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This
SECURITY AGREEMENT (this "Agreement"),
dated
as of July 3, 2007, among the Grantors listed on the signature pages hereof
and
those additional entities that hereafter become parties hereto by executing
the
form of Supplement attached hereto as Annex
1
(collectively, jointly and severally, the "Grantors"
and
each, individually a "Grantor"),
and
WELLS FARGO FOOTHILL, INC., a California corporation, in its capacity as
administrative agent for the Lender Group and the Bank Product Providers
(together with its successors and assigns in such capacity, the "Agent").
WITNESSETH:
WHEREAS,
pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented, renewed, extended, replaced or otherwise modified from
time to time, including all schedules thereto, the "Credit
Agreement")
by and
among Take-Two
Interactive Software, Inc., a Delaware corporation ("Parent"),
each
of Parent's Subsidiaries identified on the signature pages thereof as Borrowers
(such Subsidiaries, together with Parent, are referred to hereinafter each
individually as a "Borrower",
and
individually and collectively, jointly and severally, as "Borrowers"),
each
of Parent's Subsidiaries identified on the signature pages thereof as Guarantors
(such Subsidiaries are referred to hereinafter each individually as a
"Guarantor",
and
individually and collectively, jointly and severally, as "Guarantors"),
the
lenders from time to time party thereto as "Lenders" ("Lenders"),
and
Agent,
the
Lender Group has agreed to make certain financial accommodations available
to
Borrowers from time to time pursuant to the terms and conditions thereof;
and
WHEREAS,
Agent has agreed to act as agent for the benefit of the Lender Group and the
Bank Product Providers in connection with the transactions contemplated by
the
Credit Agreement, this Agreement, and the other Loan Documents; and
WHEREAS,
in order to induce the Lender Group to enter into the Credit Agreement and
the
other Loan Documents and to induce the Lender Group to make and extend financial
accommodations to Borrowers as provided for in the Credit Agreement, Grantors
have agreed to grant a continuing security interest in and to the Collateral
in
order to secure the prompt and complete payment, observance and performance
of,
among other things, the Secured Obligations,
NOW,
THEREFORE, for and in consideration of the recitals made above and other good
and valuable consideration, the receipt, sufficiency and adequacy of which
are
hereby acknowledged, the parties hereto agree as follows:
1.Defined
Terms.
All
capitalized terms used herein (including in the preamble and recitals hereof)
without definition shall have the meanings ascribed thereto in the Credit
Agreement. Any terms used in this Agreement that are defined in the Code shall
be construed and defined as set forth in the Code unless otherwise defined
herein or in the Credit Agreement; provided, however, that if the Code is used
to define any term used herein and if such term is defined differently in
different Articles of the Code, the definition of such term contained in Article
9 of the Code shall govern. In addition to those terms defined elsewhere in
this
Agreement, as used in this Agreement, the following terms shall have the
following meanings:
(a) "Account"
means
an account (as that term is defined in the Code).
(b) "Account
Debtor"
means
an account debtor (as that term is defined in the Code).
(c) "Agent's
Lien"
has the
meaning specified therefor in the Credit Agreement.
(d) "Bank
Product Obligations"
has the
meaning specified therefor in the Credit Agreement.
(e) "Bank
Product Provider"
has the
meaning specified therefor in the Credit Agreement.
(f) "Books"
means
books and records (including each Grantor's Records indicating, summarizing,
or
evidencing such Grantor's assets (including the Collateral) or liabilities,
each
Grantor's Records relating to such Grantor's business operations or financial
condition, and each Grantor's goods or General Intangibles related to such
information).
(g) "Borrower"
and
"Borrowers"
have
the respective meanings specified therefor in the recitals to this
Agreement.
(h) "Cash
Equivalents"
has the
meaning specified therefor in the Credit Agreement.
(i) "Chattel
Paper"
means
chattel paper (as that term is defined in the Code) and includes tangible
chattel paper and electronic chattel paper.
(j) "Code"
means
the New York Uniform Commercial Code, as in effect from time to time; provided,
however, that in the event that, by reason of mandatory provisions of law,
any
or all of the attachment, perfection, priority, or remedies with respect to
Agent's Lien on any Collateral is governed by the Uniform Commercial Code as
enacted and in effect in a jurisdiction other than the State of New York, the
term "Code" shall mean the Uniform Commercial Code as enacted and in effect
in
such other jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority, or remedies.
(k) "Collateral"
has the
meaning specified therefor in Section
2.
(l) "Commercial
Tort Claims"
means
commercial tort claims (as that term is defined in the Code), and includes
those
commercial tort claims listed on Schedule
1
attached
hereto ("Commercial
Tort Claims").
(m) "Copyrights"
means
works of authorship (whether or not published, and whether or not
copyrightable), copyrights and copyright registrations (including the copyright
registrations and recordings thereof and all applications in connection
therewith listed on Schedule
2
attached
hereto and made a part hereof), and (i) all reissues, restorations, reversions,
continuations, extensions or renewals thereof, (ii) all income, royalties,
damages and payments now and hereafter due and/or payable under and with respect
thereto, including, payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements or dilutions
thereof, (iii) the right to sue for past, present and future infringements
thereof, and (iv) all of each Grantor's rights corresponding thereto throughout
the world.
(n) "Copyright
Security Agreement"
means
each Copyright Security Agreement among Grantors, or any of them, and Agent,
for
the benefit of the Lender Group and the Bank Product Providers, in substantially
the form of Exhibit
A
attached
hereto, pursuant to which Grantors have granted to Agent, for the benefit of
the
Lender Group and the Bank Product Providers, a security interest in all their
respective Copyrights.
(o) "Credit
Agreement"
has the
meaning specified therefor in the recitals to this Agreement.
(p) "Deposit
Account"
means a
deposit account (as that term is defined in the Code).
(q) "Equipment"
means
equipment (as that term is defined in the Code).
2
(r) "Event
of Default"
has the
meaning specified therefor in the Credit Agreement.
(s) "General
Intangibles"
means
general intangibles (as that term is defined in the Code) and, in any event,
includes, payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill (including the goodwill associated with any Trademark, Patent, or
Copyright), Patents, Trademarks, Copyrights, URLs and domain names, industrial
designs, other industrial or Intellectual Property or rights therein or
applications therefor, whether under license or otherwise, rights in programs,
programming materials, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment
and
other rights under any royalty or licensing agreements, including Intellectual
Property Licenses, infringement claims, rights in computer programs, information
contained on computer disks or tapes, software, literature, reports, catalogs,
pension plan refunds, pension plan refund claims, insurance premium rebates,
tax
refunds, and tax refund claims, interests in a partnership or limited liability
company which do not constitute a security under Article 8 of the Code, and
any
other personal property other than Commercial Tort Claims, money, Accounts,
Chattel Paper, Deposit Accounts, goods, Investment Related Property, and
Negotiable Collateral.
(t) "Grantor"
and
"Grantors"
have
the meanings specified therefor in the recitals to this Agreement.
(u) "Guaranty"
has the
meaning specified therefor in the Credit Agreement.
(v) "Insolvency
Proceeding"
has the
meaning specified therefor in the Credit Agreement.
(w) "Intellectual
Property"
means
any and all Intellectual Property Licenses, Patents, Copyrights, Trademarks,
the
goodwill associated with such Trademarks, confidential and proprietary
information, trade secrets and know-how (including processes, schematics,
databases, formulae, drawings, prototypes, models, designs, technical data,
specifications, customer and supplier lists, pricing and cost information,
and
business and marketing plans and proposals), all computer software, Internet
web
sites, and all other intellectual property or proprietary rights and claims
or
causes of action arising out of or related to an infringement, misappropriation
or other violation of any of the foregoing, including rights to recover for
past, present and future violations thereof.
