunder.

 

5.                                      Rights and Remedies.  Upon the occurrence and during the continuance of any such Event of Default, in addition to all other rights and remedies of the Administrative Agent, whether provided under Law, the Credit Agreement or otherwise, the Administrative Agent may enforce its security interest hereunder which may be exercised without notice to, or consent by, any Grantor, except as such notice or consent is expressly provided for hereunder.  Upon such enforcement:

 

5

 

(a)                                 the Administrative Agent may use any of the Trademarks for the sale of goods, completion of work in process, or rendering of services in connection with enforcing any security interest granted to the Administrative Agent by Grantors.

 

(b)                                 the Administrative Agent may grant such license or licenses relating to the Collateral for such term or terms, on such conditions and in such manner, as the Administrative Agent shall, in its sole discretion, deem appropriate.  Such license or licenses may be general, special, or otherwise, and may be granted on an exclusive or nonexclusive basis throughout all or part of the United States of America, its territories and possessions, and all foreign countries.

 

(c)                                  the Administrative Agent may assign, sell, or otherwise dispose of the Collateral, or any part thereof, either with or without special conditions or stipulations, except that the Administrative Agent agrees to provide the Grantors with five (5) days’ prior written notice of any proposed disposition of the Collateral.  The requirement of sending notice conclusively shall be met if such notice is mailed, first class mail, postage prepaid, to Borrower, on behalf of all Grantors.  Each Grantor hereby irrevocably appoints Borrower as its agent for the purpose of receiving notice of sale hereunder, and agrees that such Grantor conclusively shall be deemed to have received notice of sale when notice of sale has been given to Borrower.  Each Grantor expressly waives any right to receive notice of any public or private sale of any Collateral or other security for the Secured Obligations except as expressly provided in this Section 5(c).  The Administrative Agent shall have the power to buy the Collateral, or any part thereof, and the Administrative Agent shall also have the power to execute assurances and perform all other acts which the Administrative Agent may, in the Administrative Agent’s sole discretion, deem appropriate or proper to complete such assignment, sale, or disposition.  In any such event, the Grantors shall be liable for any deficiency.

 

(d)                                 In addition to the foregoing, in order to implement the assignment, sale or other disposition of any of the Collateral pursuant to Section 5(c) hereof, the Administrative Agent may, at any time, execute and deliver, on behalf of the Grantors, and each of them, pursuant to the authority granted in powers of attorney, one or more instruments of assignment of the Trademarks (or any application, registration, or recording relating thereto), in form suitable for filing, recording, or registration.  The Grantors agree to pay the Administrative Agent, on demand, all costs incurred in any such transfer of the Collateral, including, but not limited to any taxes, fees, and reasonable attorneys’ fees.

 

(e)                                  The Administrative Agent may first apply the proceeds actually received from any such use, license, assignment, sale, or other disposition of Collateral first to the reasonable costs and expenses thereof, including, without limitation, reasonable attorneys’ fees and all legal, travel, and other expenses which may be incurred by the Administrative Agent.  Thereafter, the Administrative Agent may apply any remaining proceeds to such of the Secured Obligations as provided in the Credit Agreement.  The Grantors shall remain liable to the Administrative Agent for any expenses or Secured Obligations remaining unpaid after the application of such proceeds, and the Grantors

 

6

 

will pay the Administrative Agent, on demand, any such unpaid amount, together with interest at the rate(s) set forth in the Credit Agreement.

 

(f)                                   Upon request of the Administrative Agent, the Grantors shall supply to the Administrative Agent, or the Administrative Agent’s designee, the Grantors’ knowledge and expertise relating to the manufacture and sale of the products and services bearing the Trademarks and the Grantors’ customer lists and other records relating to the Trademarks and the distribution thereof.

 

Nothing contained herein shall be construed as requiring the Administrative Agent to take any such action at any time.  All of the Administrative Agent’s rights and remedies, whether provided under Law, the Credit Agreement, this Agreement, or otherwise, shall be cumulative, and none is exclusive of any right or remedy otherwise provided herein or in any of the other Loan Documents, at law or in equity.  Such rights and remedies may be enforced alternatively, successively, or concurrently.

 

6.                                      Waivers.

 

(a)                                 Each Grantor hereby waives any and all rights that it may have to a judicial hearing, if any, in advance of the enforcement of any of the Administrative Agent’s rights hereunder, including, without limitation, its rights following any Event of Default and during the continuance thereof to take immediate possession of the Collateral and exercise its rights with respect thereto.

 

(b)                                 The Administrative Agent shall not be required to marshal any present or future security for (including, but not limited to, this Agreement and the Collateral subject to a security interest hereunder), or guaranties of, the Secured Obligations or any of them, or to resort to such security or guaranties in any particular order.  Each Grantor hereby agrees that it will not invoke any Law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Administrative Agent’s rights under this Agreement or any other instrument evidencing any of the Secured Obligations or by which any of such Secured Obligations is secured or guaranteed, and each Grantor hereby irrevocably waives the benefits of all such Laws.

 

(c)                                  Except for notices specifically provided for herein, each Grantor hereby expressly waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description.  With respect both to the Secured Obligations and any collateral therefor, each Grantor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, of any Person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Administrative Agent may deem advisable.  The Administrative Agent shall have no duty as to the protection of the Collateral or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining thereto except as otherwise required by Law.  The Administrative Agent may exercise its rights with respect to the Collateral without

 

7

 

resorting or regard to other collateral or sources of reimbursement for liability.  The Administrative Agent shall not be deemed to have waived any of its rights upon or under the Credit Agreement or the Collateral unless such waiver be in writing and signed by the Administrative Agent.  No delay or omission on the part of the Administrative Agent in exercising any right shall operate as a waiver of any right on any future occasion.  All rights and remedies of the Administrative Agent under the Credit Agreement or on the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly or concurrently.

 

7.                                      Costs and Expenses.

 

(a)                                 Without limiting any reimbursement obligations under the Credit Agreement and the other Loan Documents, and without duplication thereof, the Grantors will pay any and all charges, costs and taxes incurred in implementing or subsequently amending this Agreement, including, without limitation, recording and filing fees, appraisal fees, stamp taxes, and reasonable fees and disbursements of each Secured Party’s counsel incurred by each Secured Party, and fees and time charges for attorneys who may be employees of each Secured Party, in connection with this Agreement, and in the enforcement of this Agreement and in the enforcement or foreclosure of any Liens, security interests or other rights of any Secured Party under this Agreement, or under any other documentation heretofore, now, or hereafter given to any Secured Party in furtherance of the transactions contemplated hereby.

 

(b)                                 The Grantors agree to reimburse each Secured Party for and indemnify it against, any and all losses, expenses and liabilities (including liabilities for penalties) of whatever kind or nature sustained and reasonably incurred in connection with any claim, demand, suit or legal or arbitration proceeding relating to this Agreement, or the exercise of any rights or powers hereunder, including reasonable attorneys’ fees and disbursements, and fees and time charges for attorneys who may be employees of such Secured Party, except losses, expenses and liabilities arising out of such Secured Party’s own gross negligence or willful misconduct.

 

8.                                      Joinder.  Any other Person may become a Grantor hereunder and become bound by the terms and conditions of this Agreement by executing and delivering to the Administrative Agent an Instrument of Joinder substantially in the form attached hereto as Exhibit B, accompanied by such documentation as the Administrative Agent may require to establish the due organization, valid existence and good standing of such Person, its qualification to engage in business in each material jurisdiction in which it is required to be so qualified, its authority to execute, deliver and perform this Agreement, and the identity, authority and capacity of each Responsible Officer thereof authorized to act on its behalf.

 

9.                                      Release of Grantors.  This Agreement and all of the Secured Obligations of the Grantors hereunder shall be released upon termination of the Aggregate Commitments and payment in full of all of the Secured Obligations (other than (A) contingent indemnification obligations as to which no claim has been made and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank of Hedge Bank shall have been made) and

 

8

 

the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made).

