Exhibit 10.2

 

SECURITY AND PLEDGE AGREEMENT

 

THIS SECURITY AND PLEDGE AGREEMENT (this “Agreement”) is entered into as of
December 19, 2018, among BRPI ACQUISITION CO LLC, a Delaware limited liability
company, UNITED ONLINE, INC., a Delaware corporation, and YMAX CORPORATION, a
Delaware corporation (collectively, the “Borrowers”), the other parties
identified as “Grantors” on the signature pages hereto and such other parties
that may become Grantors hereunder after the date hereof (together with the
Borrowers, each individually a “Grantor”, and collectively, the “Grantors”) and
BANC OF CALIFORNIA, N.A., in its capacity as administrative agent (in such
capacity, the “Administrative Agent”) for the Secured Parties.

 

RECITALS

 

WHEREAS, pursuant to that certain Credit Agreement, dated as of the date hereof
(as amended, modified, extended, restated, renewed, replaced, or supplemented
from time to time, the “Credit Agreement”) among the Borrowers, the Secured
Guarantors, the Lenders party thereto and the Administrative Agent, the Lenders
have agreed to make the Term Loans upon the terms and subject to the conditions
set forth therein; and

 

WHEREAS, this Agreement is required by the terms of the Credit Agreement.

 

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1.             Definitions.

 

(a)       Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement. With reference to this
Agreement, unless otherwise specified herein: (i) the definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined, (ii) whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms, (iii) the words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation,” (iv) the word “will” shall be construed to have the same meaning
and effect as the word “shall,” (v) any definition of, or reference to, any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document, as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (vi) any reference
herein to any Person shall be construed to include such Person’s permitted
successors and assigns, (vii) the words “herein,” “hereof” and “hereunder,” and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (viii) all references
herein to Sections, Exhibits and Schedules shall be construed to refer to
Sections of, and Exhibits and Schedules to, this Agreement, (ix) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights, (x) the term
“documents” includes any and all instruments, documents, agreements,
certificates, notices, reports, financial statements and other writings, however
evidenced, whether in physical or electronic form, (xi) in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including;” the words “to” and “until” each mean “to but
excluding;” and the word “through” means “to and including”, (xii) Section
headings herein are included for convenience of reference only and shall not
affect the interpretation of this Agreement and (xiii) 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.

 

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(b)        The following terms shall have the meanings set forth in the UCC
(defined below): Accession, Account, Account Debtor, Adverse Claim, As-Extracted
Collateral, Certificated Security, Chattel Paper, Commercial Tort Claim,
Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment,
Farm Products, Financial Asset, Fixtures, General Intangible, Goods, Instrument,
Inventory, Investment Company Security, Investment Property, Letter-of-Credit
Right, Manufactured Home, Payment Intangible, Proceeds, Securities Account,
Securities Intermediary, Security, Software, Supporting Obligation and Tangible
Chattel Paper.

 

(c)           In addition, the following terms shall have the meanings set forth
below:

 

“Assignment of Claims Act” means the Assignment of Claims Act of 1940 (41 U.S.C.
Section 15, 31 U.S.C. Section 3737, and 31 U.S.C. Section 3727), including all
amendments thereto and regulations promulgated thereunder.

 

“Collateral” has the meaning provided in Section 2 hereof.

 

“Control” means the manner in which “control” is achieved under the UCC with
respect to any Collateral for which the UCC specifies a method of achieving
“control”.

 

“Copyright License” means any agreement now or hereafter in existence, providing
for the grant by, or to, any rights (including, without limitation, the grant of
rights for a party to be designated as an author or owner and/or to enforce,
defend, use, display, copy, manufacture, distribute, exploit and sell, make
derivative works, and require joinder in suit and/or receive assistance from
another party) covered in whole or in part by a Copyright.