(x) "Intellectual
Property Licenses"
means
all rights under or interests in any patent, trademark, copyright or other
intellectual property, including software license agreements with any other
party, whether the applicable Grantor is a licensee or licensor under any such
license agreement, including the license agreements listed on Schedule
3 attached
hereto and made a part hereof, and the right to use the foregoing in connection
with the enforcement of the Lender Group's rights under the Loan Documents,
including the right to prepare for sale and sell any and all Inventory and
Equipment now or hereafter owned by any Grantor and now or hereafter covered
by
such licenses.
(y) "Inventory"
means
inventory (as that term is defined in the Code).
(z) "Investment
Related Property"
means
(i) investment property (as that term is defined in the Code), and (ii) all
of
the following regardless of whether classified as investment property under
the
Code: all Pledged Interests, Pledged Operating Agreements, and Pledged
Partnership Agreements.
(aa) "Lender
Group"
has the
meaning specified therefor in the Credit Agreement.
(bb) "Loan
Document"
has the
meaning specified therefor in the Credit Agreement.
(cc) "Negotiable
Collateral"
means
letters of credit, letter of credit rights, instruments, promissory notes,
drafts and documents (as that term is defined in the Code) and, in any event,
including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill (including the goodwill associated with any Trademark, Patent, or
Copyright), Patents, Trademarks, Copyrights, URLs and domain names, industrial
designs, other industrial or Intellectual Property or rights therein or
applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due
or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, including Intellectual Property
Licenses, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, pension plan
refunds, pension plan refund claims, insurance premium rebates, tax refunds,
and
tax refund claims, uncertificated securities, and any other personal property
other than Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit
Accounts, goods, Investment Related Property, and Negotiable
Collateral.
3
(dd) "Obligations"
has the
meaning specified therefor in the Credit Agreement.
(ee) "Patents"
means
inventions, discoveries and ideas, whether patentable or not, and all patents,
registrations and applications therefor, including the patents and patent
applications listed on Schedule
4
attached
hereto and made a part hereof, and (i) all reissues, continuations,
continuations-in-part, substitutes, extensions or renewals thereof and
improvements thereon, (ii) all income, royalties, damages and payments now
and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iii) the right to sue
for past, present and future infringements thereof, and (iv) all of each
Grantor's rights corresponding thereto throughout the world.
(ff) "Patent
Security Agreement"
means
each Patent Security Agreement among Grantors, or any of them, and Agent, for
the benefit of the Lender Group and the Bank Product Providers, in substantially
the form of Exhibit
B
attached
hereto, pursuant to which Grantors have granted to Agent, for the benefit of
the
Lender Group and the Bank Product Providers, a security interest in all their
respective Patents.
(gg) "Permitted
Discretion"
has the
meaning specified therefor in the Credit Agreement.
(hh) "Permitted
Liens"
has the
meaning specified therefor in the Credit Agreement.
(ii) "Person"
has the
meaning specified therefor in the Credit Agreement.
(jj) "Pledged
Companies"
means,
each Person listed on Schedule
5
hereto
as a "Pledged Company", together with each other Person, all or a portion of
whose Stock, is acquired or otherwise owned by a Grantor after the Closing
Date.
(kk) "Pledged
Interests"
means
all of each Grantor's right, title and interest in and to all of the Stock
now
or hereafter owned by such Grantor (other than Stock of Inactive Subsidiaries),
regardless of class or designation, including all substitutions therefor and
replacements thereof, all proceeds thereof and all rights relating thereto,
also
including any certificates representing the Stock, the right to request after
the occurrence and during the continuation of an Event of Default that such
Stock be registered in the name of Agent or any of its nominees, the right
to
receive any certificates representing any of the Stock and the right to require
that such certificates be delivered to Agent together with undated powers or
assignments of investment securities with respect thereto, duly endorsed in
blank by such Grantor, all warrants, options, share appreciation rights and
other rights, contractual or otherwise, in respect thereof and of all dividends,
distributions of income, profits, surplus, or other compensation by way of
income or liquidating distributions, in cash or in kind, and cash, instruments,
and other property from time to time received, receivable, or otherwise
distributed in respect of or in addition to, in substitution of, on account
of,
or in exchange for any or all of the foregoing.
(ll) "Pledged
Interests Addendum"
means a
Pledged Interests Addendum substantially in the form of Exhibit
C
to this
Agreement.
4
(mm) "Pledged
Note Addendum"
means a
Pledged Note Addendum substantially in the form of Exhibit
E
to this
Agreement.
(nn) "Pledged
Notes"
has the
meaning specified therefor in Section
5(h).
(oo) "Pledged
Operating Agreements"
means
all of each Grantor's rights, powers, and remedies under the limited liability
company operating agreements of each of the Pledged Companies that are limited
liability companies.
(pp) "Pledged
Partnership Agreements"
means
all of each Grantor's rights, powers, and remedies under the partnership
agreements of each of the Pledged Companies that are partnerships.
(qq) "Proceeds"
has the
meaning specified therefor in Section
2.
(rr) "Real
Property"
means
any estates or interests in real property now owned or hereafter acquired by
any
Grantor and the improvements thereto.
(ss) "Records"
means
information that is inscribed on a tangible medium or which is stored in an
electronic or other medium and is retrievable in perceivable form.
(tt) "Security
Interest"
has the
meaning specified therefor in Section
2.
(uu) "Secured
Obligations"
means
each and all of the following: (a) all of the present and future obligations
of
Grantors arising from this Agreement, the Credit Agreement, or the other Loan
Documents (including any Guaranty), (b) all Bank Product Obligations, and (c)
all Obligations of Grantors, including, in the case of each of clauses (a),
(b)
and (c), reasonable attorneys fees and expenses and any interest, fees, or
expenses that accrue after the filing of an Insolvency Proceeding, regardless
of
whether allowed or allowable in whole or in part as a claim in any Insolvency
Proceeding.
(vv) "Securities
Account"
means a
securities account (as that term is defined in the Code).
(ww) "Stock"
has the
meaning specified therefor in the Credit Agreement
(xx) "Supporting
Obligations"
means
Supporting Obligations (as such term is defined in the Code), and includes
letters of credit and guaranties issued in support of Accounts, Chattel Paper,
documents, General Intangibles, instruments, or Investment Related
Property.
(yy) "Trademarks"
means
trademarks, trade names, registered trademarks, trademark applications, service
marks, registered service marks and service mark applications, brand names,
certification marks, collective marks, d/b/a's, Internet domain names, logos,
symbols, trade dress, assumed names, fictitious names, and other indicia of
origin, including the registered trademarks, trademark applications, registered
service marks and service mark applications listed on Schedule
6
attached
hereto and made a part hereof, and (i) all extensions, modifications and
renewals thereof, (ii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iii) the right to sue
for past, present and future infringements and dilutions thereof, (iv) the
goodwill of each Grantor's business symbolized by the foregoing and connected
therewith, and (v) all of each Grantor's rights corresponding thereto throughout
the world.
(zz) "Trademark
Security Agreement"
means
each Trademark Security Agreement among Grantors, or any of them, and Agent,
for
the benefit of the Lender Group and the Bank Product Providers, in substantially
the form of Exhibit
D
attached
hereto, pursuant to which Grantors have granted to Agent, for the benefit of
the
Lender Group and the Bank Product Providers, a security interest in all their
respective Trademarks.
5
(aaa) "URL"
means
"uniform resource locator," an internet web address.
2.Grant
of Security.