 

Additionally, Collateral that is released or is required to be released from the security interest created by this Agreement in order to permit the Grantors to consummate any disposition of stock or assets, merger, consolidation, amalgamation, acquisition, transfer or dividend payment or distribution that the Grantors are permitted to consummate pursuant to the Loan Documents, if any, shall be so released by the Administrative Agent at such times and to the extent necessary or appropriate to permit the Grantors to consummate such permitted transactions promptly following the Administrative Agent’s receipt of written request therefor by the Grantors specifying the purpose for which release is requested and such further certificates or other documents as the Administrative Agent shall request in its reasonable discretion to confirm that the Grantors are permitted to consummate such permitted transaction and to confirm its replacement Lien on appropriate collateral (unless replacement collateral is not required pursuant to the Loan Documents).  Any request for any permitted release shall be transmitted to the Administrative Agent.

 

Upon such release of the Grantors’ Secured Obligations hereunder, or release of Collateral permitted hereunder, the Administrative Agent shall return any Collateral to the Grantors, or to the Person or Persons legally entitled thereto, and shall endorse, execute, deliver, record and file all instruments and documents, and do all other acts and things, reasonably required for the return of the applicable Collateral to the Grantors, or to the Person or Persons legally entitled thereto, and to evidence or document the release of the Administrative Agent’s and the other Secured Party’s interests in such Collateral arising under this Agreement, all as reasonably requested by, and at the sole expense of, the Grantors.

 

10.                               Continuing Effect.  This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Grantors for liquidation or reorganization, should the Grantors become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Grantors’ assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by the Administrative Agent or any other Secured Party, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part thereof is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

11.                               Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Secured Parties and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent, and any attempted assignment without such consent shall be null and void.  By accepting the benefits of the Loan Documents, each Hedge Bank and Cash Management Bank agrees to be bound by all of the applicable provisions thereof.

 

9

 

12.                               Amendments in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by each affected Grantor and the Administrative Agent, subject to any consents required under the Credit Agreement; provided that any provision of this Agreement imposing obligations on any Grantor may be waived by the Administrative Agent in a written instrument executed by the Administrative Agent; provided, further, no such waiver amendment, supplement or modification shall require the consent of any Hedge Bank or Cash Management Bank except as may be expressly provided in the Credit Agreement.

 

13.                               Additional Powers and Authorization.  The Administrative Agent shall be entitled to the benefits accruing to it as the Administrative Agent under the Credit Agreement and the other Loan Documents.  Notwithstanding anything contained herein to the contrary, the Administrative Agent may employ agents, trustees, or attorneys-in-fact and may vest any of them with any Property (including, without limitation, any Collateral assigned hereunder), title, right or power deemed necessary for the purposes of such appointment.

 

14.                               WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.

 

15.                               SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS.

 

(a)                                 EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, BOROUGH OF MANHATTAN, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY

 

10

 

BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE GRANTORS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(b)                                 EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (A) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)                                  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

16.                               Miscellaneous.

 

(a)                                 The Grantors and the Administrative Agent may from time to time agree in writing to the release of certain of the Collateral from the security interest created hereby.

 

(b)                                 Any notice, request, demand or other communication required or permitted under this Agreement shall be in writing and shall be deemed to be properly given if done in accordance with Section 10.02 of the Credit Agreement.

 

(c)                                  Except as otherwise set forth in the Credit Agreement, the provisions of this Agreement may not be modified, amended, restated or supplemented, whether or not the modification, amendment, restatement or supplement is supported by new consideration, except by a written instrument duly executed and delivered by the Administrative Agent  and the Grantors.

 

(d)                                 Except as otherwise set forth in the Credit Agreement or this Agreement, any waiver of the terms and conditions of this Agreement, or any Event of Default and its consequences hereunder or thereunder, and any consent or approval required or permitted by this Agreement to be given, may be made or given with, but only with, the written consent of the Administrative Agent on such terms and conditions as specified in the written instrument granting such waiver, consent or approval.

 

11

 

(e)                                  Any failure or delay by the Administrative Agent to require strict performance by the Grantors of any of the provisions, warranties, terms, and conditions contained herein, or in any other agreement, document, or instrument, shall not affect the Administrative Agent’s right to demand strict compliance and performance therewith, and any waiver of any default shall not waive or affect any other default, whether prior or subsequent thereto, and whether of the same or of a different type.  None of the warranties, conditions, provisions, and terms contained herein, or in any other agreement, document, or instrument, shall be deemed to have been waived by any act or knowledge of the Administrative Agent, its agents, officers, or employees, but only by an instrument in writing, signed by an officer of the Administrative Agent and directed to the Grantors, specifying such waiver.

 

(f)                                   If any term or provision of this Agreement conflicts with any term or provision of the Credit Agreement, the term or provision of the Credit Agreement shall control.

 

(g)                                  If any provision hereof shall be deemed to be invalid by any court, such invalidity shall not affect the remainder of this Agreement.

 

(h)                                 This Agreement supersedes all prior oral and written assignments and agreements between the parties hereto on the subject matter hereof.

 

(i)                                     This Agreement shall be binding upon, and for the benefit of, the parties hereto and their respective legal representatives, successors, and assigns.

 

(j)                                    This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement.

 

17.                               Amendment and Restatement of Existing Trademark Assignment.  This Assignment constitutes an amendment and restatement of the Existing Trademark Assignment in its entirely and the Existing Trademark Assignment shall thereafter be and shall be deemed replaced and superseded in all respects by this Agreement.  The execution of this Agreement shall not operate as a novation, waiver of any right, power or remedy of the Administrative Agent or Secured Parties, nor constitute a waiver of any provision of the Existing Trademark Assignment.  Each Grantor (i) acknowledges and agrees that this Agreement does not constitute a novation or termination of the “Secured Obligations” under the Existing Trademark Assignment or the other Loan Documents as in effect prior to the effective date of the amendment and restatement of the Existing Trademark Assignment (the “Restatement Effective Date”) and which remain outstanding as of the Restatement Effective Date, (ii) acknowledges and agrees that the “Secured Obligations” under the Existing Trademark Assignment and the other Loan Documents are in all respects continuing (as amended and restated hereby and which are in all respects hereinafter subject to the terms herein), (iii) ratifies and reaffirms all of its payments and performance obligations, contingent or otherwise, under each Loan Document, (iv) and ratifies and reaffirms each of the liens and security interests granted by it to Bank of America, N.A., as administrative agent for the benefit of the secured parties named in (or referred to in) the Existing Trademark Assignment, in or pursuant to the Existing Patent

 

12

 

Assignment, and confirms and agrees that such liens and security interests are in all respects continuing and in full force and effect and shall continue to secure all of the Secured Obligations, including without limitation, all Obligations under the Credit Agreement and (v) agrees that this Assignment shall in no manner impair or otherwise adversely affect any of such liens and security interests.

 

[Remainder of page intentionally left blank.]

 

13

 

IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly authorized officer as of the date first written above.