 

“Copyrights” means, collectively, all of the following of any Grantor: (i) all
copyrights, works protectable by copyright, copyright registrations and
copyright applications anywhere in the world, (ii) all derivative works,
counterparts, extensions and renewals of any of the foregoing, (iii) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past, present and future infringements,
violations or misappropriations of any of the foregoing, (iv) the right to sue
for past, present and future infringements, violations or misappropriations of
any of the foregoing and (v) all rights corresponding to any of the foregoing
throughout the world.

 

“Government Contract” means a contract between any Grantor and an agency,
department or instrumentality of the United States or any state, municipal or
local Governmental Authority located in the United States or all obligations of
any such Governmental Authority arising under any Account now or hereafter owing
by any such Governmental Authority, as Account Debtor, to any Grantor.

 

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“Intellectual Property” means, collectively, all of the following of any
Grantor: (i) all systems software and applications software (including source
code and object code), all documentation for such software, including, without
limitation, user manuals, flowcharts, functional specifications, operations
manuals, and all formulas, processes, ideas and know-how embodied in any of the
foregoing, (ii) concepts, discoveries, improvements and ideas, know-how,
technology, reports, design information, trade secrets, practices,
specifications, test procedures, maintenance manuals, research and development,
inventions (whether or not patentable), blueprints, drawings, data, customer
lists, catalogs, and all physical embodiments of any of the foregoing, (iii)
Patents and Patent Licenses, Copyrights and Copyright Licenses, Trademarks and
Trademark Licenses and (iv) other agreements with respect to any rights in any
of the items described in the foregoing clauses (i), (ii), and (iii).

 

“Issuer” means the issuer of any Pledged Equity.

 

“Patent License” means any agreement, now or hereafter in existence, providing
for the grant by, or to, any Grantor of any rights (including, without
limitation, the right for a party to be designated as an owner and/or to
enforce, defend, make, have made, make improvements, manufacture, use, sell,
import, export, and require joinder in suit and/or receive assistance from
another party) covered in whole or in part by a Patent.

 

“Patents” means collectively, all of the following of any Grantor: (i) all
patents, all inventions and patent applications anywhere in the world, (ii) all
improvements, counterparts, reissues, divisional, re-examinations, extensions,
continuations (in whole or in part) and renewals of any of the foregoing and
improvements thereon, (iii) all income, royalties, damages or payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past,
present or future infringements, violations or misappropriations of any of the
foregoing, (iv) the right to sue for past, present and future infringements,
violations or misappropriations of any of the foregoing and (v) all rights
corresponding to any of the foregoing throughout the world.

 

“Pledged Equity” means, with respect to each Grantor, (i) 100% of the issued and
outstanding Equity Interests of each Domestic Subsidiary of such Grantor that is
directly owned by such Grantor and (ii) 65% (or such greater percentage that,
due to a change in an applicable Law after the date hereof, that could not
reasonably be expected to cause the undistributed earnings of such Foreign
Subsidiary, as determined for United States federal income tax purposes, to be
treated as a deemed dividend to such Foreign Subsidiary’s United States parent)
of the issued and outstanding Equity Interests entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and
outstanding Equity Interests not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary of such Grantor that is
directly owned by such Grantor, including the Equity Interests of the
Subsidiaries owned by such Grantor as set forth on Schedule 5.21(f) to the
Credit Agreement (as updated from time to time in accordance with the Credit
Agreement), in each case together with the certificates (or other agreements or
instruments), if any, representing such shares, and all options and other
rights, contractual or otherwise, with respect thereto, including, but not
limited to, the following:

 

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(1)       all Equity Interests representing a dividend thereon, or representing
a distribution or return of capital upon or in respect thereof, or resulting
from a stock split, revision, reclassification or other exchange therefor, and
any subscriptions, warrants, rights or options issued to the holder thereof, or
otherwise in respect thereof; and

 

(2)       in the event of any consolidation or merger involving any Issuer and
in which such Issuer is not the surviving Person, all shares of each class of
the Equity Interests of the successor Person formed by or resulting from such
consolidation or merger, to the extent that such successor Person is a direct
Subsidiary of a Grantor.