(a) Each
Grantor hereby unconditionally grants, assigns and pledges to Agent, for the
benefit of the Lender Group and the Bank Product Providers, a continuing
security interest (hereinafter referred to as the "Security
Interest")
in all
personal property of such Grantor whether now owned or hereafter acquired or
arising and wherever located, including such Grantor's right, title, and
interest in and to the following, whether now owned or hereafter acquired or
arising and wherever located (the "Collateral"):
(i) all
of
such Grantor's Accounts;
(ii) all
of
such Grantor's Books;
(iii) all
of
such Grantor's Chattel Paper;
(iv) all
of
such Grantor's interest with respect to any Deposit Account (other than
(x)
payroll accounts or (y) medical or insurance reimbursement
accounts);
(v) all
of
such Grantor's Equipment and fixtures;
(vi) all
of
such Grantor's General Intangibles;
(vii) all
of
such Grantor's Inventory;
(viii) all
of
such Grantor's Investment Related Property;
(ix) all
of
such Grantor's Negotiable Collateral;
(x) all
of
such Grantor's rights in respect of Supporting Obligations;
(xi) all
of
such Grantor's interest with respect to any Commercial Tort Claims;
(xii) all
of
such Grantor's money, Cash Equivalents, or other assets of such Grantor that
now
or hereafter come into the possession, custody, or control of Agent (or its
agent or designee) or any other member of the Lender Group; and
(xiii) all
of
the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance or commercial tort claims covering
or
relating to any or all of the foregoing, and any and all Accounts (subject
to
the limitation set forth in clause (iv) above), Books, Chattel Paper, Commercial
Tort Claims, Deposit Accounts, Equipment, General Intangibles, Inventory,
Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease,
license, exchange, collection, or other disposition of any of the foregoing,
the
proceeds of any award in condemnation with respect to any of the property of
Grantors, any rebates or refunds, whether for taxes or otherwise, and all
proceeds of any such proceeds, or any portion thereof or interest therein,
and
the proceeds thereof, and all proceeds of any loss of, damage to, or destruction
of the above, whether insured or not insured, and, to the extent not otherwise
included, any indemnity, warranty, or guaranty payable by reason of loss or
damage to, or otherwise with respect to any of the foregoing (the "Proceeds").
Without limiting the generality of the foregoing, the term "Proceeds" includes
whatever is receivable or received when Investment Related Property or proceeds
are sold, exchanged, collected, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes proceeds of any indemnity
or guaranty payable to any Grantor or Agent from time to time with respect
to
any of the Investment Related Property.
6
Notwithstanding
anything herein to the contrary, the term "Collateral" shall not include, and
no
Grantor is pledging, nor granting a security interest hereunder in, any of
such
Grantor's right, title or interest in (A) any license, contract or agreement
to
which such Grantor is a party as of the date hereof or any of its right, title
or interest thereunder to the extent, but only to the extent, that such a grant
would, under the express terms of such license, contract or agreement on the
date hereof result in a breach of the terms of, or constitute a default under,
such license, contract or agreement (other than to the extent that any such
term
(i) has been waived or (ii) would be rendered ineffective pursuant to Sections
9-406, 9-408, 9-409 of the Code or other applicable provisions of the Uniform
Commercial Code of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided,
that
(x) immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest in, all such right, title and interest as
if
such provision had never been in effect and (y) the foregoing exclusion shall
in
no way be construed so as to limit, impair or otherwise affect Agent's
unconditional continuing security interest in and liens upon any rights or
interest of a Grantor in or to the proceeds of, or any monies due or to become
due under, any such license, contract or agreement or (B) all intent-to-use
United States trademark applications for which an amendment to allege use or
statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C.
§ 1051(d), respectively, or if filed, has not been deemed in conformance
with 15 U.S.C. § 1051(a) or examined and accepted, respectively, by the
United States Patent and Trademark Office, provided that, upon such filing
and
acceptance, such intent-to-use applications shall be included in the definition
of Collateral.
Notwithstanding
anything herein to the contrary, the term "Collateral" shall not include (A)
in
the case of a Canadian Subsidiary, more than 65% (or
such
greater percentage that,
due
to a change in applicable law after the date hereof, (i) would not reasonably
be
expected to cause the undistributed earnings of such Canadian Subsidiary as
determined for United States federal income tax purposes to be treated as a
deemed dividend to such Canadian Subsidiary's United States parent and (ii)
would not reasonably be expected to cause any
adverse
tax consequences) of the issued and outstanding shares of Stock
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
(it
being understood and agreed that the Collateral shall include 100% of
the
issued and outstanding shares of
Stock
not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
or other equity interest of such Canadian Subsidiary) or (B) in the case of
all
other foreign Subsidiaries (other than a Canadian Subsidiary), any of the issued
and outstanding shares of Stock.
The
Grantors agree that the pledge of the shares of Stock of any Subsidiary of
a
Grantor who is a Canadian Subsidiary may be supplemented by one or more separate
pledge agreements, deeds of pledge, share charges, or other similar agreements
or instruments, executed and delivered by the relevant Grantors in favor of
the
Agent, which pledge agreements will provide for the pledge of such shares of
Stock in accordance with the laws of the applicable foreign jurisdiction subject
to the limitations set forth above regarding the pledge of Stock securing the
payment and performance of the Secured Obligations of the Grantors. With respect
to such shares of Stock, the Agent may, at any time and from time to time,
in
its reasonable discretion, take actions in such foreign jurisdictions that
will
result in the perfection of the Lien created in such shares of
Stock.
3.Security
for Obligations.
This
Agreement and the Security Interest created hereby secures the payment and
performance of all the Secured Obligations, whether now existing or arising
hereafter. Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts which constitute part of the Secured
Obligations and would be owed by Grantors, or any of them, to Agent, the Lender
Group, the Bank Product Providers or any of them, but for the fact that they
are
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving any Grantor.
4.Grantors
Remain Liable.
Anything herein to the contrary notwithstanding, (a) each of the Grantors shall
remain liable under the contracts and agreements included in the Collateral,
including the Pledged Operating Agreements, to perform all of the duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Agent or any other member of the Lender Group
of
any of the rights hereunder shall not release any Grantor from any of its duties
or obligations under such contracts and agreements included in the Collateral,
and (c) none of the members of the Lender Group shall have any obligation or
liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall any of the members of the Lender Group
be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder. Until an Event of Default shall occur and be continuing, except
as
otherwise provided in this Agreement, the Credit Agreement, or any other Loan
Document, Grantors shall have the right to possession and enjoyment of the
Collateral for the purpose of conducting the ordinary course of their respective
businesses, subject to and upon the terms hereof and of the Credit Agreement
and
the other Loan Documents. Without limiting the generality of the foregoing,
it
is the intention of the parties hereto that record and beneficial ownership
of
the Pledged Interests, including all voting, consensual, and dividend rights,
shall remain in the applicable Grantor until the occurrence of an Event of
Default and until Agent shall notify the applicable Grantor of Agent's exercise
of voting, consensual, or dividend rights with respect to the Pledged Interests
pursuant to Section
15
hereof.
7
5.Representations
and Warranties.
Each
Grantor hereby represents and warrants as follows:
(a) The
exact
legal name of each of the Grantors is set forth on the signature pages of this
Agreement or a written notice provided to Agent pursuant to Section
6.5
of the
Credit Agreement.
(b)Schedule
7
attached
hereto sets forth all Real Property owned by Grantors as of the Closing Date.
