Exhibit 10.67

 

EXECUTION VERSION

 

 

FIRST LIEN GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

EACH OF THE GRANTORS PARTY HERETO

 

in favor of

 

BARCLAYS BANK PLC,
as Collateral Agent

 

Dated as of February 7, 2014

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

SECTION 1.

DEFINED TERMS

1

 

 

 

1.1

Definitions

1

1.2

Other Definitional Provisions

4

 

 

 

SECTION 2.

GUARANTEE

4

 

 

 

2.1

Guarantee

4

2.2

Right of Contribution

5

2.3

No Subrogation

5

2.4

Amendments, Etc. with Respect to the Guaranteed Obligations

6

2.5

Guarantee Absolute and Unconditional

6

2.6

Reinstatement

8

2.7

Payments

8

2.8

Information

8

 

 

 

SECTION 3.

GRANT OF SECURITY INTEREST

8

 

 

 

3.1

Grant of Security Interests

8

 

 

 

SECTION 4.

REPRESENTATIONS AND WARRANTIES

9

 

 

 

4.1

Representations in Credit Agreement

9

4.2

Title; No Other Liens

9

4.3

Names; Jurisdiction of Organization; Chief Executive Office

10

4.4

Pledged Securities

10

4.5

Pledged Notes

10

4.6

Intellectual Property

10

4.7

Commercial Tort Claims

10

4.8

Deposit Accounts; Securities Accounts and Commodity Accounts

10

4.9

Specific Collateral

11

4.10

Perfection and Priority

11

4.11

Enforcement

11

 

 

 

SECTION 5.

COVENANTS

11

 

 

 

5.1

Covenants in Credit Agreement

11

5.2

Investment Property

11

5.3

Commercial Tort Claims

11

5.4

Maintenance of Perfected Security Interest; Defense of Claims

12

5.5

Delivery of Instruments and Tangible Chattel Paper and Control of Investment
Property, Letter-of-Credit Rights and Electronic Chattel Paper

12

5.6

Deposit Accounts, Securities Accounts and Commodity Accounts

13

5.7

Intellectual Property

13

5.8

Maintenance of Perfected Security Interest; Further Documentation and Consents

14

 

 

 

SECTION 6.

REMEDIAL PROVISIONS

14

 

 

 

6.1

Certain Matters Relating to Receivables

14

6.2

Communications with Grantors; Grantors Remain Liable

15

 

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TABLE OF CONTENTS

(con’t)

 

 

 

Page

 

 

 

6.3

Pledged Securities; Dividends

15

6.4

Intellectual Property

16

6.5

Proceeds to be Turned Over To Collateral Agent

17

6.6

Application of Proceeds

17

6.7

Code and Other Remedies

17

6.8

Private Sales

20

6.9

Deficiency

20

 

 

 

SECTION 7.

THE COLLATERAL AGENT

20

 

 

 

7.1

Collateral Agent’s Appointment as Attorney-in-Fact, etc.

20

7.2

Duty of Collateral Agent

21

7.3

Authorization of Financing Statements

22

7.4

Authority of Collateral Agent

22

 

 

 

SECTION 8.

MISCELLANEOUS

22

 

 

 

8.1

Amendments in Writing

22

8.2

Notices

23

8.3

No Waiver by Course of Conduct; Cumulative Remedies

23

8.4

Enforcement Expenses; Indemnification

23

8.5

Successors and Assigns

23

8.6

Set-Off

23

8.7

Counterparts

24

8.8

Severability

24

8.9

Section Headings

24

8.10

Integration

24

8.11

Governing Law; Jurisdiction; Etc.

24

8.12

Acknowledgements

25

8.13

Additional Grantors

25

8.14

Releases

25

8.15

WAIVER OF JURY TRIAL

26

8.16

Reinstatement

26

8.17

Independent Obligations

26

8.18

Intercreditor Agreement Governs

26

 

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TABLE OF CONTENTS

 

 

 

Page

SCHEDULES

 

 

Schedule 1

Notice Addresses

 

Schedule 2

Investment Property

 

Schedule 3

Legal Name, Jurisdictions of Organization and Organizational Identification
Number

 

Schedule 4(a)

Intellectual Property

 

Schedule 4(b)

License Arrangements and Agreements

 

Schedule 5

Commercial Tort Claims

 

Schedule 6

Deposit Accounts; Securities Accounts; Commodity Accounts

 

Schedule 7

Perfection and Priority

 

 

 

 

ANNEXES

 

 

Annex I

Assumption Agreement

 

 

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FIRST LIEN GUARANTEE AND COLLATERAL AGREEMENT

 

FIRST LIEN GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 7, 2014,
made by SFX Entertainment, Inc. a Delaware corporation (the “Borrower”), the
other Persons listed on the signature pages hereof and the Additional Grantors
(as defined herein) in favor of Barclays Bank PLC, as collateral agent (in such
capacity, together with any successor agent appointed pursuant to Section 8.07
of the Credit Agreement referred to below, the “Collateral Agent”) for the
Secured Parties (as defined below), including the several banks and other
financial institutions or entities (the “Lenders”) from time to time parties to
that certain Credit Agreement, dated as the date hereof, by and among the
Borrower, the Lenders, Barclays Bank PLC, as administrative agent, and the other
agents party thereto (as amended, restated, supplemented waived and/or otherwise
modified from time to time, the “Credit Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to
make Revolving Loans and other extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that
includes each other Grantor (as defined below);

 

WHEREAS, the proceeds of the Revolving Loans under the Credit Agreement will be
used in part to enable the Borrower to fund Permitted Acquisitions;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
making of the Revolving Loans and other extensions of credit under the Credit
Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective Revolving Loans and other extensions of credit to the Borrower
under the Credit Agreement that the Grantors shall have executed and delivered
this Agreement to the Administrative Agent for the ratable benefit of the
Secured Parties;

 

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Revolving Loans thereunder and to
induce the Secured Hedging Counterparties to enter into Secured Hedging
Agreements and the Cash Management Counterparties to enter into Cash Management
Documents from time to time, each Grantor hereby agrees with the Collateral
Agent, for the ratable benefit of the Secured Parties, as follows:

 

SECTION 1.                            DEFINED TERMS

 

1.1                               Definitions.  (a) Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement, and the following terms are used
herein as defined in the UCC: “Accession”, “As-Extracted Collateral”,
“Certificated Security”, “Chattel Paper”, “Commercial Tort Claim”, “Document”,
“Equipment”, “Fixture”, “General Intangible”, “Goods”, “Instrument”,
“Inventory”, “Letter-of-Credit Right”, “Securities Account”, “Security”,
“Supporting Obligations” and “Uncertificated Securities”.

 

(b)  The following terms shall have the following meanings:

 

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“Acceleration Date”:  the date the Collateral Agent may take any of the actions
listed in Section 7.01 of the Credit Agreement upon and during the continuance
of any Event of Default.

 

“Account”: any right to payment of a monetary obligation, whether or not earned
by performance, including, but not limited to, the right to payment for goods
sold or leased or for services rendered, whether or not such right is evidenced
by an Instrument or Chattel Paper, and right to payment of management fees. 
Without limiting the generality of the foregoing, the term “Account” shall
further include all “accounts” (as that term is defined in the UCC), all
accounts receivable, all “health-care-insurance receivables” (as that term is
defined in the UCC), all “payment intangibles” (as that term is defined in the
UCC) and all other rights to payment of every kind and description, whether or
not earned by performance.

 

“Additional Grantors”: as defined in Section 8.13.

 

“Agreement”:  this First Lien Guarantee and Collateral Agreement, as the same
may be amended, restated, supplemented waived and/or otherwise modified from
time to time.

 

“Bankruptcy Default”: an Event of Default under Section 7.01(f) of the Credit
Agreement.

 

“Borrower”: as defined in the preamble hereto.

 

“Borrower Credit Agreement Obligations”:  “Obligations” as defined in the Credit
Agreement.

 

“Borrower Obligations”:  collectively, the (i) Borrower Credit Agreement
Obligations and (ii) the Borrower’s Hedging and Cash Management Obligations,
but, as to the foregoing clause (ii), only to the extent that, and only so long
as, the Borrower Credit Agreement Obligations are secured and guaranteed
pursuant to this Agreement; provided that Borrower Obligations shall not include
Excluded Swap Obligations.

 

“Collateral”:  as defined in Section 3.1.

 

“Collateral Account”:  any collateral account established by the Collateral
Agent as provided in Sections 6.1 or 6.5.

 

“Collateral Agent”: as defined in the preamble hereto.

 

“Commodity Exchange Act”: the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as
amended from time to time, and any successor statute.

 

“Credit Agreement”: as defined in the preamble hereto.

 

“Deposit Account”:  all deposit accounts as defined in the Uniform Commercial
Code of any applicable jurisdiction and, in any event, including, without
limitation, any demand, time, savings, passbook or like account maintained with
a depositary institution.

 

“Excluded Accounts”: all Deposit Accounts and Securities Accounts not required
to be subject to Controlled Deposit Accounts or Controlled Securities Accounts
(as applicable) pursuant to Section 5.15 of the Credit Agreement.

 

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“Excluded Equity Interests”: any Equity Interest in any Excluded Subsidiary,
other than (i) 100% of the non-Voting Stock of an Excluded Subsidiary and
(ii) Voting Stock of an Excluded Subsidiary representing 65% of the total voting
power of all outstanding Voting Stock of such Excluded Subsidiary.