 

Notwithstanding anything to the contrary contained herein, the Pledged Equity
shall not include any Excluded Property.

 

“Trademark License” means any agreement, now or hereafter in existence,
providing for the grant by, or to, any Grantor of any rights in (including,
without limitation, the right for a party to be designated as an owner and/or to
enforce, defend, use, mark, police, and require joinder in suit and/or receive
assistance from another party) covered in whole, or in part, by a Trademark.

 

“Trademarks” means, collectively, all of the following of any Grantor: (i) all
trademarks, trade names, corporate names, company names, business names,
fictitious business names, internet domain names, trade styles, service marks,
logos, other business identifiers, whether registered or unregistered, all
registrations and recordings thereof, and all applications in connection
therewith (other than each United States application to register any trademark
or service mark prior to the filing under applicable Law of a verified statement
of use for such trademark or service mark) anywhere in the world, (ii) all
counterparts, extensions and renewals of any of the foregoing, (iii) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past, present or future infringements,
violations, dilutions or misappropriations of any of the foregoing, (iv) the
right to sue for past, present or future infringements, violations, dilutions or
misappropriations of any of the foregoing and (v) all rights corresponding to
any of the foregoing (including the goodwill) throughout the world.

 

“Vehicles” means all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title under the laws of
any state, all tires and all other appurtenances to any of the foregoing.

 

“Vessel” means any watercraft or other artificial contrivance used, or capable
of being used, as a means of transportation on water (including, without
limitation, those whose primary purpose is the maritime transportation of cargo
or which are otherwise engaged, used or useful in any business activities of the
Grantors) which are owned by and registered (or to be owned and registered) in
the name of any of the Grantors, including, without limitation, any Vessel
leased or otherwise registered in the foregoing parties’ names, pursuant to a
lease or other operating agreement constituting a capital lease obligation, in
each case together with all related spares, equipment and any additional
improvements, vessel owned, bareboat chartered or operated by a Grantor other
than Vessels owned by an entity other than a Grantor and which are managed under
Vessel management agreements.

 

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“UCC” means the Uniform Commercial Code as in effect from time to time in the
state of California except as such term may be used in connection with the
perfection of the Collateral and then the applicable jurisdiction with respect
to such affected Collateral shall apply.

 

“USPTO” means the United States Patent and Trademark Office.

 

“Work” means any work that is subject to copyright protection pursuant to Title
17 of the United States Code.

 

2.             Grant of Security Interest in the Collateral. To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Grantor hereby grants to the Administrative Agent, for the benefit of the
Secured Parties, a continuing security interest in, and a right to set off
against, any and all right, title and interest of such Grantor in and to all of
the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Collateral”): (a) all Accounts; (b) all cash,
currency and Cash Equivalents; (c) all Chattel Paper (including Electronic
Chattel Paper and Tangible Chattel Paper); (d) those certain Commercial Tort
Claims set forth on Schedule 5.21(e) to the Credit Agreement (as updated from
time to time in accordance with the Credit Agreement); (e) all Deposit Accounts;
(f) all Documents; (g) all Equipment; (h) all Fixtures; (i) all General
Intangibles; (j) all Goods; (k) all Instruments; (l) all Intellectual Property;
(m) all Inventory; (n) all Investment Property; (o) all Letter-of-Credit Rights;
(p) all Payment Intangibles; (q) all Pledged Equity; (r) all Securities
Accounts; (s) all Software; (t) all Supporting Obligations; (u) all Vehicles;
(v) all books and records pertaining to the Collateral; (w) all Accessions and
all Proceeds and products of any and all of the foregoing and (x) all other
personal property of any kind or type whatsoever now or hereafter owned by such
Grantor or as to which such Grantor now or hereafter has the power to transfer
interest therein.