(c) Such
Grantor is the sole legal and beneficial owner, or exclusive or non-exclusive
licensee, of all Intellectual Property rights that are necessary to the conduct
of its business as currently conducted. As of the Closing Date, (i) such Grantor
has no ownership interest in, or title to, any Copyrights, Patents or Trademarks
that are registered or the subject of pending applications for registrations,
except as set forth on Schedules
2,
4
and
6,
respectively, attached hereto; (ii) such Grantor has no ownership interest
in,
or title to, any Copyrights, Patents or Trademarks that are material to such
Grantor's businesses as currently conducted and used in connection with Grand
Theft Auto San Andreas or any other Material Videogame Franchise title that
was
commercially released within two years prior to the Closing Date that are not
registered or the subject of pending applications for registrations, except
as
set forth in Schedule
5(c)
attached
hereto; and (iii) such Grantor is not a party to any Intellectual Property
Licenses pursuant to which the Grantor is granted the right to develop,
manufacture, publish, market, distribute and sell any Material Videogame
Franchise, except as set forth on Schedule
3
attached
hereto. This Agreement is effective to create a valid and continuing Lien on
such Grantor's Copyrights, Patents and Trademarks and all of its rights and
interests in and to any Intellectual Property Licenses. Upon the filing of
the
Copyright Security Agreement with the United States Copyright Office and the
filing of the Patent Security Agreement and the Trademark Security Agreement
with the United States Patent and Trademark Office, and the filing of
appropriate financing statements in the jurisdictions listed on Schedule
8
hereto,
all action necessary or desirable to protect and perfect the Security Interest
in and to each Grantor's Patents, registered Trademarks, or registered
Copyrights has been taken and such perfected Security Interests are enforceable
as such as against any and all creditors of and purchasers from any Grantor.
All
Intellectual Property owned by each Grantor is valid, subsisting and enforceable
and, subject to Grantor's knowledge, is not subject to any outstanding order,
judgment or decree restricting its use or adversely affecting the rights of
such
Grantor thereto. Each of the Grantors has taken all actions reasonably necessary
to ensure protection of the Intellectual Property owned by such Grantor under
applicable law. Each of the Grantors has taken all actions reasonably necessary
to maintain the secrecy of all confidential Intellectual Property used in its
business (including requiring the execution of valid and enforceable agreements
by employees or any other person to whom such confidential Intellectual Property
is made available). To the knowledge of each Grantor, such Grantor is not using
or failing to enforce any Intellectual Property owned by such Grantor in a
manner that would reasonably be expected to result in the cancellation or
unenforceability of such Intellectual Property. Each of the Grantors has a
policy of requiring all employees, agents, consultants or contractors who have
contributed to or participated in the creation, development, improvement or
modification of Intellectual Property for such Grantor to assign all of their
rights therein to such Grantor. To the knowledge of each Grantor, no Person
(other than such Grantor) has any reasonable basis for claiming any right,
title
or interest in and to any such Intellectual Property used in connection with
any
Material Videogame Franchise. To the knowledge of each Grantor, no current
or
former employee of such Grantor is or was a party to any confidentiality
agreement and/or agreement not to compete that restricts or forbids, or
restricted or forbade at any time during such employee's employment by such
Grantor such employee's performance of such Grantor's business, or any other
activity that such employee was hired to perform or otherwise performed on
behalf of or in connection with such employee's employment by such Grantor.
No
Grantor incorporates any material open source computer software in the products
it publishes.
8
(d) This
Agreement creates a valid security interest in the Collateral of each Grantor,
to the extent a security interest therein can be created under the Code,
securing the payment and performance of the Secured Obligations. Except to
the
extent a security interest in the Collateral cannot be perfected by the filing
of a financing statement under the Code, all filings and other actions necessary
or desirable to perfect and protect such security interest have been duly taken
or will have been taken upon the filing of financing statements listing each
applicable Grantor, as a debtor, and Agent, as secured party, in the
jurisdictions listed next to such Grantor's name on Schedule
8
attached
hereto. Upon the making of such filings, Agent shall have a first priority
perfected security interest in the Collateral of each Grantor to the extent
such
security interest can be perfected by the filing of a financing statement.
All
action by any Grantor necessary to protect and perfect such security interest
on
each item of Collateral has been duly taken.
(e) (i)
Except for the Security Interest created hereby, each Grantor is and will at
all
times be the sole holder of record and the legal and beneficial owner, free
and
clear of all Liens other than Permitted Liens, of the Pledged Interests
indicated on Schedule
5
as being
owned by such Grantor and, when acquired by such Grantor, any Pledged Interests
acquired after the Closing Date; (ii) all of the Pledged Interests are duly
authorized, validly issued, fully paid and nonassessable and the Pledged
Interests constitute or will constitute the percentage of the issued and
outstanding Stock of the Pledged Companies of such Grantor identified on
Schedule
5
hereto
as supplemented or modified by any Pledged Interests Addendum or any Supplement
to this Agreement; (iii) such Grantor has the right and requisite authority
to
pledge, the Investment Related Property pledged by such Grantor to Agent as
provided herein; (iv) all actions necessary or desirable to perfect, establish
the first priority of, or otherwise protect, Agent's Liens in the Investment
Related Property, and the proceeds thereof, have been duly taken, (A) upon
the
execution and delivery of this Agreement; (B) upon the taking of possession
by
Agent (or its agent or designee) of any certificates constituting the Pledged
Interests, to the extent such Pledged Interests are represented by certificates,
together with undated powers endorsed in blank by the applicable Grantor; (C)
upon the filing of financing statements in the applicable jurisdiction set
forth
on Schedule
8
attached
hereto for such Grantor with respect to the Pledged Interests of such Grantor
that are not represented by certificates, and (D) with respect to any Securities
Accounts, upon the delivery of Control Agreements with respect thereto; and
(v)
each Grantor has delivered to and deposited with Agent (or, with respect to
any
Pledged Interests created or obtained after the Closing Date, will deliver
and
deposit in accordance with Sections
6(a)
and
8
hereof)
all certificates representing the Pledged Interests owned by such Grantor to
the
extent such Pledged Interests are represented by certificates, and undated
powers endorsed in blank with respect to such certificates. None of the Pledged
Interests owned or held by such Grantor has been issued or transferred in
violation of any securities registration, securities disclosure or similar
laws
of any jurisdiction to which such issuance or transfer may be
subject.
(f) No
consent, approval, authorization, or other order or other action by, and no
notice to or filing with, any Governmental Authority or any other Person is
required (i) for the grant of a Security Interest by such Grantor in and to
the
Collateral pursuant to this Agreement or for the execution, delivery, or
performance of this Agreement by such Grantor, or (ii) for the exercise by
Agent
of the voting or other rights provided for in this Agreement with respect to
the
Investment Related Property or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with such
disposition of Investment Related Property by laws affecting the offering and
sale of securities generally.
9
(g)Schedule
9
attached
hereto sets forth all motor vehicles owned by Grantors as of the Closing Date,
by model, model year and vehicle identification number ("VIN").
(h) There
is
no material default, breach, violation or event of acceleration existing under
any promissory note (as defined in the Code) constituting Collateral and pledged
hereunder (the "Pledged
Notes")
and no
event has occurred or circumstance exists which, with the passage of time or
the
giving of notice, or both, would constitute a material default, breach,
violation or event of acceleration under the Pledged Notes. Such Grantor, if
it
is an obligee under a Pledged Note, has not waived any material default, breach,
violation or event of acceleration under such Pledged Notes. A true, correct
and
complete list of the Pledged Notes is set forth on Schedule
10.