 

“Excluded Swap Obligation”: with respect to any Guarantor, any Swap Obligation
if, and to the extent that, all or a portion of the guarantee of such Guarantor
of, or the grant by such Guarantor of a security interest to secure, such Swap
Obligation (or any guarantee thereof) is or becomes illegal under the Commodity
Exchange Act or any rule, regulation or order of the Commodity Futures Trading
Commission (or the application or official interpretation of any thereof) by
virtue of such Guarantor’s failure for any reason to constitute an “eligible
contract participant” as defined in the Commodity Exchange Act and the
regulations thereunder at the time the guarantee of such Guarantor or the grant
of such security interest becomes effective with respect to such Swap
Obligation. If a Swap Obligation arises under a master agreement governing more
than one swap, such exclusion shall apply only to the portion of such Swap
Obligation that is attributable to swaps for which such guarantee or security
interest is or becomes illegal.

 

“Grantors”:  the collective reference to each signatory hereto (other than the
Collateral Agent) together with any other entity that may become a party hereto
as provided herein.

 

“Guaranteed Obligations”: as defined in Section 2.1; provided that Guaranteed
Obligations shall not include Excluded Swap Obligations.

 

“Guarantor Obligations”:  with respect to any Guarantor, (i) all obligations and
liabilities of such Guarantor which may arise under or in connection with this
Agreement (including, without limitation, Section 2) or any other Loan Document
to which such Guarantor is a party, in each case whether on account of guarantee
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative Agent,
to the Collateral Agent or to the other Secured Parties that are required to be
paid by such Guarantor pursuant to the terms of this Agreement or any other Loan
Document) and (ii) any Subsidiary Guarantor’s Hedging and Cash Management
Obligations, but, as to foregoing clause (ii) only to the extent that, and only
so long as, the Borrower’s Credit Agreement Obligations are secured and
guaranteed pursuant to this Agreement; provided that Guarantor Obligations shall
not include Excluded Swap Obligations.

 

“Guarantors”:  the collective reference to each signatory hereto (in each case,
other than the Collateral Agent) together with any other entity that may become
a party hereto as provided herein.

 

“Intercompany Note”:  any promissory note evidencing loans made by any Grantor
to the Borrower or any of its Subsidiaries.

 

“Investment Property”:  the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the UCC (other than
any Excluded Equity Interests) and (ii) whether or not constituting “investment
property” as so defined, all Pledged Securities.

 

“Issuers”:  the collective reference to each issuer of a Pledged Security.

 

“Lenders”:  as defined in the preamble hereto.

 

“Pledged Notes”:  all promissory notes listed on Schedule 2, all Intercompany
Notes at any time issued to any Grantor and all other promissory notes issued to
or held by any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of business).

 

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“Pledged Securities”:  the collective reference to the Pledged Notes and the
Pledged Stock.

 

“Pledged Stock”:  the collective reference to (i) the shares of equity interests
listed on Schedule 2, (ii) any other shares, stock certificates, options,
interests or rights of any nature whatsoever in respect of the equity interests
of any Person that may be issued or granted to, or held by, any Grantor while
this Agreement is in effect and that are required to become Collateral pursuant
to Section 3.1.

 

“Proceeds”:  all “proceeds” as such term is defined in Section 9-102(a)(64) of
the UCC and, in any event, shall include, without limitation, all dividends or
other income from the Investment Property, collections thereon or distributions
or payments with respect thereto.

 

“Receivable”:  any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, without
limitation, any Account).

 

“Secured Obligations”:  (i) in the case of the Borrower, the Borrower
Obligations and (ii) in the case of each other Guarantor, its Guarantor
Obligations, in each case except as constitutes an Excluded Swap Obligation.

 

“Swap Obligation”: with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“UCC”: the Uniform Commercial Code from time to time in effect in the State of
New York; provided, that in the event that, by reason of mandatory provisions of
any applicable requirement of Law, any of the perfection or priority of the
Collateral Agent’s or any other Secured Party’s security interest in any
Collateral is governed by the Uniform Commercial Code of a jurisdiction other
than the State of New York, “UCC” shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or priority and for purposes of the definitions related to or
otherwise used in such provisions.

 

1.2                               Other Definitional Provisions.  (a) The words
“hereof,” “herein”, “hereto” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.

 

(b)  The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

(c)  Where the context requires, terms relating to the Collateral or any part
thereof, when used in relation to a Grantor, shall refer to such Grantor’s
Collateral or the relevant part thereof.

 

SECTION 2.                            GUARANTEE

 

2.1                               Guarantee.  (a) Each of the Grantors hereby,
jointly and severally, as a primary obligor and not merely as a surety,
unconditionally and irrevocably, guarantees to the Collateral Agent for the
ratable benefit of the Secured Parties and their respective permitted
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by each other Guarantor when due (whether at the stated
maturity, by acceleration or otherwise) of the Secured Obligations, including,
without limitation, (i) the principal of and interest on the Revolving Loans
made to the Borrower pursuant to the Credit Agreement, (ii) all other amounts
payable by the Borrower under the Credit Agreement and the

 

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other Loan Documents, and (iii) the punctual and faithful performance, keeping,
observance, and fulfillment by the Guarantors of all of the agreements,
conditions, covenants, and obligations of the Guarantors contained in the Loan
Documents (all of the foregoing being referred to collectively as the
“Guaranteed Obligations”). Each Grantor hereby agrees that this Guarantee is an
absolute, irrevocable and unconditional Guarantee of payment and is not a
Guarantee of collection.

 

(b)  Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Grantor for the Guaranteed
Obligations shall in no event exceed the amount which can be guaranteed by such
Grantor under applicable federal and state laws relating to the insolvency of
debtors (after giving effect to the right of contribution established in
Section 2.2).

 

(c)  Each Grantor agrees that the Guaranteed Obligations may at any time and
from time to time exceed the amount of the liability of such Grantor hereunder
without impairing the Guarantee contained in this Section 2 or affecting the
rights and remedies of the Collateral Agent or any other Secured Party
hereunder.

 

(d)  The Guarantee contained in this Section 2 shall remain in full force and
effect until all the Obligations (including all obligations of each Grantor
under the guarantee contained in this Section 2) shall have been satisfied by
payment in full (other than contingent or indemnification obligations not then
asserted or due), notwithstanding that from time to time during the term of the
Credit Agreement the Loan Parties may be free from any Obligations.

 

(e)  Except as provided in Section 8.14, no payment made by the Borrower, any of
the other Guarantors, any other guarantor or any other Person or received or
collected by the Collateral Agent or any other Secured Party from the Borrower,
any of the other Guarantors or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Guaranteed Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of any
Grantor hereunder which shall, notwithstanding any such payment (other than any
payment made by such Guarantor in respect of the Guaranteed Obligations or any
payment received or collected from such Guarantor in respect of the Guaranteed
Obligations), remain liable for the Guaranteed Obligations up to the maximum
liability of such Grantor hereunder until the Guaranteed Obligations shall have
been paid in full (other than contingent or indemnification obligations not then
asserted or due).

 

2.2                               Right of Contribution.  Each Grantor hereby
agrees that to the extent that a Grantor shall have paid more than its
proportionate share of any payment made hereunder, such Grantor shall be
entitled to seek and receive contribution from and against any other Guarantor
which has not paid its proportionate share of such payment.  Each Grantor’s
right of contribution shall be subject to the terms and conditions of
Section 2.3.  The provisions of this Section 2.2 shall in no respect limit the
obligations and liabilities of any Guarantor to the Collateral Agent and the
other Secured Parties, and each Guarantor shall remain liable to the Collateral
Agent and the other Secured Parties for the full amount guaranteed by such
Guarantor hereunder.

 

2.3                               No Subrogation.  Notwithstanding any payment
made by any Grantor hereunder or any set-off or application of funds of any
Guarantor by the Collateral Agent or any other Secured Party, no Guarantor shall
be entitled to be subrogated to any of the rights of the Collateral Agent or any
other Secured Party against the Borrower or any other Guarantor or any
collateral security or guarantee or right of offset held by the Collateral Agent
or any other Secured Party for the payment of the Guaranteed Obligations, nor
shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Collateral
Agent and the other Secured Parties on account of the Guaranteed

 

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Obligations shall have been indefeasibly paid in full in cash (other than
contingent or indemnification obligations not then asserted or due).  If any
amount shall be paid to any Grantor on account of such subrogation rights at any
time when all of such Guaranteed Obligations shall not have been paid in full,
such amount shall be held by such Grantor in trust for the Collateral Agent and
the other Secured Parties, segregated from other funds of such Grantor, and
shall, forthwith upon receipt by such Grantor, be turned over to the Collateral
Agent in the exact form received by such Grantor (duly indorsed by such Grantor
to the Collateral Agent, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as the Collateral Agent
may determine.  Notwithstanding anything to the contrary contained in this
Agreement, if all or any portion of the Guaranteed Obligations have been
satisfied in connection with an exercise of remedies in respect of the Equity
Interests of any Loan Party (“Foreclosed Loan Party”), no Loan Party may, at any
time, exercise any rights of subrogation, contribution, indemnity, reimbursement
or other similar rights against, and may not proceed or seek recourse against or
with respect to such Foreclosed Loan Party and/or any property or asset thereof,
whether pursuant to this Agreement or otherwise, including after indefeasible
payment in full in cash of the Guaranteed Obligations.

 

2.4                               Amendments, Etc. with Respect to the
Guaranteed Obligations.  To the fullest extent permitted by applicable law, each
Grantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Guaranteed
Obligations made by the Collateral Agent or any other Secured Party may be
rescinded by the Collateral Agent or such other Secured Party and any of the
Guaranteed Obligations continued, and the Guaranteed Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified
(including changing the time for payment of the Guaranteed Obligations),
accelerated, compromised, waived, surrendered or released by the Collateral
Agent or any other Secured Party, and the Credit Agreement and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be, amended, modified, supplemented or terminated, in whole or in part, as
the Collateral Agent may reasonably deem advisable from time to time, and any
collateral security, guarantee or right of set-off at any time held by the
Collateral Agent or any other Secured Party for the payment of the Guaranteed
Obligations may be sold, exchanged, waived, surrendered or released.  Neither
the Collateral Agent nor any other Secured Party shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Guaranteed Obligations or for the guarantee contained in this Section 2
or any property subject thereto.