 

Notwithstanding anything to the contrary contained herein, the security
interests granted under this Agreement shall not extend to (a) Excluded Property
or Excluded Accounts, (b) any General Intangible, permit, lease, license,
contract or other Instrument of a Grantor to the extent the grant of a security
interest in such General Intangible, permit, lease, license, contract or other
Instrument in the manner contemplated by this Agreement, under the terms thereof
or under applicable Law, is prohibited and would result in the termination
thereof or give the other parties thereto the right to terminate, accelerate or
otherwise alter such Grantor’s rights, titles and interests thereunder
(including upon the giving of notice or the lapse of time or both) or (c) any
United States intent-to-use trademark applications to the extent that, and
solely during the period in which the grant of a security interest therein would
impair the validity or enforceability of or render void or result in the
cancellation of, any registration issued as a result of such intent-to-use
trademark applications under applicable Law; provided that upon submission and
acceptance by the USPTO of an amendment to allege pursuant to 15 U.S.C. Section
1060(a) or any successor provision, such intent-to-use trademark application
shall be considered Collateral; provided, further that (i) any such limitation
described in the foregoing clause (b) on the security interests granted
hereunder shall only apply to the extent that any such prohibition or right to
terminate or accelerate or alter the Grantor’s rights could not be rendered
ineffective pursuant to the UCC or any other applicable Law (including Debtor
Relief Laws) or principles of equity and (ii) in the event of the termination or
elimination of any such prohibition or right or the requirement for any consent
contained in any applicable Law, General Intangible, permit, lease, license,
contract or other Instrument, to the extent sufficient to permit any such item
to become Collateral hereunder, or upon the granting of any such consent, or
waiving or terminating any requirement for such consent, a security interest in
such General Intangible, permit, lease, license, contract or other Instrument
shall be automatically and simultaneously granted hereunder and shall be
included as Collateral hereunder.

 

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The Grantors and the Administrative Agent, on behalf of the Secured Parties,
hereby acknowledge and agree that the security interest created hereby in the
Collateral (a) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (b) is not to be
construed as an assignment of any Intellectual Property.

 

3.             Representations and Warranties. Each Grantor hereby represents
and warrants to the Administrative Agent, for the benefit of the Secured
Parties, that until the Facility Termination Date:

 

(a)       Ownership. Each Grantor is the legal and beneficial owner of its
Collateral and has the right to pledge, sell, assign or transfer the same. There
exists no Adverse Claim with respect to the Pledged Equity of such Grantor.

 

(b)       Security Interest/Priority. This Agreement creates a valid security
interest in favor of the Administrative Agent, for the benefit of the Secured
Parties, in the Collateral of such Grantor and, when properly perfected by
filing, shall constitute a valid and perfected, first priority security interest
in such Collateral (including all uncertificated Pledged Equity consisting of
partnership or limited liability company interests that do not constitute
Securities), to the extent such security interest can be perfected by filing
under the UCC, free and clear of all Liens except for Permitted Liens. No
Grantor has authenticated any currently effective agreement authorizing any
secured party thereunder to file a financing statement, except to perfect
Permitted Liens. The taking possession by the Administrative Agent of the
certificated securities (if any) evidencing the Pledged Equity and all other
Instruments constituting Collateral will perfect and establish the first
priority of the Administrative Agent’s security interest in all the Pledged
Equity evidenced by such certificated securities and such Instruments. With
respect to any Collateral consisting of a Deposit Account, Securities
Entitlement or held in a Securities Account, upon execution and delivery by the
applicable Grantor, the applicable Securities Intermediary and the
Administrative Agent of an agreement granting control to the Administrative
Agent over such Collateral, the Administrative Agent shall have a valid and
perfected, first priority security interest in such Collateral.

 

(c)       Types of Collateral. None of the Collateral consists of, or is the
Proceeds of, (i) As-Extracted Collateral, (ii) Consumer Goods, (iii) Farm
Products, (iv) Manufactured Homes, (v) standing timber, (vi) an aircraft,
airframe, aircraft engine or related property, (vii) an aircraft leasehold
interest, (viii) a Vessel or (ix) any other interest in or to any of the
foregoing.