 

	
 
    	
“Grantors”
    
	
 
    	
 
    
	
 
    	
BALLY   TECHNOLOGIES, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
ARCADE   PLANET, INC.,
    
	
 
    	
a   California corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING INTERNATIONAL, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
ALLIANCE   HOLDING COMPANY,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
SIERRA   DESIGN GROUP,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
CASINO   ELECTRONICS, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
COMPUDIGM   SERVICES, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Trademark Security Agreement

 

 

	
 
    	
BALLY   GAMING SERVICES, LLC,
    
	
 
    	
 
    
	
 
    	
a   Nevada limited liability gaming company
    
	
 
    	
 
    
	
 
    	
By:         B.G.I.   GAMING & SYSTEMS, S. DE R.L. DE C.V., the Sole Member of BALLY   GAMING SERVICES, LLC
    
	
 
    	
 
    
	
 
    	
By:         BALLY   GAMING, INC., the Managing Member of B.G.I. GAMING & SYSTEMS,   S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Trademark Security Agreement

 

 

	
 
    	
SHFL   ENTERTAINMENT, INC.,
    
	
 
    	
a   Minnesota corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Trademark Security Agreement

 

 

	
 
    	
SHFL   INTERNATIONAL LLC,
    
	
 
    	
a   Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
By:         SHUFFLE MASTER   INTERNATIONAL, INC., the Sole Member of SHFL INTERNATIONAL LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Trademark Security Agreement

 

 

	
 
    	
SHFL   PROPERTIES LLC,
    
	
 
    	
a   Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
By:         SHFL   ENTERTAINMENT, INC., the Sole Member of SHFL PROPERTIES LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Trademark Security Agreement

 

 

ACCEPTED AND AGREED

AS OF THE DATE FIRST

ABOVE WRITTEN:

 

“Administrative Agent”

 

BANK OF AMERICA, N.A.,

as Administrative Agent for the Secured Parties

 

 

	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    

 

Amended and Restated Trademark Security Agreement

 

 

SCHEDULE 1

TO
 AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT

 

U.S. REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS

 

	
Trademark
    	
 
    	
App. No.
    	
 
    	
App.
   Date
    	
 
    	
Reg. No.
    	
 
    	
Registration
   Date
    	
 
    	
Status
    	
 
    	
Post Reg.
   Owner
    	
 
    	
Registrant
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Amended and Restated Trademark Security Agreement

 

 

EXHIBIT A

TO

AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT

 

SUPPLEMENTAL TRADEMARK SECURITY AGREEMENT

 

THIS SUPPLEMENTAL TRADEMARK SECURITY AGREEMENT (this “Agreement”), dated as of [ · ], is made by each of the signatories hereto indicated as a Grantor (each a “Grantor” and collectively, the “Grantors”) in favor of Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), for the benefit of the Secured Parties under the Credit Agreement (as defined below). Capitalized terms not defined herein have the meanings assigned to them in the Trademark Security Agreement (as defined below), and if not defined therein, then in the Credit Agreement (as defined below):

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Second Amended and Restated Credit Agreement, dated as of April 19, 2013, among Borrower, the Lenders referred to therein, and the Administrative Agent (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, 2013, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), Bally Technologies, Inc., a Nevada corporation (“Borrower”) and certain of its subsidiaries, including the  Grantors, executed and delivered that certain Amended and Restated Trademark Security Agreement (the “Trademark Security Agreement”), dated as of November 25, 2013.

 

WHEREAS, pursuant to the Trademark Security Agreement, the Grantors, among other things, granted a security interest in (a) all of the Grantors’ now-existing, or hereafter acquired, right, title, and interest in and to all of the Grantors’ trademarks, trade names, trade styles, trade dress, logos and service marks; all prints and labels on which said trademarks, trade names, trade styles, and service marks appear, have appeared, or will appear, and all designs and general intangibles of a like nature; all applications, registrations, and recordings relating to the foregoing in the United States Patent and Trademark Office (“USPTO”) or in any similar office or agency of the United States, any State thereof, or any political subdivision thereof, or in any other countries, and all reissues, extensions, and renewals thereof, including those trademark registrations and applications described in Schedule 1 hereto (the “Trademarks”); (b) the goodwill of the business symbolized by each of the Trademarks, including, without limitation, all customer lists and other records relating to the distribution of products or services bearing the Trademarks; (c) all licenses and sublicenses of Trademarks, to the extent that there exists no prohibition as a matter of law or pursuant to such agreements governing such license or sublicense on the transfer thereof for security as contemplated by this Agreement; (d) any and all proceeds of any of the foregoing, including license fees, royalties, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto; and (e) the right to sue or otherwise recover for past, present and future infringement or other violation of the Trademarks or any licenses with respect thereto (in any case, not including any “intent-to-use” application for registration of a trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect

 

 

thereto, solely to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law) (collectively, the “Collateral”) which includes, without limitation, Collateral of the Grantors acquired after the date of the Trademark Security Agreement (the “After-Acquired Trademarks”); and

 

WHEREAS, pursuant to the Trademark Security Agreement, the Grantors agreed to execute and deliver this Agreement with respect to certain After-Acquired Trademarks in order to record with the United States Patent and Trademark Office the Administrative Agent’s security interest in such After-Acquired Trademarks.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Grantor hereby agrees with the Administrative Agent as follows:

 

Section 1.                                           Grant of Security Interest in Trademark Collateral.  For valuable consideration, the Grantors and each of them hereby jointly and severally pledge and grant to the Administrative Agent (for and on behalf of the Secured Parties) a security interest, to secure the prompt and indefeasible payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations, and each of them, in and to the After-Acquired Trademarks described in Schedule 1 attached hereto.

 

Section 2.                                           Guaranty and Security Agreement.  The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Trademark Security Agreement, and each Grantor hereby acknowledges and agrees that the rights and remedies of the Administrative Agent with respect to the security interest in the After-Acquired Trademarks are more fully set forth in the Trademark Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

 

Section 3.                                           Counterparts.  This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.

 

Section 4.                                           Governing Law.  This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

 

22

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 

	
 
    	
 
    	
Sincerely,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[ · ]
    
	
 
    	
 
    	
as   a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[ · ]
    
	
 
    	
 
    	
as   a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
ACCEPTED   AND AGREED
    	
 
    	
 
    
	
as   of the date first above written:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Bank   of America, N.A.
    	
 
    	
 
    
	
as   the Administrative Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

[SIGNATURE PAGE TO SUPPLEMENTAL TRADEMARK SECURITY AGREEMENT]

 

 

SCHEDULE 1
 TO
 SUPPLEMENTAL TRADEMARK SECURITY AGREEMENT

 

U.S. REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS

 

	
Trademark
    	
 
    	
App. No.
    	
 
    	
App.
   Date
    	
 
    	
Reg. No.
    	
 
    	
Registration
   Date
    	
 
    	
Status
    	
 
    	
Post Reg.
   Owner
    	
 
    	
Registrant
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT B

TO

AMENDED AND RESTATED TRADEMARK SECURITY AGREEMENT

 

INSTRUMENT OF JOINDER

 

THIS INSTRUMENT OF JOINDER (“Joinder”) is executed as of                                   ,                by                             , a                                                            (“Joining Party”), and delivered to Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), pursuant to the Amended and Restated Trademark Security Agreement dated as of November 25, 2013, made by each of the Grantors listed on the signature pages thereto and certain other Grantors party thereto from time to time in favor of the Administrative Agent for the benefit of the Secured Parties (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Trademark Security Agreement”).  Terms used but not defined in this Joinder shall have the meanings defined for those terms in the Trademark Security Agreement.

 

RECITALS

 

(A)                               The Trademark Security Agreement was made by the Grantors in favor of the Administrative Agent for the benefit of the Secured Parties in accordance with that certain Second Amended and Restated Credit Agreement dated as of April 19, 2013 (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), by and among Bally Technologies, Inc., a Nevada corporation (“Borrower”), the Lenders therein named and Bank of America, N.A., as the Administrative Agent.

 

(B)                               Joining Party has become a Subsidiary of Borrower, and as such is required pursuant to Section 6.12 of the Credit Agreement to become a Grantor under the Trademark Security Agreement.

 

(C)                               Joining Party expects to realize direct and indirect benefits as a result of the availability to Borrower of the Loans under the Credit Agreement and the availability of financing accommodations to the Loan Parties under the Secured Cash Management Agreements and Secured Hedge Agreements.

 

NOW THEREFORE, Joining Party agrees as follows:

 

AGREEMENT

 

(1)                                 By this Joinder, Joining Party becomes a “Grantor” under and pursuant to Section 8 of the Trademark Security Agreement.  Joining Party agrees that, upon its execution hereof, it will become a Grantor under the Trademark Security Agreement with respect to the Secured Obligations, and will be bound by all terms, conditions, and duties applicable to a Grantor under the Assignment.  Without limiting the foregoing, the Joining Party hereby pledges and grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, and a

 

 

continuing lien on, all of the Collateral of the Joining Party, wherever located and whether now owned or existing or at any time hereafter acquired by the Joining Party or in which the Joining Party now has or at any time in the future may acquire any right, title or interest, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations.  Each reference to a “Grantor” in the Trademark Security Agreement shall be deemed to include the Joining Party.