 

2.5                               Guarantee Absolute and Unconditional.  To the
fullest extent permitted by applicable law, each Grantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by the Collateral Agent or any
other Secured Party upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Guaranteed Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrower and
any of the Guarantors, on the one hand, with respect to the Loan Documents and
the Collateral Agent and the other Secured Parties, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
the guarantee contained in this Section 2.  To the fullest extent permitted by
applicable law, each Grantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or any of
the Guarantors with respect to the Guaranteed Obligations.  Each Grantor
understands and agrees that the guarantee of such Grantor contained in this
Section 2, to the fullest extent permitted by applicable law, shall be construed
as a continuing, absolute and unconditional guarantee of payment and shall not
be discharged as a result of or otherwise affected by any of the following:

 

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(a)                                 any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by the Collateral Agent or any other Secured Party upon the Guarantee
contained in this Section 2 or acceptance of the Guarantee contained in this
Section 2;

 

(b)                                 diligence, presentment, protest, demand for
payment, notice of default or nonpayment and any other notice whatsoever to or
upon the Borrower or any other Grantor in respect of any Guaranteed Obligations
or any part thereof or any defense arising by reason of any disability or other
defense of a Borrower or any other Grantor with respect to the Obligations;

 

(c)                                  the validity or enforceability (or
invalidity or unenforceability) of the Credit Agreement or any other Loan
Document, any of the Guaranteed Obligations (or any portion thereof) or any
other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Collateral Agent or any
other Secured Party,

 

(d)                                 any defense, set-off or counterclaim (other
than a defense of payment or performance) which may at any time be available to
or be asserted by the Borrower or any other Person against the Collateral Agent
or any other Secured Party,

 

(e)                                  the absence of (i) any attempt to collect
any Guaranteed Obligation or any part thereof from a Borrower or any other
Grantor or other action to enforce the same or (ii) any action to enforce any
Loan Document or any Lien hereunder or thereunder;

 

(f)                                   the failure by any Person to take any
steps to perfect and maintain any Lien on, or preserve any rights with respect
to any Collateral;

 

(g)                                  any workout, insolvency, bankruptcy
proceeding, reorganization, arrangement, liquidation or dissolution by or
against a Borrower, any other Guarantor, or any Subsidiary of any Loan Party or
any procedure, agreement, order, stipulation, election, action or omission
thereunder, including any discharge or disallowance of, or bar or stay against
collection, any Guaranteed Obligation (or any interest therein) in or as a
result of any such proceeding;

 

(h)                                 any foreclosure, whether or not through
judicial sale, and any other sale or other disposition of any Collateral or any
election following the occurrence of an Event of Default by any Secured Party to
proceed separately against any Collateral in accordance with such Secured
Party’s rights under applicable requirement of Law; or

 

(i)                                     any defense, setoff or counterclaim or
any other circumstance whatsoever (other than a defense of payment or
performance) (with or without notice to or knowledge of the Borrower or any
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of any other Grantor from the Guaranteed Obligations, or of
such Grantor under the Guarantee contained in this Section 2, in bankruptcy or
in any other instance.

 

When making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against any Grantor, the Collateral Agent or any other Secured Party
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Guaranteed Obligations or any right of offset with respect thereto, and
any failure by the Collateral Agent or any other Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Borrower, any other Guarantor or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any other Guarantor or any other Person or any
such collateral security, guarantee or

 

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right of offset, shall not relieve any Grantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Collateral Agent or any
other Secured Party against any Guarantor.  For the purposes hereof “demand”
shall include the commencement and continuance of any legal proceedings.

 

2.6                               Reinstatement.  The Guarantee contained in
this Section 2 shall continue to be effective, or be reinstated, as the case may
be, if at any time payment, or any part thereof, of any of the Guaranteed
Obligations is rescinded or must otherwise be restored or returned by the
Collateral Agent or any other Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any other
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any other
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.

 

2.7                               Payments.  Each Grantor hereby guarantees that
payments hereunder will be paid to the Collateral Agent (a) without set-off or
counterclaim in Dollars at the Administrative Agent’s Office and (b) free and
clear of, and without deduction for, any Non-Excluded Taxes or Other Taxes on
the same terms and to the same extent that payments by the Borrower are required
to be made pursuant to the terms of Section 2.18 of the Credit Agreement,
applying the provisions of Section 2.18 of the Credit Agreement to such Grantor
and the Collateral Agent mutatis mutandis.

 

2.8                               Information.  Each Grantor (a) assumes all
responsibility for being and keeping itself informed of the financial condition
and assets of any other Guarantor, and of all other circumstances bearing upon
the risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that such Grantor assumes and incurs hereunder, and
(b) agrees that none of the Collateral Agent or the other Secured Parties will
have any duty to advise such Grantor of information known to it or any of them
regarding such circumstances or risks.

 

SECTION 3.                            GRANT OF SECURITY INTEREST

 

3.1                               Grant of Security Interests.  Each Grantor
hereby grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in all of the following property now owned or at
any time hereafter acquired or created by such Grantor or in which such Grantor
now has or at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations:

 

(a)  all Accounts;

 

(b)  all Chattel Paper;

 

(c)  all cash and Cash Equivalents;

 

(d)  all Deposit Accounts, Securities Accounts and Commodity Accounts;

 

(e)  all Documents;

 

(f)  all Equipment;

 

(g)  all Fixtures;

 

(h)  all General Intangibles;

 

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(i)  all Goods not covered by the other clauses of this Section 3;

 

(j)  all Instruments, including the Pledged Notes;

 

(k)  all Pledged Stock;

 

(l)  all Intellectual Property;

 

(m)  all Inventory;

 

(n)  all Investment Property;

 

(o)  all Letters of Credit and Letter-of-Credit Rights;

 

(p)  all Commercial Tort Claims described on Schedule 5 and on any supplement
thereto received by the Collateral Agent;

 

(q)  all other tangible and intangible personal property not otherwise described
above;

 

(r)  all books and records pertaining to the Collateral; and

 

(s)  to the extent not otherwise included, all Proceeds, Supporting Obligations
and products of any of the Collateral and products of any and all of the
foregoing and all collateral security and guarantees given by any Person with
respect to any of the foregoing;

 

provided, that notwithstanding any of the other provisions set forth in this
Section 3.1, this Agreement shall not constitute a grant of a security interest
in any Excluded Assets and the Excluded Assets shall be excluded from the
definition of “Collateral”.

 

SECTION 4.                            REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders and the other Secured Parties to enter into the Credit
Agreement and extend credit to the Borrower, each Grantor hereby represents and
warrants to the Collateral Agent and each other Secured Party and, with respect
to Section 4.1, each Lender:

 

4.1                               Representations in Credit Agreement.  The
representations and warranties set forth in Article III of the Credit Agreement
to the extent they refer to a Grantor or to the Loan Documents to which such
Grantor is a party, each of which is hereby incorporated herein by reference,
are true and correct in all material respects (or, in the case of any such
representation or warranty already qualified by materiality, in all respects),
and the Collateral Agent and each other Secured Party shall be entitled to rely
on each of them as if they were fully set forth herein; provided, that each
reference in each such representation and warranty to the Borrower’s knowledge
shall, for the purposes of this Section 4.1, be deemed to be a reference to such
Grantor’s knowledge.

 

4.2                               Title; No Other Liens.  Except as otherwise
permitted under Section 6.02 of the Credit Agreement, such Grantor owns or has
rights in each item of the Collateral pledged by it hereunder free and clear of
any and all Liens.  Except as otherwise permitted under Section 6.02 of the
Credit Agreement, no financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office
except financing statements that have been filed without the consent of the
Grantor.

 

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4.3                               Names; Jurisdiction of Organization; Chief
Executive Office.  On the date hereof, such Grantor’s full and correct legal
name, jurisdiction of organization and identification number from the
jurisdiction of organization (if any) are specified on Schedule 3.  Except as
set forth on Schedule 3, no Grantor has changed its name, jurisdiction of
organization, chief executive office or sole place of business or its corporate
structure in any way (e.g., by merger, consolidation, change in corporate form
or otherwise) and has not done business under any other name, in each case,
within the past five years.  On the date hereof, such Grantor’s books and
records concerning the Collateral are kept at the locations designated on
Schedule 3.

 

4.4                               Pledged Securities.  On the date hereof, the
shares of Pledged Stock pledged by such Grantor hereunder:

 

(a)                                 have been duly authorized, validly issued
and are fully paid and non-assessable, to the extent such concepts are
applicable; and

 

(b)                                 constitute all the issued and outstanding
shares of all classes of the Voting Stock of each Issuer owned by such Grantor
or (x) in the case of the Voting Stock of any Excluded Subsidiary, 65% of the
outstanding Voting Stock and (y) in the case of shares of the non-voting Equity
Interests of an Excluded Subsidiary, 100% of such issued and outstanding shares
of each such Excluded Subsidiary.

 

4.5                               Pledged Notes.  Schedule 2 sets forth a
complete and correct list of all promissory notes (other than any held in a
Securities Account listed on Schedule 6) held by any Grantor on the date hereof
with a principal amount in excess of $2,500,000.

 

4.6                               Intellectual Property.

 

(a)                                 Schedule 4(a) lists all registered or
applied for United States Intellectual Property owned by such Grantor in its own
name on the date hereof.

 

(b)                                 Schedule 4(b) sets forth all IP Licenses
under which a Grantor is an exclusive licensee or licensor on the date hereof
except as either would not reasonably be expected to have a Material Adverse
Effect or the failure of which to maintain would not reasonably be expected to
have a Material Adverse Effect.