 

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(d)       Accounts. (i) Each Account of the Grantors and the papers and
documents relating thereto are genuine and in all material respects what they
purport to be, (ii) each Account arises out of (A) a bona fide sale of goods
sold and delivered by such Grantor (or is in the process of being delivered) or
(B) services theretofore actually rendered by such Grantor to, the account
debtor named therein, (iii) no Account of a Grantor is evidenced by any
Instrument or Chattel Paper unless, subject to Section 5.21(c) of the Credit
Agreement and Section 4(c)(i) of this Agreement, such Instrument or Chattel
Paper, to the extent requested by the Administrative Agent, has been endorsed
over and delivered to, or submitted to the control of, the Administrative Agent,
(iv) no surety bond was required or given in connection with any Account of a
Grantor or the contracts or purchase orders out of which they arose, (v) the
right to receive payment under each Account may be assigned as a matter of law,
and (vi) no Account Debtor has any defense, set-off, claim or counterclaim
against any Grantor that can be asserted against the Administrative Agent,
whether in any proceeding to enforce the Administrative Agent’s rights in the
Collateral otherwise, except defenses, setoffs, claims or counterclaims that are
not, in the aggregate, material to the value of the Accounts, taken as a whole.

 

(e)       Equipment and Inventory. With respect to any Equipment and/or
Inventory of a Grantor, each such Grantor has exclusive possession and control
of such Equipment and Inventory of such Grantor except for (i) Equipment leased
by such Grantor as a lessee, (ii) Equipment or Inventory in transit with common
carriers or (iii) Equipment and/or Inventory in the possession or control of a
warehouseman, bailee or any agent or processor of such Grantor to the extent
such Grantor has complied with Section 4(e). No Inventory of a Grantor is held
by a Person other than a Grantor pursuant to consignment, sale or return, sale
on approval or similar arrangement. Collateral consisting of Inventory is of
good and merchantable quality, free from material defects. None of such
Inventory is subject to any licensing, Patent, Trademark, trade name or
Copyright with any Person that restricts any Grantor’s ability to use,
manufacture, lease, sell or otherwise dispose of such Inventory. The completion
of the manufacturing process of such Inventory by a Person other than the
applicable Grantor would be permitted under any contract to which such Grantor
is a party or to which the Inventory is subject.

 

(f)       Authorization of Pledged Equity. All Pledged Equity (i) is duly
authorized and validly issued, (ii) is fully paid and, to the extent applicable,
nonassessable and is not subject to the preemptive rights of any Person, (iii)
is beneficially owned as of record by a Grantor and (iv) constitute all the
issued and outstanding shares of all classes of the equity of such Issuer issued
to such Grantor.

 

(g)       No Other Equity Interests, Instruments, Etc. As of the Closing Date,
(i) no Grantor owns any certificated Equity Interests in any Subsidiary that are
required to be pledged and delivered to the Administrative Agent hereunder
except as set forth on Schedule 5.21(f) to the Credit Agreement (as updated from
time to time in accordance with the Credit Agreement), and (ii) no Grantor holds
any Instruments, Documents or Tangible Chattel Paper required to be pledged and
delivered to the Administrative Agent pursuant to Section 4(c)(i) of this
Agreement other than as set forth on Schedule 5.21(c) to the Credit Agreement
(as updated from time to time in accordance with the Credit Agreement). Subject
to Section 5.21(c) of the Credit Agreement and Section 4(c)(i) of this
Agreement, all such certificated securities, Instruments, Documents and Tangible
Chattel Paper have been delivered to the Administrative Agent to the extent (A)
requested by the Administrative Agent or (B) as required by the terms of this
Agreement and the other Loan Documents.