 

(2)                                 The Joining Party represents and warrants that the representations and warranties made by it as a Grantor under the Trademark Security Agreement (giving effect to this Joinder and to any supplements to the schedules thereto delivered in connection herewith) are true and correct in all material respects on and as of the date hereof (with all references to “the date hereof” contained in the Trademark Security Agreement being references to the date of this Joinder with respect to the Joining Party).

 

(3)                                 The Joining Party hereby represents and warrants that set forth on Schedule I attached hereto is a true and correct schedule of all of Grantors’ Trademarks registered, or subject to pending applications, in the USPTO as of the date hereof.

 

(4)                                 Except as expressly supplemented hereby, the Trademark Security Agreement shall remain in full force and effect.

 

(5)                                 This Joinder shall be governed by, and construed in accordance with, the law of the State of New York.

 

(6)                                 The effective date of this Joinder is                   ,             .

 

 

	
 
    	
 
    	
“Joining   Party”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
a
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
BANK   OF AMERICA, N.A,
    	
 
    	
 
    
	
as   Administrative Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

SCHEDULE 1

TO
 INSTRUMENT OF JOINDER

 

U.S. REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS

 

	
Trademark
    	
 
    	
App. No.
    	
 
    	
App.
   Date
    	
 
    	
Reg. No.
    	
 
    	
Registration
   Date
    	
 
    	
Status
    	
 
    	
Post Reg.
   Owner
    	
 
    	
Registrant
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

Exhibit D

 

Form of Amended Copyright Security Agreement

 

 

Execution Version

 

AMENDED AND RESTATED COPYRIGHT SECURITY AGREEMENT

 

This AMENDED AND RESTATED COPYRIGHT SECURITY AGREEMENT (this “Agreement”) dated as of November 25, 2013, is made by Bally Technologies, Inc., a Nevada corporation (“Borrower”) and each of its subsidiaries listed on the signature pages hereto (each a “Subsidiary Grantor”, and together with Borrower and each other Person who may become a party hereto pursuant to Section 8 of this Agreement, the “Grantors”), in favor of Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), for the benefit of the Secured Parties under the Credit Agreement referred to below, with reference to the following facts:

 

RECITALS

 

A.                                    Pursuant to that certain Credit Agreement, dated as of September 26, 2008, among Borrower, the Lenders referred to therein, and the Administrative Agent (as from time to time amended, restated, extended, renewed, modified or supplemented), the Grantors executed and delivered that certain Copyright Assignment, dated as of September 26, 2008 (as from time to time amended, restated, extended, renewed, modified or supplemented, the “Existing Copyright Assignment”).

 

B.                                    Borrower has entered into that certain Second Amended and Restated Credit Agreement, dated as of April 19, 2013, among Borrower, the Lenders referred to therein, and the Administrative Agent (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, 2013, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), and accordingly the parties hereto desire to amend and restate the Existing Copyright Assignment pursuant to this Agreement.  This Agreement is one of the Loan Documents referred to in the Credit Agreement.

 

C.                                    The Subsidiary Grantors have guaranteed the obligations of Borrower pursuant to the Credit Agreement.

 

D.                                    Pursuant to the Credit Agreement, the Lenders had made, and are making, certain credit facilities available to Borrower.  Additionally, as contemplated by the Credit Agreement, from time to time, certain Secured Parties may enter into Secured Cash Management Agreements and/or Secured Hedge Agreements with the Borrower and/or the Grantors.

 

E.                                     As a condition to the continued availability of such credit facilities, Secured Cash Management Agreements and Secured Hedge Agreements, the Grantors are required to enter into this Agreement to pledge certain Collateral (as hereinafter defined) to the Administrative Agent for the benefit of the Secured Parties as herein provided.

 

F.                                      The Grantors expect to realize direct and indirect benefits as the result of the availability of (i) the aforementioned credit facilities to the Borrower and (ii) the aforementioned Secured Cash Management Agreements and Secured Cash Hedge Agreements, as the result of financial or business support which will be provided to the Grantors by Borrower and each other Grantor.

 

 

AGREEMENT

 

NOW, THEREFORE, in order to induce the Lenders to extend and maintain the aforementioned credit facilities to Borrower and the Secured Parties to extend and maintain the financial accommodations under the Secured Cash Management Agreements and Secured Hedge Agreements, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Grantors hereby jointly and severally represent, warrant, covenant and agree as follows:

 

1.                                      Definitions.  Terms defined in the Credit Agreement and not otherwise defined in this Agreement shall have the meanings defined for those terms in the Credit Agreement.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Agreement” means this Amended and Restated Copyright Security Agreement, and any extensions, modifications, renewals, restatements, supplements or amendments hereof, including, without limitation, any documents or agreements by which additional Grantors become party hereto.

 

“Collateral” means and includes all of the following: (a) all of the Grantors’ now-existing, or hereafter acquired, right, title, and interest in and to all of the Grantors’ copyrights and copyrightable works (whether or not the underlying works of authorship have been published), together with all applications, registrations, and recordings relating to the foregoing in the United States Copyright Office (“USCO”) or in any similar office or agency of the United States, any State thereof, or any political subdivision thereof, or in any other countries, and extensions and renewals thereof, including those copyright applications, registrations and recordings described in Schedule 1 hereto (the “Copyrights”); (b) all licenses and sublicenses of Copyrights, to the extent that there exists no prohibition as a matter of law or pursuant to such agreements governing such license or sublicense on the transfer thereof for security as contemplated by this Agreement; (c) any and all proceeds of any of the foregoing, including license fees, royalties, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto; and (d) the right to sue or otherwise recover for past, present and future infringement or other violation of the Copyrights or any licenses with respect thereto.

 

“Grantors” means those Persons mentioned in the preamble to this Agreement and those entities that become parties hereto as provided in Section 6.12 of the Credit Agreement or Section 8 hereof, and each of them, and any one or more of them, jointly and severally.

 

“Secured Obligations” means (a) in the case of Borrower, any and all present and future Obligations of any type or nature of Borrower arising under or relating to the Credit Agreement, the Secured Cash Management Agreements, the Secured Hedge Agreements and the Loan Documents or any one or more of them and (b) in the case of the Subsidiary Grantors, all present and future Obligations of any type or nature of the Subsidiary Grantors, or any one or more of them, arising under or relating to the Guaranty or any other Loan Documents, or with respect to any Secured Cash Management Agreement or any Secured Hedge Agreement or any one or more of them; provided, that in the case of each Grantor (other than Borrower), the Secured Obligations of such Grantor shall exclude any Excluded Swap Obligations of such Grantor.

 

2

 

2.                                      Grant of Security Interest.  For valuable consideration, the Grantors and each of them hereby jointly and severally pledge and grant to the Administrative Agent (for and on behalf of the Secured Parties) a security interest, to secure the prompt and indefeasible payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations, and each of them, in and to all of the presently existing and hereafter acquired Collateral.  This Agreement is a continuing and irrevocable agreement and all the rights, powers, privileges and remedies hereunder shall apply to any and all Secured Obligations, including those arising under successive transactions which shall either continue the Secured Obligations, increase or decrease them and notwithstanding the bankruptcy of any Grantor or any other event or proceeding affecting any Grantor.

 

3.                                      Representations, Warranties and Covenants.  The Grantors, and each of them, represent, warrant and agree that:

 

(a)                                 All of the existing Collateral is valid and subsisting in full force and effect, and the Grantors own the sole, full, and clear title thereto, and the right and power to grant the security interests granted hereunder. The Grantors will, at their expense, perform all acts and execute all documents necessary to maintain the existence of the Collateral as valid and subsisting, including, without limitation, the filing of any maintenance fees or affidavits, except as would not reasonably be expected to result in a Material Adverse Effect.  The Collateral is not subject to any Liens or licenses of any nature whatsoever, whether recorded or unrecorded, except as permitted by the Credit Agreement.