 

(c)                                  On the Closing Date, the Intellectual
Property set forth on Schedule 4(a) is owned by the Grantor specified thereon
and is, to the relevant Grantor’s knowledge, (i) valid, in full force and
effect, subsisting and unexpired and (ii) insofar as it is registered
Intellectual Property, enforceable.  The consummation of the Transactions or any
Permitted Acquisition shall not result in a breach or default of any material IP
License, and none of the following shall materially limit or impair the
ownership, use, validity or enforceability of, or any rights of such Grantor in,
any Intellectual Property.

 

4.7                               Commercial Tort Claims.  To the knowledge of
such Grantor, the only Commercial Tort Claims of any Grantor in an amount
reasonably estimated to exceed $2,500,000 existing on the date hereof
(regardless of whether the defendant or other material facts can be determined
and regardless of whether such Commercial Tort Claim has been asserted,
threatened or has otherwise been made known to the obligee thereof or whether
litigation has been commenced for such claims) are those listed on Schedule 5,
which sets forth such information separately for each Grantor in a manner that
reasonably identifies each such Commercial Tort Claim.

 

4.8                               Deposit Accounts; Securities Accounts and
Commodity Accounts.  Schedule 6 sets forth a complete and correct list of all
Deposit Accounts, Securities Accounts and Commodity Accounts of any

 

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Grantor on the date hereof.  Each Control Agreement is effective (or will be
when executed) to establish the Collateral Agent’s “control” (for purposes of
the UCC) of the Collateral subject thereto.

 

4.9                               Specific Collateral.  None of the Collateral
is, or is Proceeds or products of any (a) farm products, (b) as-extracted
collateral or (c) timber to be cut.

 

4.10                        Perfection and Priority.  Except as set forth on
Schedule 7 and as permitted pursuant to Section 5.16 of the Credit Agreement,
all actions by each Grantor required hereunder to protect and perfect the Lien
granted hereunder on the Collateral have been duly taken.

 

4.11                        Enforcement.  No Permit, notice to or filing with
any Governmental Authority or any other Person or any consent from any Person is
required for the exercise by the Collateral Agent of its rights provided for in
this Agreement or the enforcement of remedies in respect of a material portion
of the Collateral pursuant to this Agreement, including the transfer of a
material portion of the Collateral, except as may be required in connection with
any approvals that may be required to be obtained from any bailees or landlords
to collect the Collateral.

 

SECTION 5.                            COVENANTS

 

Until all Obligations shall have been indefeasibly paid in full in cash, each
Grantor hereby covenants and agrees to the Collateral Agent and each other
Secured Party that:

 

5.1                               Covenants in Credit Agreement.  To the extent
applicable, each Grantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Grantor or any of its
Subsidiaries.

 

5.2                               Investment Property.  (a) [Reserved].

 

(b)                                 To the extent any Pledged Stock
(i) constitutes interests in any limited liability company or limited
partnership controlled now or in the future by any Grantor and (ii) is a
“Security” within the meaning of Article 8 of the UCC and is governed by
Article 8 of the UCC, such interest shall be certificated and each such interest
shall at all times hereafter continue to be such a security and represented by
such certificate.  Each Grantor further acknowledges and agrees that with
respect to any interest in any limited liability company or limited partnership
controlled now or in the future by such Grantor and pledged hereunder that is
not a “Security” within the meaning of Article 8 of the UCC, such Grantor shall
at no time elect to treat any such interest as a “Security” within the meaning
of Article 8 of the UCC, nor shall such interest be represented by a
certificate, unless such Grantor provides prior written notification to the
Collateral Agent of such election and such interest is thereafter represented by
a certificate that is promptly delivered to the Collateral Agent pursuant to the
terms hereof.

 

(c)                                  To the extent that any Pledged Security is
a Certificated Security or an Instrument or is an Uncertificated Security that
becomes a Certificated Security or Instrument, the applicable Grantor shall
promptly deliver such certificates or Instruments evidencing such Pledged
Securities to the Collateral Agent together with stock powers or indorsements
thereof reasonably satisfactory to the Collateral Agent.

 

5.3                               Commercial Tort Claims.  If any Grantor shall
at any time after the date of this Agreement acquire or become the beneficiary
of a Commercial Tort Claim in an amount reasonably estimated to exceed
$2,500,000 (regardless of whether the defendant or other material facts can be
determined and regardless of whether such Commercial Tort Claim has been
asserted, threatened or has otherwise been made known to the obligee thereof or
whether litigation has been commenced for such

 

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claims), such Grantor shall promptly provide the Collateral Agent with a
supplement to Schedule 5 hereto describing the details thereof in a manner that
reasonably identifies such Commercial Tort Claim and which is otherwise
reasonably satisfactory to the Collateral Agent, and hereby authorizes the
filing of additional financing statements or amendments to existing financing
statements describing such Commercial Tort Claim, and agrees to do such other
acts or things reasonably deemed necessary or desirable by the Collateral Agent
to provide a perfected security interest in any such Commercial Tort Claim. Any
supplement to Schedule 5 delivered pursuant to this Section 5.3 shall, after the
receipt thereof by the Collateral Agent, become part of Schedule 5 for all
purposes hereunder other than in respect of representations and warranties made
prior to the date of such receipt.

 

5.4                               Maintenance of Perfected Security Interest;
Defense of Claims.  Each Grantor agrees to promptly, and in any case within five
Business Days after the occurrence thereof, notify the Collateral Agent of any
change (i) in its legal name, (ii) in the type of organization or corporate
structure of any Grantor, (iii) in the jurisdiction of organization of any
Grantor, (iv) in the “location” (as determined in accordance with Section 9-307
of the UCC) of any Grantor or (v) in the organizational identification number of
any Grantor.  Each Grantor agrees not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the UCC or
other applicable Law that are required in order for the Collateral Agent to
continue at all times following such change to have a valid, legal and perfected
(to the extent perfection of the security interest in such property is required
by the terms hereof), security interest (subject only to Liens permitted under
the Credit Agreement and having priority by operation of applicable Law) in the
Collateral for its benefit and the benefit of the other Secured Parties.

 

5.5                               Delivery of Instruments and Tangible Chattel
Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic
Chattel Paper.  (a) If any amount payable under or in connection with any
Collateral owned by such Grantor shall be or become evidenced by an Instrument
or Tangible Chattel Paper other than such Instrument delivered in accordance
with Section 5.2(c) and in the possession of the Collateral Agent, such Grantor
shall, at the request of the Collateral Agent, immediately deliver such
Instrument or Tangible Chattel Paper to the Collateral Agent, duly indorsed in a
manner satisfactory to the Collateral Agent; provided, that this requirement
shall not apply to any interests in such Instruments or Tangible Chattel Paper
which have an individual value of $2,500,000 or less.

 

(b)                                 Such Grantor shall not grant “control” (as
defined in Article 9-106 of the UCC) over any Investment Property to any Person
other than the Collateral Agent.

 

(c)                                  If such Grantor is or becomes the
beneficiary of letters of credit that are not Supporting Obligations with
respect to any Collateral, such Grantor shall promptly, and in any event within
five Business Days after becoming a beneficiary, notify the Collateral Agent
thereof and if requested by the Collateral Agent, enter into a Contractual
Obligation with the Collateral Agent, the issuers of such letters of credit or
any nominated person with respect to the Letter-of-Credit Rights under such
letters of credit; provided, that this requirement shall not apply to any such
letters of credit which have an individual value of $2,500,000 or less.  Such
Contractual Obligation shall assign such Letter-of-Credit Rights to the
Collateral Agent and such assignment shall be sufficient to grant control for
the purposes of Section 9-107 of the UCC (or any similar section under any
equivalent UCC).  Such Contractual Obligation shall also direct all payments
thereunder to a Deposit Account subject to a Control Agreement in compliance
with Section 5.6.  The provisions of the Contractual Obligation shall be in form
and substance reasonably satisfactory to the Collateral Agent.

 

(d)                                 If any amount payable under or in connection
with any Collateral owned by such Grantor shall be or become evidenced by
Electronic Chattel Paper, such Grantor shall take all steps necessary to grant
the Collateral Agent control of all such Electronic Chattel Paper for the
purposes of Section 9-105

 

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of the UCC (or any similar section under any equivalent UCC) and all
“transferable records” as defined in each of the Uniform Electronic Transactions
Act and the Electronic Signatures in Global and National Commerce Act; provided,
that this requirement shall not apply to any interests in such Electronic
Chattel Paper which have an individual value of $2,500,000 or less.

 

5.6                               Deposit Accounts, Securities Accounts and
Commodity Accounts.  Each Grantor agrees that:

 

(a)                                 With respect to any Commodity Account,
Deposit Account or Securities Account of such Grantor on the Closing Date other
than any Excluded Account, it shall deliver on or prior to the date that is 120
days following the Closing Date (or such longer period as to which the
Collateral Agent may consent in its sole discretion) to the Collateral Agent, an
executed Control Agreement in form and substance satisfactory to the Collateral
Agent which will provide the Collateral Agent with “control” (as defined in
Section 9-104, 9-106 or 8-106 of the UCC, as applicable) with respect to all
cash, Cash Equivalents and other Collateral on deposit or contained therein; and

 

(b)                                 With respect to any Commodity Account,
Deposit Account or Securities Account created, acquired, established or
maintained by such Grantor after the Closing Date other than any Excluded
Account, such Granter shall execute and deliver an executed Control Agreement
with respect to such Deposit Account, Securities Account or Commodities Account
to the Collateral Agent within 30 days of opening such account (or such longer
period as the Collateral Agent may consent in its sole discretion).