(i) Each
Grantor has made in good faith and in accordance with the procedures and
regulations of the United States Copyright Office and the United States Patent
and Trademark Office, as applicable, all payments, filings and recordations
necessary to protect and maintain its interest in the Intellectual Property
rights identified on Schedules
2(a),4(a)
and
6(a)
in the
United States in a manner sufficient to claim in the public record such
Grantor's ownership thereof, including (i) making all necessary
registration, maintenance, and renewal fee payments; and (ii) filing all
necessary documents, including all applications for registration of such
Intellectual Property rights.
(j) Except
as
set forth on Schedules
2,
4
or
6,
no
claim has been made in writing and is continuing or, to each Grantor's
knowledge, overtly threatened that the use by any Grantor of any Intellectual
Property rights that are material to the conduct of its business does or may
violate the Intellectual Property rights of any Person. To each Grantor's
knowledge, there is currently no infringement or unauthorized use of any item
of
Intellectual Property rights contained on Schedules
2,
4
or
6
that are
material to the conduct of its business.
6.Covenants.
Each
Grantor, jointly and severally, covenants and agrees with Agent and the Lender
Group that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with Section
22
hereof:
(a)Possession
of Collateral.
In the
event that any Collateral, including proceeds, is evidenced by or consists
of
Negotiable Collateral, Investment Related Property, or Chattel Paper, and if
and
to the extent that perfection or priority of Agent's Security Interest is
dependent on possession, the applicable Grantor, immediately upon the request
of
Agent and in accordance with Section
8
hereof,
shall execute such other documents and instruments as shall be reasonably
requested by Agent or, if applicable, endorse and deliver physical possession
of
such Negotiable Collateral, Investment Related Property, or Chattel Paper to
Agent, together with such undated powers endorsed in blank as shall be
reasonably requested by Agent.
(b)Chattel
Paper.
(i) Each
Grantor shall take all steps reasonably necessary to grant Agent control of
all
electronic Chattel Paper in accordance with the Code and all "transferable
records" as that term is defined in Section 16 of the Uniform Electronic
Transaction Act and Section 201 of the federal Electronic Signatures in Global
and National Commerce Act as in effect in any relevant jurisdiction;
and
(ii) If
any
Grantor retains possession of any Chattel Paper or instruments (which retention
of possession shall be subject to the extent permitted hereby and by the Credit
Agreement), promptly upon the request of Agent, such Chattel Paper and
instruments shall be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the Security Interest
of
Wells Fargo Foothill, Inc., as Agent for the benefit of the Lender Group and
the
Bank Product Providers".
10
(c)Control
Agreements.
(i) Except
to
the extent otherwise permitted by the Credit Agreement, each
Grantor shall obtain an authenticated Control Agreement, from each bank
maintaining a Deposit Account for such Grantor; and
(ii) Except
to
the extent otherwise permitted by the Credit Agreement, each Grantor shall
obtain authenticated Control Agreements, from each issuer of uncertificated
securities, securities intermediary, or commodities intermediary issuing or
holding any financial assets or commodities to or for any Grantor.
(d)Letter
of Credit Rights.
Each
Grantor that is or becomes the beneficiary of a letter of credit shall promptly
(and in any event within 5 Business Days after becoming a beneficiary), notify
Agent thereof and, upon the request by Agent, enter into a tri-party agreement
with Agent and the issuer or confirmation bank with respect to letter-of-credit
rights (as that term is defined in the Code) assigning such letter-of-credit
rights to Agent and directing all payments thereunder to Agent's Account, all
in
form and substance reasonably satisfactory to Agent.
(e)Commercial
Tort Claims.
Each
Grantor shall promptly (and in any event within 5 Business Days of receipt
thereof), notify Agent in writing upon incurring or otherwise obtaining a
Commercial Tort Claim after the date hereof and, upon request of Agent, promptly
amend Schedule
1
to this
Agreement to describe such after-acquired Commercial Tort Claim in a manner
that
reasonably identifies such Commercial Tort Claim, and hereby authorizes the
filing of additional financing statements or amendments to existing financing
statements describing such Commercial Tort Claims, and agrees to do such other
acts or things deemed reasonably necessary or desirable by Agent to give Agent
a
first priority, perfected security interest in any such Commercial Tort Claim.
(f)Government
Contracts.
If any
Account or Chattel Paper arises out of a contract or contracts with the United
States of America or any department, agency, or instrumentality thereof,
Grantors shall promptly (and in any event within 5 Business Days of the creation
thereof) notify Agent thereof in writing and execute any instruments or take
any
steps reasonably required by Agent in order that all moneys due or to become
due
under such contract or contracts shall be assigned to Agent, for the benefit
of
the Lender Group and the Bank Product Providers, and shall provide written
notice thereof under the Assignment of Claims Act or other applicable law.
(g)Intellectual
Property.
(i) Upon
request of Agent, in order to facilitate filings with the United States Patent
and Trademark Office and the United States Copyright Office, each Grantor shall
execute and deliver to Agent one or more Copyright Security Agreements,
Trademark Security Agreements, or Patent Security Agreements to further evidence
Agent's Lien on such Grantor's Patents, Trademarks, or Copyrights, and the
General Intangibles of such Grantor relating thereto or represented
thereby;
(ii) Each
Grantor shall have the duty, to the extent material to or economically desirable
in the operation of such Grantor's business, (A) to promptly sue for
infringement, misappropriation, or dilution and to recover any and all damages
for such infringement, misappropriation, or dilution, (B) to prosecute
diligently any trademark application or service mark application that is part
of
the Trademarks pending as of the date hereof or hereafter until the termination
of this Agreement, (C) to prosecute diligently any patent application that
is
part of the Patents pending as of the date hereof or hereafter until the
termination of this Agreement, and (D) to take reasonable and necessary action
to preserve and maintain all of such Grantor's Trademarks, Patents, Copyrights,
Intellectual Property Licenses, and its rights therein, including the filing
of
applications for renewal, affidavits of use, affidavits of noncontestability
and
opposition and interference and cancellation proceedings, unless as otherwise
permitted by the Credit Agreement or the Loan Documents. Each Grantor shall
fully comply with the provisions of Section
5.21
of the
Credit Agreement;
11
(iii) Grantors
acknowledge and agree that the Lender Group shall have no duties with respect
to
the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without
limiting the generality of this Section
6(g),
Grantors acknowledge and agree that no member of the Lender Group shall be
under
any obligation to take any steps necessary to preserve rights in the Trademarks,
Patents, Copyrights, or Intellectual Property Licenses against any other Person,
but any member of the Lender Group may do so at its option from and after the
occurrence and during the continuance of an Event of Default, and all expenses
incurred in connection therewith (including reasonable fees and expenses of
attorneys and other professionals) shall be for the sole account of Borrowers
and shall be chargeable to the Loan Account;
(iv) Promptly
upon the filing of an application for the registration of any Patent, Trademark,
or Copyright with the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency, such Grantor shall
provide Agent with written notice thereof. Promptly upon any such filing, each
Grantor shall comply with Section
6(g)(i)
hereof;
and
(v) With
respect to the Intellectual Property rights that are material to the conduct
of
Grantors' businesses, each Grantor agrees to take all reasonably necessary
steps
to protect each such Intellectual Property right. Each Grantor hereby agrees
to
take corresponding steps with respect to each new or acquired Intellectual
Property right to which it or any of its Subsidiaries is now or later becomes
entitled that are material to the conduct of their businesses. Any expenses
incurred in connection with such activities shall be borne solely by such
Grantor.
(h)Investment
Related Property.