 

(b)                                 As of the date hereof, none of the Grantors owns any Copyrights registered, or subject to pending applications, in the USCO other than those against which the Administrative Agent already has perfected a security interest pursuant to the Existing Copyright Assignment, or those described in Schedule 1.

 

(c)                                  Upon the delivery of any report supplementing Schedule 5.17 to the Credit Agreement made pursuant to Section 6.02(j) of the Credit Agreement, the applicable Grantor shall execute and deliver to the Administrative Agent a supplement to this Agreement substantially in the form of Exhibit A hereto granting the Administrative Agent a security interest in any Copyrights reflected on such report supplementing Schedule 5.17 to the Credit Agreement.  Each Grantor authorizes the Administrative Agent to modify this Agreement by amending Schedule 1 to include any new Copyright, and any Copyright renewal of any Grantor applied for and or otherwise obtained hereafter.

 

(d)                                 No Grantor will do any act, or omit to do any act, whereby the Copyrights may become abandoned, canceled, invalidated, or unenforceable, where such abandonment, cancellation, invalidation, or unenforceability would reasonably be expected to result in a Material Adverse Effect.  Each Grantor shall notify the Administrative Agent promptly if it knows, or has reason to know, of any reason why any application, registration, or recording may become abandoned, canceled, invalidated, or unenforceable, and if as a result thereof, a Material Adverse Effect would reasonably be expected to occur.

 

3

 

(e)                                  The Grantors will render any assistance, as the Administrative Agent may reasonably determine is necessary, to the Administrative Agent in any proceeding before the USCO, any federal or state court, or any similar office or agency in the United States, or any State therein, or any other country, to protect the Administrative Agent’s security interest in the Copyrights.

 

(f)                                   The Grantors assume all responsibility and liability arising from the use of the Copyrights, and each Grantor hereby indemnifies and holds the Administrative Agent and each of the Secured Parties harmless from and against any claim, suit, loss, damage, or expense (including reasonable attorneys’ fees) arising out of any alleged defect in any product manufactured, promoted, or sold by any Grantor (or any Affiliate or Subsidiary thereof) in connection with any Copyrights.

 

(g)                                  The Grantors shall promptly notify the Administrative Agent in writing of any adverse determination in any proceeding in the USCO or any other foreign or domestic Governmental Agency, court or body, regarding any Grantor’s ownership of any of the Copyrights, which would reasonably be expected to result in a Material Adverse Effect.  In the event of any material infringement of any of the Copyrights by a third party which would reasonably be expected to result in a Material Adverse Effect, the Grantors shall promptly notify the Administrative Agent of such infringement and sue for and diligently pursue damages for such infringement unless it is in the best interest of the Grantors not to pursue such proceeding.  In the event that the Grantors elect not to pursue any rights that might apply to the applicable Grantor in connection with such infringement, the Grantors will notify the Administrative Agent of such election.

 

(h)                                 Each Grantor shall, at its sole expense, do, make, execute and deliver all such additional and further acts, things, assurances, and instruments, in each case in form and substance satisfactory to the Administrative Agent, relating to the creation, validity, or perfection of the security interests provided for in this Agreement under 35 U.S.C. Section 261, 15 U.S.C. Section 1051 et seq., the Uniform Commercial Code or other Law of the United States, the State of New York, or of any countries or other States as the Administrative Agent may from time to time reasonably request, and shall take all such other action as the Administrative Agent may reasonably require to more completely vest in and assure to the Administrative Agent its security interest in any of the Collateral, and each Grantor hereby irrevocably authorizes the Administrative Agent or its designee, at such Grantor’s expense, to execute such documents, and file such financing statements with respect thereto with or without such Grantor’s signature, as the Administrative Agent may reasonably deem appropriate.  In the event that any recording or refiling (or the filing of any statement of continuation or assignment of any financing statement) or any other action, is required at any time to protect and preserve such security interest, the Grantors shall, at their sole cost and expense, cause the same to be done or taken at such time and in such manner as may be necessary and as may be reasonably requested by the Administrative Agent.  Each Grantor further authorizes the Administrative Agent to have this or any other similar security agreement recorded or filed with the USCO or other appropriate federal, state or government office.

 

4

 

(i)                                     Following the Administrative Agent’s request thereof and the applicable Grantor’s failure to perform, the Administrative Agent is hereby irrevocably appointed by each Grantor as its lawful attorney and agent, with full power of substitution to execute and deliver on behalf of and in the name of any or all Grantors, such financing statements and other documents and agreements, and to take such other action as the Administrative Agent may deem necessary for the purpose of perfecting, protecting or effecting the security interests granted herein and effected hereby, and any mortgages or Liens necessary or desirable to implement or effectuate the same, under any applicable Law, and the Administrative Agent is hereby authorized to file on behalf of and in the name of any or all Grantors, at the Grantors’ sole expense, such financing statements, documents and agreements in any appropriate governmental office.

 

(j)                                    The Administrative Agent may, in its sole discretion, pay any amount, or do any act which the Grantors fail to pay or do as required hereunder to preserve, defend, protect, maintain, record, amend, or enforce the Secured Obligations, or the security interest granted hereunder, including, but not limited to, all filing or recording fees, court costs, collection charges, and reasonable attorneys’ fees.  The Grantors will be liable to the Administrative Agent for any such payment, which payment shall be deemed an advance by the Lenders to the Grantors, shall be payable on demand, together with interest at the per annum rate then applicable to Base Rate Advances under the Credit Agreement, or the Default Rate, if applicable, and shall be part of the Secured Obligations.

 

4.                                      Events of Default.  Any “Event of Default” as defined in the Credit Agreement shall constitute an Event of Default hereunder.

 

5.                                      Rights and Remedies.  Upon the occurrence and during the continuance of any such Event of Default, in addition to all other rights and remedies of the Administrative Agent, whether provided under Law, the Credit Agreement or otherwise, the Administrative Agent may enforce its security interest hereunder which may be exercised without notice to, or consent by, any Grantor, except as such notice or consent is expressly provided for hereunder.  Upon such enforcement:

 

(a)                                 the Administrative Agent may use any of the Copyrights for the sale of goods, completion of work in process, or rendering of services in connection with enforcing any security interest granted to the Administrative Agent by the Grantors.

 

(b)                                 the Administrative Agent may grant such license or licenses relating to the Collateral for such term or terms, on such conditions and in such manner, as the Administrative Agent shall, in its sole discretion, deem appropriate.  Such license or licenses may be general, special, or otherwise, and may be granted on an exclusive or nonexclusive basis throughout all or part of the United States of America, its territories and possessions, and all foreign countries.

 

(c)                                  the Administrative Agent may assign, sell, or otherwise dispose of the Collateral, or any part thereof, either with or without special conditions or stipulations, except that the Administrative Agent agrees to provide the Grantors with five (5) days’

 

5

 

prior written notice of any proposed disposition of the Collateral.  The requirement of sending notice conclusively shall be met if such notice is mailed, first class mail, postage prepaid, to Borrower, on behalf of all Grantors.  Each Grantor hereby irrevocably appoints Borrower as its agent for the purpose of receiving notice of sale hereunder, and agrees that such Grantor conclusively shall be deemed to have received notice of sale when notice of sale has been given to Borrower.  Each Grantor expressly waives any right to receive notice of any public or private sale of any Collateral or other security for the Secured Obligations except as expressly provided in this Section 5(c).  The Administrative Agent shall have the power to buy the Collateral, or any part thereof, and the Administrative Agent shall also have the power to execute assurances and perform all other acts which the Administrative Agent may, in the Administrative Agent’s sole discretion, deem appropriate or proper to complete such assignment, sale, or disposition.  In any such event, the Grantors shall be liable for any deficiency.