 

5.7                               Intellectual Property.  Each Grantor agrees
that:

 

(a)                                 it shall not do any act or omit to do any
act whereby any of the Intellectual Property which is material to the business
of Grantor or which is of material value may lapse, be impaired, or become
abandoned, dedicated to the public, or unenforceable, or which would adversely
affect the validity, grant, or enforceability of the security interest granted
therein;

 

(b)                                 it shall, within 30 days after the creation
or acquisition or exclusive license of any copyrightable work which is material
to the business of Grantors (and at the request of the Collateral Agent assuming
such Grantor has timely provided notice thereof to the Collateral Agent), apply
to register the Copyright and, in the case of an exclusive IP License, record
such license to such Copyright, in the United States Copyright Office;

 

(c)                                  it shall (i) within 30 days after Grantor
or any of its agents, employees, designees or licensees, filing, in the name of
or for the benefit of Grantor, an application for the registration of any
material Patent or Trademark with the United States Patent and Trademark Office
or any foreign counterpart or (ii) within 30 days after such Grantor receives,
as owner or exclusive licensee, a Copyright registration with the United States
Copyright Office or any foreign counterpart, in any case which is material to
the business of Grantors notify the Collateral Agent and upon request of the
Collateral Agent, promptly execute and deliver documents as the Collateral Agent
may reasonably request to evidence the Collateral Agent’s security interest in
such Collateral;

 

(d)                                 it shall promptly notify the Collateral
Agent if it knows or has reason to know that any item of material Intellectual
Property may become (i) abandoned or dedicated to the public or placed in the
public domain, (ii) invalid or unenforceable, (iii) subject to any adverse
determination or development (including the institution of proceedings) in any
action or proceeding in the United States Patent and Trademark Office, the
United States Copyright Office, any state registry, any foreign counterpart of
the foregoing, or any court or (iv) be the subject of any reversion or
termination rights;

 

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(e)                                  it shall not permit the inclusion in any
contract to which it hereafter becomes a party of any provision that could or
might in any way materially impair or prevent the creation of a security
interest in, or the assignment of, such Grantor’s rights and interests in any
material property included within the definitions of any Intellectual Property
acquired under such contracts;

 

(f)                                   in the event that any material
Intellectual Property owned by or exclusively licensed to any Grantor is
infringed, misappropriated, or diluted by a third party, such Grantor shall
promptly take all commercially reasonable actions to stop such infringement,
misappropriation, or dilution and protect its rights in such Intellectual
Property including, but not limited to, the initiation of a suit for injunctive
relief and to recover damages; and

 

(g)                                  it shall take all steps reasonably
necessary to protect the secrecy of all material Trade Secrets, including,
without limitation, entering into confidentiality agreements with employees and
consultants and labeling and restricting access to secret information and
documents.

 

5.8                               Maintenance of Perfected Security Interest;
Further Documentation and Consents.

 

(a)                                 No Grantor shall (i) use or permit any
Collateral to be used unlawfully or in violation of any provision of any Loan
Document, any Related Document, any material requirement of Law or any policy of
insurance covering the Collateral or (ii) enter into any Contractual Obligation
or undertaking restricting the right or ability of such Grantor or the
Collateral Agent to transfer any Collateral if such restriction would reasonably
be expected to have a Material Adverse Effect.

 

(b)                                 Such Grantor shall maintain the security
interest created by this Agreement as a perfected security interest and, if
reasonably requested by the Collateral Agent, shall defend such security
interest and such priority against the claims and demands of all Persons.

 

(c)                                  Such Grantor shall furnish to the
Collateral Agent from time to time statements and schedules further identifying
and describing the Collateral and such other documents in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail and in form and substance reasonably satisfactory to the Collateral
Agent.

 

(d)                                 At any time and from time to time, upon the
written request of the Collateral Agent, such Grantor shall, for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, (i) promptly and duly execute and deliver, and have
recorded, such further documents, including an authorization to file (or, as
applicable, the filing) of any financing statement or amendment under the UCC
(or other filings under similar requirements of Law) in effect in any
jurisdiction with respect to the security interest created hereby and (ii) take
such further action as the Collateral Agent may reasonably request, including
using its commercially reasonable efforts to secure all approvals necessary or
appropriate for the assignment to or for the benefit of the Collateral Agent of
any Contractual Obligation held by such Grantor and to enforce the security
interests granted hereunder.

 

SECTION 6.                            REMEDIAL PROVISIONS

 

6.1                               Certain Matters Relating to Receivables.

 

(a)  At any time after the occurrence and during the continuance of an Event of
Default, upon the Collateral Agent’s reasonable request and at the expense of
the relevant Grantor, such Grantor shall use commercially reasonable efforts to
cause independent public accountants or others satisfactory to the Collateral
Agent to furnish to the Collateral Agent reports showing reconciliations, aging
and test verifications of, and trial balances for, the Receivables.

 

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(b)  If required by the Collateral Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within
three Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Collateral Agent if required, in a Collateral
Account maintained under the sole dominion and control of the Collateral Agent,
subject to withdrawal by the Collateral Agent for the account of the Collateral
Agent and the other Secured Parties only as provided in Section 6.6 and
(ii) until so turned over, shall be held by such Grantor in trust for the
Collateral Agent and the other Secured Parties, segregated from other funds of
such Grantor.  Each such deposit of Proceeds of Receivables shall be accompanied
by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.

 

(c)  If an Event of Default has occurred and is continuing and at the Collateral
Agent’s request, each Grantor shall deliver to the Collateral Agent all
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables, including, without limitation, all orders,
invoices and shipping receipts.

 

6.2                               Communications with Grantors; Grantors Remain
Liable.

 

(a)                                 Upon the request of the Collateral Agent at
any time after the occurrence and during the continuance of an Event of Default,
each Grantor shall notify obligors on the Receivables that such Receivables have
been assigned to the Collateral Agent for the ratable benefit of the Collateral
Agent and the other Secured Parties and that payments in respect of such
Receivables shall be made directly to the Collateral Agent.

 

(b)                                 Anything herein to the contrary
notwithstanding, each Grantor shall remain liable under the Receivables (or any
agreements giving rise thereto) to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto.  Neither the Collateral
Agent nor any other Secured Party shall have any obligation or liability under
any Receivable (or any agreement giving rise thereto) by reason of or arising
out of this Agreement or the receipt by the Collateral Agent or any other
Secured Party of any payment relating thereto, nor shall the Collateral Agent or
any other Secured Party be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Receivable (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.

 

6.3                               Pledged Securities; Dividends.  (a) Unless an
Event of Default shall have occurred and be continuing and the Collateral Agent
shall have given notice to the relevant Grantor of the Collateral Agent’s intent
to exercise its corresponding rights pursuant to paragraph (b) below, each
Grantor shall be permitted to receive all cash dividends paid in respect of the
Pledged Stock and all payments made in respect of the Pledged Notes to the
extent permitted in the Credit Agreement, and to exercise all voting and
corporate or other organizational rights with respect to the Pledged Securities.

 

(b)                                 If an Event of Default shall have occurred
and be continuing and the Collateral Agent has given notice to the relevant
Grantor or Grantors of its intent to exercise such rights, (i) unless otherwise
provided in the Credit Agreement, the Collateral Agent shall have the right to
receive any and all cash dividends, payments or other Proceeds paid in respect
of the Pledged Securities of such Grantor or Grantors and make application
thereof to the Secured Obligations in the order set forth in Section 6.6 and
(ii) any or all of the Pledged Securities of such Grantor or Grantors shall be
registered in the name of the Collateral Agent or its nominee, and the
Collateral Agent or its nominee may thereafter exercise (x) all

 

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voting, corporate and other rights pertaining to such Pledged Securities at any
meeting of shareholders of the relevant Issuer or Issuers or otherwise and
(y) any and all rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such Pledged Securities as if it
were the absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Pledged Securities upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Collateral Agent of any right, privilege or option pertaining to
such Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Collateral Agent may determine), all without liability except
to account for property actually received by it, but the Collateral Agent shall
have no duty to any Grantor to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so doing unless
the Collateral Agent has given notice of its intent to exercise as set forth
above.

 

(c)                                  Each Grantor hereby authorizes and
instructs each Issuer of any Pledged Securities pledged by such Grantor
hereunder to comply with any instruction received by it from the Collateral
Agent in writing that (i) states that an Event of Default has occurred and is
continuing and (ii) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from such Grantor, and each Grantor
agrees that each Issuer shall be fully protected in so complying.

 

(d)                                 After all Events of Default have been cured
or waived in accordance with the provisions of the Credit Agreement, and so long
as the Secured Obligations shall not have been accelerated, (i) each Grantor
shall have the right to exercise the voting, corporate and other rights
pertaining to such Pledged Securities that it would have otherwise been entitled
to and receive all cash dividends, payments, or other Proceeds paid in respect
of the Pledged Securities which it would be authorized to receive and retain, in
each case, pursuant to paragraph (a) above, and, to the extent necessary, the
Collateral Agent shall deliver a proxy in favor of such Grantor evidencing the
same and (ii) to the extent that the Collateral Agent has exercised its rights
under paragraph (b)(ii), the Collateral Agent shall, promptly after the written
request of the applicable Grantor, cause such Pledged Securities to be
registered in the name of such Grantor to the extent such Grantor or its
nominees holds an interest in such Collateral at such time.

 

6.4                               Intellectual Property.

 

(a)                                 Without limiting any rights of the
Collateral Agent under the Loan Documents, for the purpose of enabling the
Collateral Agent to exercise its rights and remedies under this Section 6,
solely after an Event of Default has occurred and is continuing and during such
time as the Collateral Agent shall be lawfully entitled to exercise such rights
and remedies, and at no other time or for no other purpose, each Grantor hereby
grants to the Collateral Agent, to the extent permitted by Law, an irrevocable,
non-exclusive IP License (exercisable without payment of royalty or other
compensation to such Grantor) under the Intellectual Property now owned or
hereafter acquired or created by such Grantor, wherever the same may be located;
provided, that nothing in this Section 6.4 shall require a Grantor to grant any
IP License that is prohibited by any Law or is prohibited by, or constitutes a
breach or default under or results in the termination of or gives rise to any
right of acceleration, modification or cancellation under any Contractual
Obligation with respect to such Property; provided, further, that such IP
Licenses to be granted hereunder with respect to Trademarks shall be subject to
the maintenance of quality standards with respect to the goods and services on
which such Trademarks are used sufficient to preserve the validity of such
Trademarks.