(i) If
any
Grantor shall receive or become entitled to receive any Pledged Interests after
the Closing Date, it shall promptly (and in any event within 5 Business Days
of
receipt thereof) deliver to Agent a duly executed Pledged Interests Addendum
identifying such Pledged Interests;
(ii) All
sums
of money and property paid or distributed in respect of the Investment Related
Property which are received by any Grantor shall, upon the occurrence and during
the continuance of an Event of Default, be held by such Grantor in trust for
the
benefit of Agent segregated from such Grantor's other property, and such Grantor
shall promptly deliver it forthwith to Agent's in the exact form
received;
(iii) Each
Grantor shall promptly deliver to Agent a copy of each material notice or other
communication received by it in respect of any Pledged Interests;
(iv) No
Grantor shall make or consent to any material amendment or other modification
or
waiver with respect to any Pledged Interests, Pledged Operating Agreement,
or
Pledged Partnership Agreement, or enter into any agreement or permit to exist
any restriction with respect to any Pledged Interests other than pursuant to
the
Loan Documents;
(v) Each
Grantor agrees that it will reasonably cooperate with Agent in obtaining all
necessary approvals and making all necessary filings under federal, state,
local, or foreign law in connection with the Security Interest in the Investment
Related Property or any sale or transfer thereof; and
(vi) As
to all
limited liability company or partnership interests, issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, each Grantor hereby
represents, warrants and covenants that the Pledged Interests issued pursuant
to
any such agreement (A) are and shall be represented by a certificate, (ii)
are
and shall be deemed a "security" within the meaning of Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction, and (iii) are and
shall be governed by Article 8 of Uniform Commercial Code as in effect in any
relevant jurisdiction.
12
(i)Real
Property; Fixtures.
Each
Grantor covenants and agrees that upon the acquisition of any fee interest
in
material Real Property it will promptly (and in any event within 5 Business
Days
of acquisition) notify Agent of the acquisition of such Real Property and will
grant to Agent, for the benefit of the Lender Group and the Bank Product
Providers, a first priority Mortgage on each fee interest in Real Property
now
or hereafter owned by such Grantor and shall deliver such other documentation
and opinions, in form and substance reasonably satisfactory to Agent, in
connection with the grant of such Mortgage as Agent shall request in its
Permitted Discretion, including title insurance policies, financing statements,
fixture filings and environmental audits and such Grantor shall pay all
recording costs, intangible taxes and other reasonable fees and costs (including
reasonable attorneys fees and expenses) incurred in connection therewith. Each
Grantor acknowledges and agrees that, to the extent permitted by applicable
law,
all of the Collateral shall remain personal property regardless of the manner
of
its attachment or affixation to real property.
(j)Transfers
and Other Liens.
Grantors shall not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, except as expressly permitted by the Credit Agreement, or (ii)
create or permit to exist any Lien upon or with respect to any of the
Collateral, except for Permitted Liens. The inclusion of Proceeds in the
Collateral shall not be deemed to constitute Agent's consent to any sale or
other disposition of any of the Collateral except as expressly permitted in
this
Agreement or the other Loan Documents.
(k)Other
Actions as to Any and All Collateral.
Each
Grantor shall promptly (and in any event within 5 Business Days of acquiring
or
obtaining such Collateral) notify Agent in writing upon (i) acquiring or
otherwise obtaining any Collateral after the date hereof consisting of
Trademarks, Patents, Copyrights, Intellectual Property Licenses, Investment
Related Property, Chattel Paper (electronic, tangible or otherwise), documents
(as defined in Article 9 of the Code), promissory notes (as defined in the
Code), or instruments (as defined in the Code) or (ii) any material amount
payable under or in connection with any of the Collateral being or becoming
evidenced after the date hereof by any Chattel Paper, documents, promissory
notes, or instruments and, in each such case upon the reasonable request of
Agent and in accordance with Section
8
hereof,
promptly execute such other documents and instruments, or if applicable, deliver
such Chattel Paper, other documents, promissory notes, instruments or
certificates evidencing any Investment Related Property in accordance with
Section
6
hereof
and do such other acts or things deemed reasonably necessary or desirable by
Agent to protect Agent's Security Interest therein.
(l)Pledged
Notes.
(i) If
any
Grantor shall receive or become entitled to receive any Pledged Note after
the
Closing Date, it shall promptly (and in any event within 2 Business Days of
receipt thereof) deliver to Agent a duly executed Pledged Note Addendum
identifying such Pledged Note;
(ii) No
Grantor will waive or release any material obligation of any party to the
Pledged Notes without the prior reasonable consent of Agent;
(iii) No
Grantor will take or omit to take any action or suffer or permit any action
to
be omitted or taken, the taking or omission of which would result in any right
of offset against sums payable under the Pledged Notes;
(iv) Each
Grantor shall give Agent copies of all material notices (including notices
of
default) given or received with respect to the Pledged Notes promptly after
giving or receiving such notice; and
13
(v) Without
Agent's reasonable prior written consent, each Grantor shall not, and shall
not
agree to, assign or surrender its rights and interests under the Pledged Notes
nor terminate, cancel, modify, change, supplement or amend the Pledged Notes.
(m)Motor
Vehicles.
Upon
reasonable request of Agent, with respect to all motor vehicles owned by any
Grantor that have an individual fair market value in excess of $25,000, Grantor
shall deliver to Agent, a certificate of title for all such motor vehicles
and
shall cause those title certificates to be filed (with the Agent's Lien noted
thereon) in the appropriate state motor vehicle filing office.
7.Relation
to Other Security Documents.
The
provisions of this Agreement shall be read and construed with the other Loan
Documents referred to below in the manner so indicated.
(a)Credit
Agreement.
In the
event of any conflict between any provision in this Agreement and a provision
in
the Credit Agreement, such provision of the Credit Agreement shall
control.
(b)Patent,
Trademark, Copyright Security Agreements.
The
provisions of the Copyright Security Agreements, Trademark Security Agreements,
and Patent Security Agreements are supplemental to the provisions of this
Agreement, and nothing contained in the Copyright Security Agreements, Trademark
Security Agreements, or the Patent Security Agreements shall limit any of the
rights or remedies of Agent hereunder.
8.Further
Assurances.
(a) Each
Grantor agrees that from time to time, at its own expense, such Grantor will
promptly execute and deliver all further instruments and documents, and take
all
further action, that may be necessary or that Agent may reasonably request,
in
order to perfect and protect any Security Interest granted or purported to
be
granted hereby or to enable Agent to exercise and enforce its rights and
remedies hereunder with respect to any of the Collateral.
(b) Each
Grantor hereby authorizes the filing by Agent of financing or continuation
statements, or amendments thereto, and such Grantor will execute and deliver
to
Agent such other instruments or notices, as may be necessary or as Agent may
reasonably request, in order to perfect and preserve the Security Interest
granted or purported to be granted hereby.
(c) Each
Grantor hereby authorizes Agent at any time and from time to time to file,
transmit, or communicate, as applicable, financing statements and amendments
(i)
describing the Collateral as "all personal property of debtor" or "all assets
of
debtor" or words of similar effect, (ii) describing the Collateral as being
of
equal or lesser scope or with greater detail, or (iii) that contain any
information required by part 5 of Article 9 of the Code for the sufficiency
or
filing office acceptance. Each Grantor also hereby ratifies any and all
financing statements or amendments previously filed by Agent in any
jurisdiction.
(d) Each
Grantor acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
filed in connection with this Agreement without the prior written consent of
Agent, subject to such Grantor's rights under Section 9-509(d)(2) of the
Code.
9.Agent's
Right to Perform Contracts, Exercise Rights, etc..