 

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(h)       Partnership and Limited Liability Company Interests. Except as
previously disclosed to the Administrative Agent, none of the Collateral
consisting of an interest in a partnership or a limited liability company (i) is
dealt in or traded on a securities exchange or in a securities market, (ii) by
its terms expressly provides that it is a Security governed by Article 8 of the
UCC, (iii) is an Investment Company Security, (iv) is held in a Securities
Account or (v) constitutes a Security or a Financial Asset.

 

(i)       Contracts; Agreements; Licenses. Except as could not reasonably be
expected to have a Material Adverse Effect, no Grantor has any Material
Contracts, agreements or licenses which are non-assignable by their terms, or as
a matter of law, or which prevent the granting of a security interest therein.

 

(j)       Consents; Etc. No approval, consent, exemption, authorization or other
action by, notice to, or filing with, any Governmental Authority or any other
Person (including, without limitation, any stockholder, member or creditor of
such Grantor), is necessary or required for (i) the grant by such Grantor of the
security interest in the Collateral granted hereby or for the execution,
delivery or performance of this Agreement by such Grantor, (ii) the perfection
of such security interest (to the extent such security interest can be perfected
by filing under the UCC, the granting of control (to the extent required under
Section 4(c) hereof) or by filing an appropriate notice with the USPTO or the
United States Copyright Office) or (iii) the exercise by the Administrative
Agent or the Secured Parties of the rights and remedies provided for in this
Agreement (including, without limitation, as against any Issuer), except for (A)
the filing or recording of UCC financing statements or other filings under the
Assignment of Claims Act, (B) the filing of appropriate notices with the USPTO
and the United States Copyright Office, (C) obtaining control to perfect the
Liens created by this Agreement (to the extent required under Section 4(c)
hereof), (D) such actions as may be required by Laws affecting the offering and
sale of securities, (E) such actions as may be required by applicable foreign
Laws affecting the pledge of the Pledged Equity of Foreign Subsidiaries, (F)
consents, authorizations, filings or other actions which have been obtained or
made, and (G) as may be required with respect to Vehicles registered under a
certificate of title, subject to Section 4(o) of this Agreement.

 

(k)       Commercial Tort Claims. As of the Closing Date, no Grantor has any
Commercial Tort Claims seeking damages in excess of $1,500,000 other than as set
forth on Schedule 5.21(e) to the Credit Agreement (as updated from time to time
in accordance with the Credit Agreement).

 

(l)        Copyrights, Patents and Trademarks.

 

(i)          All Intellectual Property of such Grantor that is reasonably
necessary for, or material to, the operation of such Grantor’s business is
valid, subsisting, unexpired, enforceable and has not been abandoned.

 

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(ii)       No holding, decision or judgment has been rendered by any
Governmental Authority that would limit, cancel or question the validity of any
Intellectual Property of any Grantor.

 

(iii)       All applications pertaining to the Copyrights, Patents and
Trademarks of each Grantor have been duly and properly filed, and all
registrations or letters pertaining to such Copyrights, Patents and Trademarks
have been duly and properly filed and issued.

 

(iv)       No Grantor has made any assignment or agreement in conflict with the
security interest in the Intellectual Property of any Grantor hereunder.

 

(v)       Each Grantor and each of its Subsidiaries, own, or possess the right
to use, all of the Intellectual Property that is reasonably necessary for the
operation of their respective businesses, without conflict with the rights of
any other Person.

 

(vi)       To the best knowledge of such Grantor, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed by such Grantor or any of its
Subsidiaries infringes upon any rights held by any other Person.

 

(vii)       Except as set forth on Schedule 5.06 to the Credit Agreement, no
proceeding, claim or litigation regarding any of the foregoing is pending or, to
the best knowledge of such Grantor, threatened, which, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

4.             Covenants. Each Grantor covenants that until the Facility
Termination Date, that such Grantor shall:

 

(a)           Maintenance of Perfected Security Interest; Further Information.