 

(b)                                 Notwithstanding anything contained herein to
the contrary, but subject to the provisions of Section 6.05 of the Credit
Agreement that limit the rights of the Grantors to dispose of their Property and
subject to the Collateral Agent’s exercise of its rights and remedies under this
Section 6, the Grantors will

 

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be permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to their Intellectual Property in
the ordinary course of the business of the Grantors. The Grantors shall not (and
shall not cause their licensees to) do any act or omit to do any act whereby any
Intellectual Property that is necessary for the operations of such Grantor’s
business may become invalidated or otherwise impaired.  In furtherance of the
foregoing, so long as no Event of Default shall have occurred and be continuing,
the Collateral Agent shall from time to time, upon the request of the respective
Grantor, execute and deliver any instruments, certificates or other documents,
in the form so requested, that such Grantor shall have certified are appropriate
in its judgment to allow it to take any action permitted above (including
relinquishment of the IP License provided pursuant to paragraph (a) above as to
any specific Intellectual Property).  Further, upon the payment in full in cash
of all of the Obligations (other than contingent or indemnification obligations
not then asserted or due) or earlier expiration of this Agreement or release of
the Collateral, the IP License granted pursuant to paragraph (a) above shall
terminate and become null and void.  Notwithstanding the foregoing, the exercise
of rights and remedies under this Section 6 by the Collateral Agent shall not
terminate the rights of the holders of any licenses or sublicenses theretofore
granted by the Grantors in accordance with the first sentence of this
paragraph (b).

 

6.5                               Proceeds to be Turned Over To Collateral
Agent.  If an Event of Default shall have occurred and be continuing, all
Proceeds received by any Grantor consisting of cash, checks and other near-cash
items shall be held by such Grantor in trust for the Collateral Agent and the
other Secured Parties, segregated from other funds of such Grantor, and shall,
promptly upon receipt by such Grantor, be turned over to the Collateral Agent in
the exact form received by such Grantor (duly indorsed by such Grantor to the
Collateral Agent, if required).  All Proceeds received by the Collateral Agent
hereunder shall be held by the Collateral Agent in a Collateral Account
maintained under its sole dominion and control.  All Proceeds while held by the
Collateral Agent in a Collateral Account (or by such Grantor in trust for the
Collateral Agent and the other Secured Parties) shall continue to be held as
collateral security for all of the Secured Obligations and shall not constitute
payment thereof until applied as provided in Section 6.7.

 

6.6                               Application of Proceeds.  If an Event of
Default shall have occurred and be continuing, and the Loans shall have been
accelerated pursuant to Article VII of the Credit Agreement, the Collateral
Agent shall apply all or any part of Proceeds constituting Collateral and any
proceeds of the Guarantee set forth in Section 2, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any Collateral or otherwise reasonably relating to
the Collateral or the rights of the Collateral Agent and any other Secured Party
hereunder (including any other amounts owed to the Collateral Agent or such
other Secured Party under any other Loan Document), in payment of the Secured
Obligations, and shall make any such application in accordance with Section 7.02
of the Credit Agreement, and only after such application and after the payment
by the Collateral Agent of any other amount required by any requirement of Law,
need the Collateral Agent account for the surplus, if any, to any Grantor.

 

6.7                               Code and Other Remedies.  (a)  UCC Remedies. 
If an Event of Default shall have occurred and be continuing, the Collateral
Agent, on behalf of itself, the Collateral Agent and the other Secured Parties,
may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the UCC or any other applicable Law.

 

(b)                                 Disposition of Collateral.  Without limiting
the generality of the foregoing, if an Event of Default shall have occurred and
be continuing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below or notices otherwise provided in the
Loan Documents) to or upon any Grantor or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby waived

 

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unless otherwise provided in the Loan Documents), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the Collateral Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk.  Any Agent
or any Lender shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.

 

(c)                                  Management of Collateral.  Each Grantor
further agrees, if an Event of Default shall have occurred and be continuing,
(i) at the Collateral Agent’s request, to assemble the Collateral and make it
available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor’s premises or elsewhere, (ii) without
limiting the foregoing, the Collateral Agent also has the right to require that
each Grantor store and keep any Collateral pending further action by the
Collateral Agent and, while any such Collateral is so stored or kept, provide
such guards and maintenance services as shall be reasonably necessary to protect
the same and to preserve and maintain such Collateral in good condition,
(iii) until the Collateral Agent is able to transfer any Collateral, the
Collateral Agent shall have the right to hold or use such Collateral to the
extent that it deems appropriate for the purpose of preserving the Collateral or
its value or for any other purpose deemed appropriate by the Collateral Agent
and (iv) the Collateral Agent may, if it so elects, seek the appointment of a
receiver or keeper to take possession of any Collateral and to enforce any of
the Collateral Agent’s remedies (for the benefit of the Secured Parties), with
respect to such appointment without prior notice or hearing as to such
appointment.  Notwithstanding the foregoing, the Collateral Agent’s rights under
this paragraph (c) are subject to the applicable limitations under federal Law. 
The Collateral Agent shall not have any obligation to any Grantor to maintain or
preserve the rights of any Grantor as against third parties with respect to any
Collateral while such Collateral is in the possession of the Collateral Agent.

 

(d)                                 Application of Proceeds.  The Collateral
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 6.7, after deducting all reasonable and documented out-of-pocket costs
and expenses of every kind actually incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Collateral Agent hereunder
(including any other amounts owed to the Collateral Agent under any other Loan
Document), including, without limitation, reasonable attorneys’ fees and
disbursements of one firm of counsel, one firm of local counsel in each
applicable jurisdiction, and in case of an actual or potential conflict, one
firm of special counsel, to the payment in whole or in part of the Secured
Obligations, in such order as the Collateral Agent may elect, and only after
such application and after the payment by the Collateral Agent of any other
amount required by any provision of Law, including, without limitation,
Section 9-615(a)(3) of the UCC, need the Collateral Agent account for the
surplus, if any, to any Grantor.  If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 Business Days before such sale or
other disposition.

 

(e)                                  Direct Obligation.  Neither the Collateral
Agent nor any other Secured Party shall be required to make any demand upon, or
pursue or exhaust any right or remedy against, any Grantor, any other Loan Party
or any other Person with respect to the payment of the Obligations or to pursue
or exhaust any right or remedy with respect to any Collateral therefor or any
direct or indirect guarantee thereof.  All of the rights and remedies of the
Collateral Agent and any other Secured Party under any Loan Document shall be
cumulative, may be exercised individually or concurrently and not exclusive of
any other rights or remedies provided by any applicable requirement of Law.  To
the extent it may

 

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lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes
the benefit and advantage of, and covenants not to assert against the Collateral
Agent, any Lender or any other Secured Party, any valuation, stay, appraisement,
extension, redemption or similar laws and any and all rights or defenses it may
have as a surety, now or hereafter existing, arising out of the exercise by them
of any rights hereunder.  If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 Business Days before such sale or other
disposition.

 

(f)                                   Commercially Reasonable.  To the extent
that applicable requirements of Law impose duties on the Collateral Agent to
exercise remedies in a commercially reasonable manner, each Grantor acknowledges
and agrees that it is not commercially unreasonable for the Collateral Agent to
do any of the following:

 

(i)                                     fail to incur significant costs,
expenses or other Liabilities reasonably deemed as such by the Collateral Agent
to prepare any Collateral for disposition or otherwise to complete raw material
or work in process into finished goods or other finished products for
disposition;

 

(ii)                                  fail to obtain Permits, or other consents,
for access to any Collateral to transfer or for the collection or transfer of
any Collateral, or, if not required by other requirements of Law, fail to obtain
Permits or other consents for the collection or disposition of any Collateral;

 

(iii)                               fail to exercise remedies against account
debtors or other Persons obligated on any Collateral or to remove Liens on any
Collateral or to remove any adverse claims against any Collateral;

 

(iv)                              advertise dispositions of any Collateral
through publications or media of general circulation, whether or not such
Collateral is of a specialized nature or to contact other Persons, whether or
not in the same business as any Grantor, for expressions of interest in
acquiring any such Collateral;

 

(v)                                 exercise collection remedies against account
debtors and other Persons obligated on any Collateral, directly or through the
use of collection agencies or other collection specialists, hire one or more
professional auctioneers to assist in the disposition of any Collateral, whether
or not such Collateral is of a specialized nature or, to the extent deemed
appropriate by the Collateral Agent, obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Collateral
Agent in the collection or disposition of any Collateral, or utilize Internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capacity of doing so, or that match
buyers and sellers of assets to dispose of any Collateral;

 

(vi)                              dispose of assets in wholesale rather than
retail markets;

 

(vii)                           disclaim disposition warranties, such as title,
possession or quiet enjoyment; or

 

(viii)                        purchase insurance or credit enhancements to
insure the Collateral Agent against risks of loss, collection or disposition of
any Collateral or to provide to the Collateral Agent a guaranteed return from
the collection or disposition of any Collateral.

 

Each Grantor acknowledges that the purpose of this Section 6.7 is to provide a
non-exhaustive list of actions or omissions that are commercially reasonable
when exercising remedies against any Collateral and that other actions or
omissions by the Secured Parties shall not be deemed commercially

 

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unreasonable solely on account of not being indicated in this Section 6.7. 
Without limitation upon the foregoing, nothing contained in this Section 6.7
shall be construed to grant any rights to any Grantor or to impose any duties on
the Collateral Agent that would not have been granted or imposed by this
Agreement or by applicable requirements of Law in the absence of this
Section 6.7.