 

(d)                                 In addition to the foregoing, in order to implement the assignment, sale or other disposition of any of the Collateral pursuant to Section 5(c) hereof, the Administrative Agent may, at any time, execute and deliver, on behalf of the Grantors, and each of them, pursuant to the authority granted in powers of attorney, one or more instruments of assignment of the Copyrights (or any application, registration, or recording relating thereto), in form suitable for filing, recording, or registration.  The Grantors agree to pay the Administrative Agent, on demand, all costs incurred in any such transfer of the Collateral, including, but not limited to any taxes, fees, and reasonable attorneys’ fees.

 

(e)                                  The Administrative Agent may first apply the proceeds actually received from any such use, license, assignment, sale, or other disposition of Collateral first to the reasonable costs and expenses thereof, including, without limitation, reasonable attorneys’ fees and all legal, travel, and other expenses which may be incurred by the Administrative Agent.  Thereafter, the Administrative Agent may apply any remaining proceeds to such of the Secured Obligations as provided in the Credit Agreement.  The Grantors shall remain liable to the Administrative Agent for any expenses or Secured Obligations remaining unpaid after the application of such proceeds, and the Grantors will pay the Administrative Agent, on demand, any such unpaid amount, together with interest at the rate(s) set forth in the Credit Agreement.

 

(f)                                   Upon request of the Administrative Agent, the Grantors shall supply to the Administrative Agent, or the Administrative Agent’s designee, the Grantors’ knowledge and expertise relating to the manufacture and sale of the products and services relating to the Copyrights and the Grantors’ customer lists and other records relating to the Copyrights and the distribution thereof.

 

Nothing contained herein shall be construed as requiring the Administrative Agent to take any such action at any time.  All of the Administrative Agent’s rights and remedies, whether provided under Law, the Credit Agreement, this Agreement, or otherwise, shall be cumulative, and none is exclusive of any right or remedy otherwise provided herein or in any of the other Loan Documents, at law or in equity.  Such rights and remedies may be enforced alternatively, successively, or concurrently.

 

6

 

6.                                      Waivers.

 

(a)                                 Each Grantor hereby waives any and all rights that it may have to a judicial hearing, if any, in advance of the enforcement of any of the Administrative Agent’s rights hereunder, including, without limitation, its rights following any Event of Default and during the continuance thereof to take immediate possession of the Collateral and exercise its rights with respect thereto.

 

(b)                                 The Administrative Agent shall not be required to marshal any present or future security for (including, but not limited to, this Agreement and the Collateral subject to a security interest hereunder), or guaranties of, the Secured Obligations or any of them, or to resort to such security or guaranties in any particular order.  Each Grantor hereby agrees that it will not invoke any Law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Administrative Agent’s rights under this Agreement or any other instrument evidencing any of the Secured Obligations or by which any of such Secured Obligations is secured or guaranteed, and each Grantor hereby irrevocably waives the benefits of all such Laws.

 

(c)                                  Except for notices specifically provided for herein, each Grantor hereby expressly waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description.  With respect both to the Secured Obligations and any collateral therefor, each Grantor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, of any Person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Administrative Agent may deem advisable.  The Administrative Agent shall have no duty as to the protection of the Collateral or any income thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of any rights pertaining thereto except as otherwise required by Law.  The Administrative Agent may exercise its rights with respect to the Collateral without resorting or regard to other collateral or sources of reimbursement for liability.  The Administrative Agent shall not be deemed to have waived any of its rights upon or under the Credit Agreement or the Collateral unless such waiver be in writing and signed by the Administrative Agent.  No delay or omission on the part of the Administrative Agent in exercising any right shall operate as a waiver of any right on any future occasion.  All rights and remedies of the Administrative Agent under the Credit Agreement or on the Collateral, whether evidenced hereby or by any other instrument or papers, shall be cumulative and may be exercised singularly or concurrently.

 

7.                                      Costs and Expenses.

 

(a)                                 Without limiting any reimbursement obligations under the Credit Agreement and the other Loan Documents, and without duplication thereof, the Grantors will pay any and all charges, costs and taxes incurred in implementing or subsequently amending this Agreement, including, without limitation, recording and filing fees, appraisal fees, stamp taxes, and reasonable fees and disbursements of each Secured

 

7

 

Party’s counsel incurred by each Secured Party, and fees and time charges for attorneys who may be employees of  each Secured Party, in connection with this Agreement, and in the enforcement of this Agreement and in the enforcement or foreclosure of any Liens, security interests or other rights of any Secured Party under this Agreement, or under any other documentation heretofore, now, or hereafter given to any Secured Party in furtherance of the transactions contemplated hereby.

 

(b)                                 The Grantors agree to reimburse each Secured Party for and indemnify it against, any and all losses, expenses and liabilities (including liabilities for penalties) of whatever kind or nature sustained and reasonably incurred in connection with any claim, demand, suit or legal or arbitration proceeding relating to this Agreement, or the exercise of any rights or powers hereunder, including reasonable attorneys’ fees and disbursements, and fees and time charges for attorneys who may be employees of  such Secured Party, except losses, expenses and liabilities arising out of such Secured Party’s own gross negligence or willful misconduct.

 

8.                                      Joinder.  Any other Person may become a Grantor hereunder and become bound by the terms and conditions of this Agreement by executing and delivering to the Administrative Agent an Instrument of Joinder substantially in the form attached hereto as Exhibit B, accompanied by such documentation as the Administrative Agent may require to establish the due organization, valid existence and good standing of such Person, its qualification to engage in business in each material jurisdiction in which it is required to be so qualified, its authority to execute, deliver and perform this Agreement, and the identity, authority and capacity of each Responsible Officer thereof authorized to act on its behalf.

 

9.                                      Release of Grantors.  This Agreement and all of the Secured Obligations of the Grantors hereunder shall be released upon termination of the Aggregate Commitments and payment in full of all of the Secured Obligations (other than (A) contingent indemnification obligations as to which no claim has been made and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank of Hedge Bank shall have been made) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made).

 

Additionally, Collateral that is released or is required to be released from the security interest created by this Agreement in order to permit the Grantors to consummate any disposition of stock or assets, merger, consolidation, amalgamation, acquisition, transfer or dividend payment or distribution that the Grantors are permitted to consummate pursuant to the Loan Documents, if any, shall be so released by the Administrative Agent at such times and to the extent necessary or appropriate to permit the Grantors to consummate such permitted transactions promptly following the Administrative Agent’s receipt of written request therefor by the Grantors specifying the purpose for which release is requested and such further certificates or other documents as the Administrative Agent shall request in its reasonable discretion to confirm that the Grantors are permitted to consummate such permitted transaction and to confirm its replacement Lien on appropriate collateral (unless replacement collateral is not required pursuant

 

8

 

to the Loan Documents).  Any request for any permitted release shall be transmitted to the Administrative Agent.

 

Upon such release of the Grantors’ Secured Obligations hereunder, or release of Collateral permitted hereunder, the Administrative Agent shall return any Collateral to the Grantors, or to the Person or Persons legally entitled thereto, and shall endorse, execute, deliver, record and file all instruments and documents, and do all other acts and things, reasonably required for the return of the applicable Collateral to the Grantors, or to the Person or Persons legally entitled thereto, and to evidence or document the release of the Administrative Agent’s and the other Secured Party’s interests in such Collateral arising under this Agreement, all as reasonably requested by, and at the sole expense of, the Grantors.

 

10.                               Continuing Effect.  This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Grantors for liquidation or reorganization, should the Grantors become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Grantors’ assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by the Administrative Agent or any other Secured Party, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part thereof is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

11.                               Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Secured Parties and their successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent, and any attempted assignment without such consent shall be null and void.  By accepting the benefits of the Loan Documents, each Hedge Bank and Cash Management Bank agrees to be bound by all of the applicable provisions thereof.