Upon
the occurrence and during the continuance of an Event of Default, Agent (or
its
designee) (a) may proceed to perform any and all of the obligations of any
Grantor contained in any contract, lease, or other agreement and exercise any
and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right to use any Grantor's rights under Intellectual
Property Licenses in connection with the enforcement of the Agent's rights
hereunder, including the right to prepare for sale and sell any and all
Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses, and (c) shall have the right to request
that
any Stock is pledged hereunder be registered in the name of Agent or any of
its
nominees.
14
10.Agent
Appointed Attorney-in-Fact.
Each
Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, at such time as an Event of Default has occurred and is continuing
under the Credit Agreement, to take any action and to execute any instrument
which Agent may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including:
(a) to
ask,
demand, collect, sue for, recover, compromise, receive and give acquittance
and
receipts for moneys due and to become due under or in connection with the
Accounts or any other Collateral of such Grantor;
(b) to
receive and open all mail addressed to such Grantor and to notify postal
authorities to change the address for the delivery of mail to such Grantor
to
that of Agent;
(c) to
receive, endorse, and collect any drafts or other instruments, documents,
Negotiable Collateral or Chattel Paper;
(d) to
file
any claims or take any action or institute any proceedings which Agent may
deem
necessary or desirable for the collection of any of the Collateral of such
Grantor or otherwise to enforce the rights of Agent with respect to any of
the
Collateral;
(e) to
repair, alter, or supply goods, if any, necessary to fulfill in whole or in
part
the purchase order of any Person obligated to such Grantor in respect of any
Account of such Grantor;
(f) to
use
any labels, Patents, Trademarks, trade names, URLs, domain names, industrial
designs, Copyrights, advertising matter or other industrial or intellectual
property rights, in advertising for sale and selling Inventory and other
Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and
(g) Agent
on
behalf of the Lender Group and the Bank Product Providers shall have the right,
but shall not be obligated, to bring suit in its own name to enforce the
Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if
Agent
shall commence any such suit, the appropriate Grantor shall, at the request
of
Agent, do any and all lawful acts and execute any and all proper documents
reasonably required by Agent in aid of such enforcement.
To
the
extent permitted by law, each Grantor hereby ratifies all that such
attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This
power of attorney is coupled with an interest and shall be irrevocable until
this Agreement is terminated in accordance with the Credit Agreement.
11.Agent
May Perform.
If any
Grantor fails to perform any agreement contained herein, Agent may itself
perform, or cause performance of, such agreement, and the reasonable expenses
of
Agent incurred in connection therewith shall be payable, jointly and severally,
by Grantors.
12.Agent's
Duties.
The
powers conferred on Agent hereunder are solely to protect Agent's interest
in
the Collateral, for the benefit of the Lender Group and the Bank Product
Providers, and shall not impose any duty upon Agent to exercise any such powers.
Except for the safe custody of any Collateral in its actual possession and
the
accounting for moneys actually received by it hereunder, Agent shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral
is
accorded treatment substantially equal to that which Agent accords its own
property.
15
13.Collection
of Accounts, General Intangibles and Negotiable Collateral.
At any
time upon the occurrence and during the continuation of an Event of Default,
Agent or Agent's designee may (a) notify Account Debtors of any Grantor that
such Grantor's Accounts, General Intangibles, Chattel Paper or Negotiable
Collateral have been assigned to Agent, for the benefit of the Lender Group
and
the Bank Product Provider, or that Agent has a security interest therein, and
(b) collect such Grantor's Accounts, General Intangibles and Negotiable
Collateral directly, and any reasonable collection costs and expenses shall
constitute part of such Grantor's Secured Obligations under the Loan
Documents.
14.Disposition
of Pledged Interests by Agent.
None of
the Pledged Interests existing as of the date of this Agreement are, and none
of
the Pledged Interests hereafter acquired on the date of acquisition thereof
will
be, registered or qualified under the various federal or state securities laws
of the United States and disposition thereof after an Event of Default may
be
restricted to one or more private (instead of public) sales in view of the
lack
of such registration. Each Grantor understands that in connection with such
disposition, Agent may approach only a restricted number of potential purchasers
and further understands that a sale under such circumstances may yield a lower
price for the Pledged Interests than if the Pledged Interests were registered
and qualified pursuant to federal and state securities laws and sold on the
open
market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant
to
the terms of this Agreement, sell or cause the Pledged Interests or any portion
thereof to be sold at a private sale, Agent shall have the right to rely upon
the advice and opinion of any nationally recognized brokerage or investment
firm
(but shall not be obligated to seek such advice and the failure to do so shall
not be considered in determining the commercial reasonableness of such action)
as to the best manner in which to offer the Pledged Interest or any portion
thereof for sale and as to the best price reasonably obtainable at the private
sale thereof; and (b) such reliance shall be conclusive evidence that Agent
has
handled the disposition in a commercially reasonable manner.
15.Voting
Rights.
(a) Upon
the
occurrence and during the continuation of an Event of Default, (i) Agent may,
at
its option, and with prior notice (unless such Event of Default is an Event
of
Default specified in Sections
7.4
or
7.5
of the
Credit Agreement, in which case no such notice need be given) to any Grantor,
and in addition to all rights and remedies available to Agent under any other
agreement, at law, in equity, or otherwise, exercise all voting rights, and
all
other ownership or consensual rights in respect of the Pledged Interests owned
by such Grantor, but under no circumstances is Agent obligated by the terms
of
this Agreement to exercise such rights, and (ii) if Agent duly exercises its
right to vote any of such Pledged Interests, each Grantor hereby appoints Agent,
such Grantor's true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote
such Pledged Interests in any manner Agent deems advisable for or against all
matters submitted or which may be submitted to a vote of shareholders, partners
or members, as the case may be. The power-of-attorney granted hereby is coupled
with an interest and shall be irrevocable.
(b) For
so
long as any Grantor shall have the right to vote the Pledged Interests owned
by
it, such Grantor covenants and agrees that it will not, without the prior
written consent of Agent, vote or take any consensual action with respect to
such Pledged Interests which would adversely affect the rights of Agent and
the
other members of the Lender Group or the value of the Pledged Interests.
16.Remedies.
Upon
the occurrence and during the continuance of an Event of Default:
(a) Agent
may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, in the other Loan Documents, or otherwise available to
it,
all the rights and remedies of a secured party on default under the Code or
any
other applicable law. Without limiting the generality of the foregoing, each
Grantor expressly agrees that, in any such event, Agent, without demand of
performance or other demand, advertisement or notice of any kind (except a
notice specified below of time and place of public or private sale) to or upon
any of Grantors or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors
to,
and each Grantor hereby agrees that it will at its own expense and upon request
of Agent forthwith, assemble all or part of the Collateral as directed by Agent
and make it available to Agent at one or more locations where such Grantor
regularly maintains Inventory, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Agent's offices or elsewhere, for cash, on credit,
and upon such other terms as Agent may deem commercially reasonable. Each
Grantor agrees that, to the extent notice of sale shall be required by law,
at
least 10 days written notice to any of Grantors of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification and specifically such notice shall constitute
a reasonable "authenticated notification of disposition" within the meaning
of
Section 9-611 of the Code. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Agent may adjourn
any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
16
(b) Agent
is
hereby granted a license or other right to use, without liability for royalties
or any other charge, each Grantor's labels, Patents, Copyrights, rights of
use
of any name, trade secrets, trade names, Trademarks, service marks and
advertising matter, URLs, domain names, industrial designs, other industrial
or
intellectual property or any property of a similar nature, whether owned or
licensable by any of Grantors or with respect to which any of Grantors have
sublicensable rights under license, sublicense, or other agreements, as it
pertains to the Collateral, in preparing for sale, advertising for sale and
selling any Collateral, and each Grantor's rights under all licenses and all
franchise agreements shall inure to the benefit of Agent.