 

6.8                               Private Sales.  Each Grantor recognizes that
the Collateral Agent may be unable to effect a public sale of any or all the
Pledged Stock, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof.  Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner.  The Collateral Agent shall be under no obligation to delay a sale of
any of the Pledged Stock for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if such Issuer would agree to do
so.

 

6.9                               Deficiency.  Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Secured Obligations and the reasonable
fees and disbursements of any attorneys employed by the Collateral Agent to
collect such deficiency.

 

SECTION 7.                            THE COLLATERAL AGENT

 

7.1                               Collateral Agent’s Appointment as
Attorney-in-Fact, etc.

 

(a)  Each Grantor hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Collateral Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following after written notice by the Collateral Agent of its intent to do so:

 

(i)                                     in the name of such Grantor or its own
name, or otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys due
under any Receivable or with respect to any other Collateral and file any claim
or take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due under any Receivable or with respect to
any other Collateral whenever payable;

 

(ii)                                  in the case of any Intellectual Property,
execute and deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Collateral Agent may request to evidence and/or
perfect the Secured Parties’ security interest in such Intellectual Property and
the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;

 

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(iii)                               pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, effect any repairs or provide
any insurance called for by the terms of this Agreement and pay all or any part
of the premiums therefor and the costs thereof;

 

(iv)                              execute, in connection with any sale provided
for in Section 6.7 or 6.8, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and

 

(v)                                 (1)  direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Collateral Agent or as the Collateral
Agent shall direct;  (2)  ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become due
at any time in respect of or arising out of any Collateral;  (3)  sign and
indorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral;  (4)  commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (5)  defend any suit,
action or proceeding brought against such Grantor with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or proceeding
and, in connection therewith, give such discharges or releases as the Collateral
Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark (along
with the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), throughout the world for such term or terms, on such
conditions, and in such manner, as the Collateral Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Collateral Agent were the absolute owner thereof
for all purposes, and do, at the Collateral Agent’s option and such Grantor’s
expense, at any time, or from time to time, all acts and things which the
Collateral Agent deems necessary to protect, preserve or realize upon the
Secured Parties’ security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do;

 

provided, that anything in this Section 7.1(a) to the contrary notwithstanding,
the Collateral Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.

 

(b)  If any Grantor fails to perform or comply with any of its agreements
contained herein, the Collateral Agent, at its option, but without any
obligation so to do, may give such Grantor written notice of such failure to
perform or comply and if such Grantor fails to perform or comply within five
Business Days of receiving such notice (or if the Collateral Agent reasonably
determines that irreparable harm to the Collateral or to the security interest
of the Secured Parties hereunder could result prior to the end of such five
Business Day period), then the Collateral Agent may perform or comply, or
otherwise cause performance or compliance, with such agreement.

 

(c)  Each Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof.  All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.

 

7.2                               Duty of Collateral Agent.  To the extent
permitted by law, the Collateral Agent’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to deal with it in the same
manner as the Collateral

 

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Agent deals with similar property for its own account.  None of the Collateral
Agent, any other Secured Party or any of their respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof.  The powers conferred on the
Collateral Agent and the other Secured Parties hereunder are solely to protect
the Collateral Agent’s and the other Secured Parties’ interests in the
Collateral and shall not impose any duty upon the Collateral Agent or any other
Secured Party to exercise any such powers.  The Collateral Agent and the other
Secured Parties shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence, bad
faith or willful misconduct or that of their directors, officers, employees or
agents.  In addition, the Collateral Agent shall not be liable or responsible
for any loss or damage to any Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehousemen, carrier,
forwarding agency, consignee or other bailee if such Person has been selected by
the Collateral Agent.

 

7.3                               Authorization of Financing Statements. 
Pursuant to any applicable law, each Grantor authorizes the Collateral Agent to
file or record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such Grantor
in such form and in such offices as the Collateral Agent reasonably determines
appropriate to perfect the security interests of the Collateral Agent (for the
benefit of the Secured Parties) under this Agreement.  Each Grantor authorizes
the Collateral Agent to use the collateral description “all personal property”
or any similar phrase in any such financing statements.  Notwithstanding
anything to the contrary contained herein or in applicable law, the Collateral
Agent shall have no responsibility for (i) preparing, recording, filing,
re-recording, or re-filing any financing statement, perfection statement,
continuation statement or other instrument in any public office or for otherwise
ensuring the perfection or maintenance of any security interest granted pursuant
to, or contemplated by, this Agreement (ii) taking any necessary steps to
preserve rights against any parties with respect to any Collateral or
(iii) taking any action to protect against any diminution in value of the
Collateral.

 

7.4                               Authority of Collateral Agent.  Each Grantor
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as among the Collateral Agent and the other
Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.

 

SECTION 8.                            MISCELLANEOUS

 

8.1                               Amendments in Writing.  None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 9.02 of the Credit Agreement;
provided, that annexes to this Agreement may be supplemented (but no existing
provisions may be modified and no Collateral may be released) through Assumption
Agreements, in substantially the form of Annex I duly executed by the Collateral
Agent and the applicable Additional Grantor.

 

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8.2                               Notices.  All notices, requests and demands to
or upon the Collateral Agent or any Grantor hereunder shall be effected in the
manner provided for in Section 9.01 of the Credit Agreement; provided that any
such notice, request or demand to or upon any Subsidiary Guarantor shall be
addressed to such Subsidiary Guarantor at its notice address set forth on
Schedule 1.

 

8.3                               No Waiver by Course of Conduct; Cumulative
Remedies.  Neither the Collateral Agent nor any other Secured Party shall by any
act (except by a written instrument pursuant to Section 8.1 above), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default.  No failure
to exercise, nor any delay in exercising, on the part of the Collateral Agent or
any other Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof.  No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  A waiver by the Collateral
Agent or any other Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Collateral Agent or such other Secured Party would otherwise have on any future
occasion.  The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.  By its acceptance of the benefits of this Agreement,
each Secured Party agrees that the Loan Documents may be enforced only by the
Collateral Agent as provided for in the Credit Agreement, and that no Secured
Party shall have any right individually to enforce or seek to enforce this
Agreement or to realize upon any Collateral or other security given to secure
the payment and performance of the Obligations.

 

8.4                               Enforcement Expenses; Indemnification.  Each
Grantor, jointly and severally, agrees to pay, indemnify and to save the
Collateral Agent and the other Secured Parties harmless from, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant to
Section 9.03 (taking into account the limitations set forth therein) of the
Credit Agreement.  The agreements in this Section 8.4 shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents and the resignation or removal of the Collateral Agreement.

 

8.5                               Successors and Assigns.  This Agreement shall
be binding upon the successors and assigns of each Grantor and shall inure to
the benefit of the Collateral Agent and the other Secured Parties and their
successors and permitted 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 Collateral Agent (it being understood that Sales
and fundamental changes permitted under the Credit Agreement shall not be
subject to this proviso).

 

8.6                               Set-Off.  Each Grantor hereby irrevocably
authorizes the Collateral Agent, each other Secured Party and each of their
respective Affiliates at any time and from time to time, in each case, while an
Event of Default shall have occurred and be continuing, without notice to such
Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to the extent permitted by applicable law, upon any amount becoming due
and payable by each Grantor (whether at the stated maturity, by acceleration or
otherwise after the expiration of any applicable grace periods) to set-off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final but excluding trust accounts), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Collateral Agent or such other
Secured Party or any of their respective Affiliates to or for the credit or the
account of such Grantor.  Each of the Collateral Agent and each other Secured
Party shall notify such Grantor promptly of any such set-off made by it or its

 

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respective Affiliates and the application made by it of the proceeds thereof,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.

 

8.7                               Counterparts.  This Agreement may be executed
by one or more of the parties to this Agreement on any number of separate
counterparts (including by telecopy or other electronic means), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

8.8                               Severability.  Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

8.9                               Section Headings.  The section headings used
in this Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.

 

8.10                        Integration.  This Agreement and the other Loan
Documents represent the agreement of the Grantors, the Collateral Agent and the
other Secured Parties with respect to the subject matter hereof and thereof.

 

8.11                        Governing Law; Jurisdiction; Etc.

 

(a)                                 Governing Law.  This Agreement and any
claims, controversy, dispute or cause of action (whether in contract or tort or
otherwise) based upon, arising out of or relating to this Agreement and the
transactions contemplated hereby and thereby shall be governed by, and construed
in accordance with, the Law of the State of New York.

 

(b)                                 Jurisdiction.  Each Grantor irrevocably and
unconditionally agrees that it will not commence any action, litigation or
proceeding of any kind or description, whether in law or equity, whether in
contract or tort or otherwise, against the Collateral Agent, any other Secured
Party, any Related Party of any of the foregoing, in any way relating to this
Agreement or the transactions relating hereto or thereto, in a forum other than
the courts of the State of New York sitting in New York County, and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, and each of the parties hereto irrevocably and
unconditionally submits to the exclusive jurisdiction of such courts and agrees
that all claims in respect of any such action, litigation or proceeding may 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, litigation 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 Collateral Agent or any
other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against the Borrower or
its properties in the courts of any jurisdiction.

 

(c)                                  Waiver of Venue.  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 (b) above.  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.

 

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(d)                                 Service of Process.  Each party hereto
irrevocably and unconditionally consents to service of process in the manner
provided for notices in Section 9.01 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.

 

(e)                                  Special Damages.  Each party hereto
irrevocably and unconditionally waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal action or proceeding
referred to in this paragraph (e) any special, exemplary, punitive or
consequential damages; provided, that nothing in this sentence shall limit the
indemnification obligations of any Guarantor with respect to special, indirect,
consequential or punitive damages arising in a third party claim against an
Indemnitee.