 

12.                               Amendments in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by each affected Grantor and the Administrative Agent, subject to any consents required under the Credit Agreement; provided that any provision of this Agreement imposing obligations on any Grantor may be waived by the Administrative Agent in a written instrument executed by the Administrative Agent; provided, further, no such waiver, amendment, supplement or modification shall require the consent of any Hedge Bank or Cash Management Bank except as may be expressly provided in the Credit Agreement.

 

13.                               Additional Powers and Authorization.  The Administrative Agent shall be entitled to the benefits accruing to it as the Administrative Agent under the Credit Agreement and the other Loan Documents.  Notwithstanding anything contained herein to the contrary, the Administrative Agent may employ agents, trustees, or attorneys-in-fact and may vest any of

 

9

 

them with any Property (including, without limitation, any Collateral assigned hereunder), title, right or power deemed necessary for the purposes of such appointment.

 

14.                               WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.

 

15.                               SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS.

 

(a)                                 EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, BOROUGH OF MANHATTAN, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE GRANTORS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(b)                                 EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (A) OF

 

10

 

THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(c)                                  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 OF THE CREDIT AGREEMENT.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

16.                               Miscellaneous.

 

(a)                                 The Grantors and the Administrative Agent may from time to time agree in writing to the release of certain of the Collateral from the security interest created hereby.

 

(b)                                 Any notice, request, demand or other communication required or permitted under this Agreement shall be in writing and shall be deemed to be properly given if done in accordance with Section 10.02 of the Credit Agreement.

 

(c)                                  Except as otherwise set forth in the Credit Agreement, the provisions of this Agreement may not be modified, amended, restated or supplemented, whether or not the modification, amendment, restatement or supplement is supported by new consideration, except by a written instrument duly executed and delivered by the Administrative Agent and the Grantors.

 

(d)                                 Except as otherwise set forth in the Credit Agreement or this Agreement, any waiver of the terms and conditions of this Agreement, or any Event of Default and its consequences hereunder or thereunder, and any consent or approval required or permitted by this Agreement to be given, may be made or given with, but only with, the written consent of the Administrative Agent on such terms and conditions as specified in the written instrument granting such waiver, consent or approval.

 

(e)                                  Any failure or delay by the Administrative Agent to require strict performance by the Grantors of any of the provisions, warranties, terms, and conditions contained herein, or in any other agreement, document, or instrument, shall not affect the Administrative Agent’s right to demand strict compliance and performance therewith, and any waiver of any default shall not waive or affect any other default, whether prior or subsequent thereto, and whether of the same or of a different type.  None of the warranties, conditions, provisions, and terms contained herein, or in any other agreement, document, or instrument, shall be deemed to have been waived by any act or knowledge of the Administrative Agent, its agents, officers, or employees, but only by an instrument in writing, signed by an officer of the Administrative Agent and directed to the Grantors, specifying such waiver.

 

11

 

(f)                                   If any term or provision of this Agreement conflicts with any term or provision of the Credit Agreement, the term or provision of the Credit Agreement shall control.

 

(g)                                  If any provision hereof shall be deemed to be invalid by any court, such invalidity shall not affect the remainder of this Agreement.

 

(h)                                 This Agreement supersedes all prior oral and written agreements between the parties hereto on the subject matter hereof.

 

(i)                                     This Agreement shall be binding upon, and for the benefit of, the parties hereto and their respective legal representatives, successors, and assigns.

 

(j)                                    This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement.

 

17.                               Amendment and Restatement of Existing Copyright Assignment.  This Agreement constitutes an amendment and restatement of the Existing Copyright Assignment in its entirely and the Existing Copyright Assignment shall thereafter be and shall be deemed replaced and superseded in all respects by this Agreement.  The execution of this Agreement shall not operate as a novation, waiver of any right, power or remedy of the Administrative Agent or Secured Parties, nor constitute a waiver of any provision of the Existing Copyright Assignment.  Each Grantor (i) acknowledges and agrees that this Agreement does not constitute a novation or termination of the “Secured Obligations” under the Existing Copyright Assignment or the other Loan Documents as in effect prior to the effective date of the amendment and restatement of the Existing Copyright Assignment (the “Restatement Effective Date”) and which remain outstanding as of the Restatement Effective Date, (ii) acknowledges and agrees that the “Secured Obligations” under the Existing Copyright Assignment and the other Loan Documents are in all respects continuing (as amended and restated hereby and which are in all respects hereinafter subject to the terms herein), (iii) ratifies and reaffirms all of its payments and performance obligations, contingent or otherwise, under each Loan Document, (iv) and ratifies and reaffirms each of the liens and security interests granted by it to Bank of America, N.A., as administrative agent for the benefit of the secured parties named in (or referred to in) the Existing Copyright Assignment, in or pursuant to the Existing Copyright Assignment, and confirms and agrees that such liens and security interests are in all respects continuing and in full force and effect and shall continue to secure all of the Secured Obligations, including without limitation, all Obligations under the Credit Agreement and (v) agrees that this Agreement shall in no manner impair or otherwise adversely affect any of such liens and security interests.

 

[Remainder of page intentionally left blank.]

 

12

 

 

IN WITNESS WHEREOF, each Grantor has executed this Agreement by its duly authorized officer as of the date first written above.

 

	
 
    	
“Grantors”
    
	
 
    	
 
    
	
 
    	
BALLY   TECHNOLOGIES, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
ARCADE   PLANET, INC.,
    
	
 
    	
a   California corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING INTERNATIONAL, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
ALLIANCE   HOLDING COMPANY,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
BALLY   GAMING, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
SIERRA   DESIGN GROUP,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
CASINO   ELECTRONICS, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
COMPUDIGM   SERVICES, INC.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Copyright Security Agreement

 

 

	
 
    	
BALLY   GAMING SERVICES, LLC,
    
	
 
    	
 
    
	
 
    	
a   Nevada limited liability gaming company
    
	
 
    	
 
    
	
 
    	
By: B.G.I. GAMING & SYSTEMS, S. DE R.L.   DE C.V., the Sole Member of BALLY GAMING SERVICES, LLC
    
	
 
    	
 
    
	
 
    	
By: BALLY GAMING, INC., the Managing Member   of B.G.I. GAMING & SYSTEMS, S. DE R.L. DE C.V.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
Address   for the Grantors:
    
	
 
    	
c/o   Bally Technologies, Inc.
    
	
 
    	
6601   South Bermuda Road
    
	
 
    	
Las   Vegas, Nevada 89119
    

 

Amended and Restated Copyright Security Agreement

 

 

	
 
    	
SHFL   ENTERTAINMENT, INC.,
    
	
 
    	
a   Minnesota corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Copyright Security Agreement

 

 

	
 
    	
SHFL   INTERNATIONAL LLC,
   a Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
By: SHUFFLE MASTER INTERNATIONAL, INC., the   Sole Member of SHFL INTERNATIONAL LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Copyright Security Agreement

 

 

	
 
    	
SHFL   PROPERTIES LLC,
   a Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
By: SHFL ENTERTAINMENT, INC., the Sole Member   of SHFL PROPERTIES LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Amended and Restated Copyright Security Agreement

 

 

	
ACCEPTED   AND AGREED
    
	
AS   OF THE DATE FIRST
    
	
ABOVE   WRITTEN:
    
	
 
    
	
“Administrative   Agent”
    
	
 
    
	
BANK   OF AMERICA, N.A.,
    
	
as   Administrative Agent for the Secured Parties
    
	
 
    
	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    
	
Title:
    	
 
    

 

Amended and Restated Copyright Security Agreement

 

 

SCHEDULE 1

TO
 AMENDED AND RESTATED COPYRIGHT SECURITY AGREEMENT

 

	
Title
    	
 
    	
Registration
   Number
    	
 
    	
Registration Date
    	
 
    	
Owner
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Amended and Restated Copyright Security Agreement

 

 

EXHIBIT A

TO

AMENDED AND RESTATED COPYRIGHT SECURITY AGREEMENT

 

SUPPLEMENTAL COPYRIGHT SECURITY AGREEMENT

 

THIS SUPPLEMENTAL COPYRIGHT SECURITY AGREEMENT (this “Agreement”), dated as of [ · ], is made by each of the signatories hereto indicated as a Grantor (each a “Grantor” and collectively, the “Grantors”) in favor of Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), for the benefit of the Secured Parties under the Credit Agreement (as defined below). Capitalized terms not defined herein have the meanings assigned to them in the Copyright Security Agreement (as defined below), and if not defined therein, then in the Credit Agreement (as defined below):

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Second Amended and Restated Credit Agreement, dated as of April 19, 2013, among Borrower, the Lenders referred to therein, and the Administrative Agent (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, 2013, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), Bally Technologies, Inc., a Nevada corporation (“Borrower”) and certain of its subsidiaries, including the  Grantors, executed and delivered that certain Amended and Restated Copyright Security Agreement (the “Copyright Security Agreement”), dated as of November 25, 2013.