(c) Any
cash
held by Agent as Collateral and all cash proceeds received by Agent in respect
of any sale of, collection from, or other realization upon all or any part
of
the Collateral shall be applied against the Secured Obligations in the order
set
forth in the Credit Agreement. In the event the proceeds of Collateral are
insufficient to satisfy all of the Secured Obligations in full, each Grantor
shall remain jointly and severally liable for any such deficiency.
(d) Each
Grantor hereby acknowledges that the Secured Obligations arose out of a
commercial transaction, and agrees that if an Event of Default shall occur
and
be continuing Agent shall have the right to an immediate writ of possession
without notice of a hearing. Agent shall have the right to the appointment
of a
receiver for the properties and assets of each Grantor, and each Grantor hereby
consents to such rights and such appointment and hereby waives any objection
such Grantor may have thereto or the right to have a bond or other security
posted by Agent.
17.Remedies
Cumulative.
Each
right, power, and remedy of Agent as provided for in this Agreement or in the
other Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise shall be cumulative and concurrent and shall be in addition
to every other right, power, or remedy provided for in this Agreement or in
the
other Loan Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by Agent,
of
any one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by Agent of any or all such other rights, powers,
or remedies.
18.Marshaling.
Agent
shall not be required to marshal any present or future collateral security
(including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order,
and
all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition
to
all other rights and remedies, however existing or arising. To the extent that
it lawfully may, 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 Agent's rights and remedies under this Agreement or under
any
other instrument creating or evidencing any of the Secured Obligations or under
which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and,
to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.
17
19.Indemnity
and Expenses.
(a) Each
Grantor agrees to indemnify Agent and the other members of the Lender Group
from
and against all claims, lawsuits and liabilities (including reasonable attorneys
fees) growing out of or resulting from this Agreement (including enforcement
of
this Agreement) or any other Loan Document to which such Grantor is a party,
except claims, losses or liabilities resulting from the gross negligence or
willful misconduct of the party seeking indemnification as determined by a
final
non-appealable order of a court of competent jurisdiction. This provision shall
survive the termination of this Agreement and the Credit Agreement and the
repayment of the Secured Obligations.
(b) Grantors,
jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge
to
the Loan Account) all the Lender Group Expenses which Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or, upon an Event of Default, the sale of,
collection from, or other realization upon, any of the Collateral in accordance
with this Agreement and the other Loan Documents, (iii) the exercise or
enforcement of any of the rights of Agent hereunder or (iv) the failure by
any
of Grantors to perform or observe any of the provisions hereof.
20.Merger,
Amendments; Etc.
THIS
AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this
Agreement, and no consent to any departure by any of Grantors herefrom, shall
in
any event be effective unless the same shall be in writing and signed by Agent,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No amendment of any provision
of
this Agreement shall be effective unless the same shall be in writing and signed
by Agent and each of Grantors to which such amendment applies.
21.Addresses
for Notices.
All
notices and other communications provided for hereunder shall be given in the
form and manner and delivered to Agent at its address specified in the Credit
Agreement, and to any of the Grantors at their respective addresses specified
in
the Credit Agreement or Guaranty, as applicable, or, as to any party, at such
other address as shall be designated by such party in a written notice to the
other party.
22.Continuing
Security Interest: Assignments under Credit Agreement.
This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Obligations have been paid
in full in cash in accordance with the provisions of the Credit Agreement and
the Commitments have expired or have been terminated, (b) be binding upon each
Grantor, and their respective successors and assigns, and (c) inure to the
benefit of, and be enforceable by, Agent, and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
may, in accordance with the provisions of the Credit Agreement, assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
herein or otherwise. Upon payment in full in cash of the Obligations in
accordance with the provisions of the Credit Agreement and the expiration or
termination of the Commitments, the Security Interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantors or any
other
Person entitled thereto. At such time, Agent will file or authorize the filing
of appropriate termination statements to terminate such Security Interest.
No
transfer or renewal, extension, assignment, or termination of this Agreement
or
of the Credit Agreement, any other Loan Document, or any other instrument or
document executed and delivered by any Grantor to Agent nor any additional
Advances or other loans made by any Lender to Borrowers, nor the taking of
further security, nor the retaking or re-delivery of the Collateral to Grantors,
or any of them, by Agent, nor any other act of the Lender Group or the Bank
Product Providers, or any of them, shall release any of Grantors from any
obligation, except a release or discharge executed in writing by Agent in
accordance with the provisions of the Credit Agreement. Agent shall not by
any
act, delay, omission or otherwise, be deemed to have waived any of its rights
or
remedies hereunder, unless such waiver is in writing and signed by Agent and
then only to the extent therein set forth. A waiver by Agent of any right or
remedy on any occasion shall not be construed as a bar to the exercise of any
such right or remedy which Agent would otherwise have had on any other
occasion.
18
23.Governing
Law.
(a) THE
VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER
LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
NEW YORK.
(b) THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE
STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED,
HOWEVER,
THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
AGENT AND EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUMNONCONVENIENS
OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS
SECTION
23(b).
(c) TO
THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AGENT AND EACH GRANTOR HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH GRANTOR REPRESENT THAT
EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
24.New
Subsidiaries.
Pursuant to Section
5.16
of the
Credit Agreement, any new direct or indirect Subsidiary (whether by acquisition
or creation) of any Borrower or any other Grantor (other than an Inactive
Subsidiary) is required to enter into this Agreement by executing and delivering
in favor of Agent a supplement to this Agreement in the form of Annex
1
attached
hereto. Upon the execution and delivery of Annex
1
by such
new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same
force and effect as if originally named as a Grantor herein. The execution
and
delivery of any instrument adding an additional Grantor as a party to this
Agreement shall not require the consent of any Grantor hereunder. The rights
and
obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor hereunder, except as permitted
under the Credit Agreement.
25.Agent.
Each
reference herein to any right granted to, benefit conferred upon or power
exercisable by the "Agent" shall be a reference to Agent, for the benefit of
the
Lender Group and the Bank Product Providers.
19
26.Miscellaneous.
(a) This
Agreement may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, shall
be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile or other electronic method of transmission
shall be equally as effective as delivery of an original executed counterpart
of
this Agreement. Any party delivering an executed counterpart of this Agreement
by telefacsimile or other electronic method of transmission also shall deliver
an original executed counterpart of this Agreement but the failure to deliver
an
original executed counterpart shall not affect the validity, enforceability,
and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis
mutandis.
(b) Any
provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other
jurisdiction.
(c) Headings
used in this Agreement are for convenience only and shall not be used in
connection with the interpretation of any provision hereof.
(d) The
pronouns used herein shall include, when appropriate, either gender and both
singular and plural, and the grammatical construction of sentences shall conform
thereto.
(e) Unless
the context of this Agreement or any other Loan Document clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms "includes" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words "hereof,""herein,""hereby,""hereunder," and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders,
and
supplements, thereto and thereof, as applicable (subject to any restrictions
on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full in cash (or cash
collateralization in accordance with the terms hereof) of all Obligations other
than unasserted contingent indemnification Obligations and other than any Bank
Product Obligations that, at such time, are allowed by the applicable Bank
Product Provider to remain outstanding and that are not required by the
provisions of the Credit Agreement to be repaid or cash collateralized. Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in
any
other Loan Document shall be satisfied by the transmission of a Record and
any
Record so transmitted shall constitute a representation and warranty as to
the
accuracy and completeness of the information contained therein.
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IN
WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement
by
and through their duly authorized officers, as of the day and year first above
written.