 

8.12                        Acknowledgements.  Each Grantor hereby acknowledges
that:

 

(a)  it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Loan Documents to which it is a party;

 

(b)  neither the Collateral Agent nor any other Secured Party has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Collateral Agent and the other Secured
Parties, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and

 

(c)  no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Collateral Agent and the other Secured Parties or among the Grantors and the
Collateral Agent and the other Secured Parties.

 

8.13                        Additional Grantors.  Each Subsidiary of the
Borrower that is required to become a party to this Agreement pursuant to
Section 5.14 of the Credit Agreement shall become a Grantor for all purposes of
this Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex I hereto (each such Subsidiary, an “Additional
Grantor”).

 

8.14                        Releases.

 

(a)  At such time as the Revolving Loans and the other Obligations (other than
contingent or indemnification obligations not then asserted or due) shall have
been indefeasibly paid in full in cash, the Collateral Agent shall take such
actions as shall be required to release its security interest in all Collateral,
and to release all guarantee obligations provided for in any Loan Document and
this Agreement and all obligations (other than those expressly stated to survive
such termination) of the Collateral Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors.  At
the request and sole expense of any Grantor following any such termination, the
Collateral Agent shall assign, transfer and deliver to such Grantor any
Collateral held by the Collateral Agent hereunder, and execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
such termination.

 

(b)  If any of the Collateral shall be sold, transferred or otherwise Sold by
any Grantor in a transaction permitted by the Credit Agreement other than to
another Grantor, then (i) the security interest in any such Collateral shall be
automatically released to the extent that such Sale does not (x) pertain to
Voting Stock of the Borrower or any Subsidiary Guarantor or other Collateral in
the possession of the Collateral Agent or (y) involve the filing of amendments
to or termination of any financing statement or mortgage in favor of the
Collateral Agent on behalf of the Secured Parties and (ii) the Collateral Agent,
at

 

25

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the request and sole expense of such Grantor, shall execute and deliver to such
Grantor all releases or other documents reasonably necessary or desirable for
the release of the Liens created hereby on such Collateral.  At the request and
sole expense of the Borrower, a Subsidiary Guarantor shall be released from its
obligations hereunder in the event that all the Voting Stock of such Subsidiary
Guarantor shall be sold, transferred or otherwise Sold in a transaction
permitted by the Credit Agreement and the Collateral Agent will assign, transfer
and deliver to the Borrower Agent such of the applicable Collateral concerning
such Voting Stock as may then be in possession of the Collateral Agent.

 

8.15                        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 OR THEREBY (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 AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

8.16                        Reinstatement.  Each Grantor agrees that, if any
payment made by any Loan Party or other Person and applied to the Secured
Obligations is at any time annulled, avoided, set aside, rescinded, invalidated,
declared to be fraudulent or preferential or otherwise required to be refunded
or repaid, or the Proceeds of any Collateral are required to be returned by any
Secured Party to such Loan Party, its estate, trustee, receiver or any other
party, including any Grantor, under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
any Lien or other Collateral securing such liability shall be and remain in full
force and effect, as fully as if such payment had never been made.  If, prior to
any of the foregoing, any Lien or other Collateral securing such Grantor’s
liability hereunder shall have been released or terminated by virtue of the
foregoing, such Lien or other Collateral shall be reinstated in full force and
effect and such prior release, termination, cancellation or surrender shall not
diminish, release, discharge, impair or otherwise affect the obligations of any
such Grantor in respect of any Lien or other Collateral securing such obligation
or the amount of such payment.

 

8.17                        Independent Obligations.  The obligations of each
Grantor hereunder are independent of and separate from the Secured Obligations. 
If any Secured Obligation is not paid when due, or upon the occurrence and
continuance of any Event of Default, the Collateral Agent may, at its sole
election, proceed directly and at once, without notice, against any Grantor and
any Collateral to collect and recover the full amount of any Secured Obligation
then due, without first proceeding against any other Grantor, any other Loan
Party or any other Collateral and without first joining any other Grantor or any
other Loan Party in any proceeding.

 

8.18                        Intercreditor Agreement Governs.  Notwithstanding
anything herein to the contrary, the lien and security interest granted to the
Collateral Agent pursuant to this Agreement and the exercise of any right or
remedy by the Collateral Agent hereunder are subject to the provisions of the
Intercreditor Agreement.  In the event of any conflict between the terms of the
Intercreditor Agreement and this Agreement, the terms of the Intercreditor
Agreement shall govern.

 

(Signature Pages Follow)

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.

 

 

SFX ENTERTAINMENT, INC.

 

430 ACQUISITION LLC

 

430R ACQUISITION LLC

 

BEATPORT JAPAN, LLC

 

BEATPORT, LLC

 

EZ FESTIVALS, LLC

 

ID&T/SFX MYSTERYLAND LLC

 

ID&T/SFX NORTH AMERICA LLC

 

ID&T/SFX Q-DANCE LLC

 

ID&T/SFX SENSATION LLC

 

ID&T/SFX TOMORROWWORLD LLC

 

MADE EVENT, LLC

 

MICHIGAN JJ HOLDINGS LLC

 

PITA I LLC

 

PITA III LLC

 

SFX ACQUISITION, LLC

 

SFX EDM HOLDINGS CORPORATION

 

SFX EX IP LLC

 

SFX EXPERIENCE, LLC

 

SFX INTERMEDIATE HOLDCO I LLC

 

SFX INTERMEDIATE HOLDCO II LLC

 

SFX INTERNATIONAL, INC.

 

SFX IP LLC

 

SFX MADE IP LLC

 

SFX MARKETING LLC

 

SFX NIGHTLIFE TELEVISION LLC

 

SFX-320 LINCOLN OPERATING LLC

 

SFX-CAMEO OPERATING LLC

 

SFX-DISCO INTERMEDIATE HOLDCO LLC

 

SFX-DISCO OPERATING LLC

 

SFXE IP LLC

 

SFX-HUDSON LLC

 

SFX-HUKA OPERATING LLC

 

SFX-IDT N.A. HOLDING II LLC

 

SFX-IDT N.A. HOLDING LLC

 

SFX-LIC OPERATING LLC

 

SFX-MOKAI OPERATING LLC

 

SFX-NIGHTLIFE OPERATING LLC

 

SFX-OPIUM GROUP OPERATING LLC

 

SFX-REACT OPERATING LLC

 

SFX-STAR ISLAND OPERATING LLC

 

SFX-VMX HOLDING LLC

 

SFX-VMX OPERATING LLC

 

STEREOSONIC US IP LLC

 

 

 

By

/s/ Richard Rosenstein

 

Name:

Richard Rosenstein

 

Title:

Chief Financial Officer

 

First Lien Guarantee and Collateral Agreement

 

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BARCLAYS BANK PLC, as Collateral Agent

 

 

 

 

 

By:

/s/ Craig Malloy

 

Name:

Craig Malloy

 

Title:

Director

 

First Lien Guarantee and Collateral Agreement

 

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Annex I to
First Lien Guarantee and Collateral Agreement

 

ASSUMPTION AGREEMENT, dated as of [·], 201[·], made by [·] (the “Additional
Grantor”), in favor of Barclays Bank PLC (“Barclays”), as Collateral Agent (in
such capacity, the “Collateral Agent”) for the banks and other financial
institutions or entities (the “Secured Parties”) from time to time parties to
the Credit Agreement referred to below.  All capitalized terms not defined
herein shall have the meanings ascribed to them in such Credit Agreement.

 

W I T N E S S E T H :

 

WHEREAS, SFX Entertainment, Inc., a Delaware corporation (the “Borrower”), the
Lenders party thereto from time to time, and Barclays, as Administrative Agent
have entered into that certain Credit Agreement, dated as of February 7, 2014
(as amended, restated, supplemented waived and/or otherwise modified from time
to time, the “Credit Agreement”);

 

WHEREAS, in connection with the Credit Agreement, the Borrower and certain of
its Subsidiaries (other than the Additional Grantor) have entered into the First
Lien Guarantee and Collateral Agreement, dated as of February 7, 2014 (as
amended, restated, supplemented, waived and/or otherwise modified from time to
time, the “First Lien Guarantee and Collateral Agreement”) in favor of the
Collateral Agent for the benefit of the Secured Parties;

 

WHEREAS, the Credit Agreement requires the Additional Grantor to become a party
to the First Lien Guarantee and Collateral Agreement; and

 

WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the First Lien Guarantee and
Collateral Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.  First Lien Guarantee and Collateral Agreement.  By executing and delivering
this Assumption Agreement, the Additional Grantor, as provided in Section 8.13
of the First Lien Guarantee and Collateral Agreement, hereby becomes a party to
the First Lien Guarantee and Collateral Agreement as a Grantor thereunder with
the same force and effect as if originally named therein as a Grantor and,
without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder.  The information set forth
in Annex 1-A hereto is hereby added to the information set forth in the
Schedules to the First Lien Guarantee and Collateral Agreement.  The Additional
Grantor hereby represents and warrants, to the extent applicable, that each of
the representations and warranties contained in Section 4 of the First Lien
Guarantee and Collateral Agreement is true and correct in all material respects
on and as of the date hereof (after giving effect to this Assumption Agreement)
as if made on and as of such date except to the extent that any representation
and warranty relates to an earlier date, in which case such representation and
warranty shall be true and correct in all material respects as of such earlier
date.

 

2.  GOVERNING LAW.  THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.

 

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[ADDITIONAL GRANTOR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

2

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Annex I-A to
Assumption Agreement

 

Supplement to Schedule 1

 

Supplement to Schedule 2

 

Supplement to Schedule 3

 

Supplement to Schedule 4(a)

 

Supplement to Schedule 4(b)

 

Supplement to Schedule 5

 

Supplement to Schedule 6

 

Supplement to Schedule 7

 

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