 

WHEREAS, pursuant to the Copyright Security Agreement, the Grantors, among other things, granted a security interest in (a) all of the Grantors’ now-existing, or hereafter acquired, right, title, and interest in and to all of the Grantors’ copyrights and copyrightable works (whether or not the underlying works of authorship have been published), together with all applications, registrations, and recordings relating to the foregoing in the United States Copyright Office (“USCO”) or in any similar office or agency of the United States, any State thereof, or any political subdivision thereof, or in any other countries, and extensions and renewals thereof, including those copyright applications, registrations and recordings described in Schedule 1 hereto (the “Copyrights”); (b) all licenses and sublicenses of Copyrights, to the extent that there exists no prohibition as a matter of law or pursuant to such agreements governing such license or sublicense on the transfer thereof for security as contemplated by this Agreement; (c) any and all proceeds of any of the foregoing, including license fees, royalties, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto; and (d) the right to sue or otherwise recover for past, present and future infringement or other violation of the Copyrights or any licenses with respect thereto (collectively, the “Collateral”) which includes, without limitation, Collateral of the Grantors acquired after the date of the Copyright Security Agreement (the “After-Acquired Copyrights”); and

 

 

WHEREAS, pursuant to the Copyright Security Agreement, the Grantors agreed to execute and deliver this Agreement with respect to certain After-Acquired Copyrights in order to record with the United States Copyright Office the Administrative Agent’s security interest in such After-Acquired Copyrights.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Grantor hereby agrees with the Administrative Agent as follows:

 

Section 1.                                           Grant of Security Interest in Copyright Collateral.  For valuable consideration, the Grantors and each of them hereby jointly and severally pledge and grant to the Administrative Agent (for and on behalf of the Secured Parties) a security interest, to secure the prompt and indefeasible payment and performance in full when due (whether at stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations, and each of them, in and to the After-Acquired Copyrights described in Schedule 1 attached hereto.

 

Section 2.                                           Guaranty and Security Agreement.  The security interest granted pursuant to this Agreement is granted in conjunction with the security interest granted to the Administrative Agent pursuant to the Copyright Security Agreement, and each Grantor hereby acknowledges and agrees that the rights and remedies of the Administrative Agent with respect to the security interest in the After-Acquired Copyrights are more fully set forth in the Copyright Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

 

Section 3.                                           Counterparts.  This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.

 

Section 4.                                           Governing Law.  This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

 

21

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

 

	
 
    	
 
    	
Sincerely,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[ · ]
    
	
 
    	
 
    	
as   a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[ · ]
    
	
 
    	
 
    	
as   a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
ACCEPTED   AND AGREED
    	
 
    	
 
    
	
as   of the date first above written:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Bank   of America, N.A.
    	
 
    	
 
    
	
as   the Administrative Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

[SIGNATURE PAGE TO SUPPLEMENTAL COPYRIGHT SECURITY AGREEMENT]

 

 

SCHEDULE 1
 TO
 SUPPLEMENTAL COPYRIGHT SECURITY AGREEMENT

 

REGISTERED COPYRIGHTS

 

	
Title
    	
 
    	
Registration
   Number
    	
 
    	
Registration Date
    	
 
    	
Owner
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT B
 TO
 AMENDED AND RESTATED COPYRIGHT SECURITY AGREEMENT

 

INSTRUMENT OF JOINDER

 

THIS INSTRUMENT OF JOINDER (“Joinder”) is executed as of                                     ,                 , by                                                 , a                                                        (“Joining Party”), and delivered to Bank of America, N.A., as administrative agent (in such capacity and together with its successors and assigns, the “Administrative Agent”), pursuant to the Amended and Restated Copyright Security Agreement dated as of November 25, 2013, made by each of the Grantors listed on the signature pages thereto and certain other Grantors party thereto from time to time in favor of the Administrative Agent for the benefit of the Secured Parties (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Copyright Security Agreement”).  Terms used but not defined in this Joinder shall have the meanings defined for those terms in the Copyright Security Agreement.

 

RECITALS

 

(A)                               The  Copyright Security Agreement was made by the Grantors in favor of the Administrative Agent for the benefit of the Secured Parties in accordance with that certain Second Amended and Restated Credit Agreement dated as of April 19, 2013 (as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of August 27, and as it may from time to time be further amended, restated, extended, renewed, modified or supplemented, the “Credit Agreement”), by and among Bally Technologies, Inc., a Nevada corporation (“Borrower”), the Lenders therein named and Bank of America, N.A., as the Administrative Agent.

 

(B)                               Joining Party has become a Subsidiary of Borrower, and as such is required pursuant to Section 6.12 of the Credit Agreement to become a Grantor under the Copyright Security Agreement.

 

(C)                               Joining Party expects to realize direct and indirect benefits as a result of the availability to Borrower of the Loans under the Credit Agreement and the availability of financing accommodations to the Loan Parties under the Secured Cash Management Agreements and Secured Hedge Agreements.

 

NOW THEREFORE, Joining Party agrees as follows:

 

AGREEMENT

 

(1)                                 By this Joinder, Joining Party becomes a “Grantor” under and pursuant to Section 8 of the  Copyright Security Agreement.  Joining Party agrees that, upon its execution hereof, it will become a Grantor under the  Copyright Security Agreement with respect to the Secured Obligations, and will be bound by all terms, conditions, and duties applicable to a Grantor under the  Copyright Security Agreement.  Without limiting the foregoing, the Joining Party hereby pledges and grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, and a continuing lien on, all of the Collateral of the Joining Party, wherever located 

 

 

and whether now owned or existing or at any time hereafter acquired by the Joining Party or in which the Joining Party now has or at any time in the future may acquire any right, title or interest, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by required prepayment, declaration, acceleration or otherwise) of the Secured Obligations. Each reference to a “Grantor” in the Copyright Security Agreement shall be deemed to include the Joining Party.

 

(2)                                 The Joining Party represents and warrants that the representations and warranties made by it as a Grantor under the Copyright Security Agreement (giving effect to this Joinder and to any supplements to the schedules thereto delivered in connection herewith) are true and correct in all material respects on and as of the date hereof (with all references to “the date hereof” contained in the Copyright Security Agreement being references to the date of this Joinder with respect to the Joining Party).

 

(3)                                 The Joining Party hereby represents and warrants that set forth on Schedule 1 attached hereto is a true and correct schedule of all of Grantors’ Copyrights registered, or subject to pending applications, in the United States Copyright Office as of the date hereof.

 

(4)                                 Except as expressly supplemented hereby, the Copyright Security Agreement shall remain in full force and effect.

 

(5)                                 This Joinder shall be governed by, and construed in accordance with, the law of the State of New York.

 

(6)                                 The effective date of this Joinder is                   ,             .

 

	
 
    	
 
    	
“Joining   Party”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
a
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
BANK   OF AMERICA, N.A,
    	
 
    	
 
    
	
as   Administrative Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    

 

 

SCHEDULE 1

TO
 INSTRUMENT OF JOINDER

 

REGISTERED COPYRIGHTS

 

	
Title
    	
 
    	
Registration
   Number
    	
 
    	
Registration Date
    	
 
    	
Owner

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}]]