 

(i)       Maintain the security interest created by this Agreement as a first
priority perfected security interest (subject only to Permitted Liens) and shall
take commercially reasonable steps to defend such security interest against the
claims and demands of all Persons whomsoever (other than the holders of
Permitted Liens).

 

(ii)       From time to time furnish to the Administrative Agent upon the
Administrative Agent’s reasonable request, statements and schedules further
identifying and describing the assets and property constituting Collateral of
such Grantor and such other reports in connection therewith as the
Administrative Agent may reasonably request, all in reasonable detail.

 

(b)           Required Notifications. Each Grantor shall promptly notify the
Administrative Agent, in writing, of: (i) any Lien (other than Permitted Liens)
on any of the Collateral which would adversely affect the ability of the
Administrative Agent to exercise any of its remedies hereunder and (ii) the
occurrence of any other event which could reasonably be expected to have a
material impairment on the aggregate value of the Collateral or on the security
interests created hereby.

 

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(c)           Perfection through Possession and Control.

 

(i)       If any amount in excess of $1,500,000 payable under or in connection
with any of the Collateral shall be or become evidenced by any Instrument or
Tangible Chattel Paper or Supporting Obligation, or if any property constituting
Collateral with a value in excess of $1,500,000 shall be stored or shipped
subject to a Document, ensure that such Instrument, Tangible Chattel Paper,
Supporting Obligation or Document is either in the possession of such Grantor at
all times or, if requested by the Administrative Agent to perfect its security
interest in such Collateral, is delivered to the Administrative Agent duly
endorsed in a manner satisfactory to the Administrative Agent. Such Grantor
shall ensure that any Collateral consisting of Tangible Chattel Paper with a
value in excess of $1,500,000 is marked with a legend reasonably acceptable to
the Administrative Agent indicating the Administrative Agent’s security interest
in such Tangible Chattel Paper.

 

(ii)       Deliver to the Administrative Agent promptly upon the receipt thereof
by or on behalf of a Grantor, all certificates and instruments constituting
Certificated Securities or Pledged Equity. Prior to delivery to the
Administrative Agent, all such certificates constituting Pledged Equity shall be
held in trust by such Grantor for the benefit of the Administrative Agent
pursuant hereto. All such certificates representing Pledged Equity shall be
delivered in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, substantially in
the form provided in Exhibit A hereto or other form reasonably acceptable to the
Administrative Agent.

 

(iii)       If any Collateral shall consist of Deposit Accounts, Electronic
Chattel Paper, Letter-of-Credit Rights, Securities Accounts or uncertificated
Investment Property, execute and deliver (and, with respect to any Collateral
consisting of a Securities Account or uncertificated Investment Property, in
each case, with a value in excess of $1,500,000 individually or in the
aggregate, cause the Securities Intermediary or the Issuer, as applicable, with
respect to such Investment Property to execute and deliver) to the
Administrative Agent all control agreements, assignments, instruments or other
documents as reasonably requested by the Administrative Agent for the purposes
of obtaining and maintaining Control of such Collateral. If any Collateral shall
consist of Deposit Accounts or Securities Accounts, comply with Section 6.14 of
the Credit Agreement.

 

(d)           Filing of Financing Statements, Notices, etc. Each Grantor shall
execute and deliver to the Administrative Agent and/or file such agreements,
assignments or instruments (including affidavits, notices, reaffirmations and
amendments and restatements of existing documents, as the Administrative Agent
may reasonably request) and do all such other things as the Administrative Agent
may reasonably deem necessary or appropriate (i) to assure to the Administrative
Agent its security interests hereunder, including (A) such instruments as the
Administrative Agent may from time to time reasonably request in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC, including, without limitation, financing statements (including
continuation statements), (B) with regard to Copyrights, a Notice of Grant of
Security Interest in Copyrights substantially in the form of Exhibit B or other
form reasonably acceptable to the Administrative Agent, (C) with regard to
Patents, a Notice of Grant of Security Interest in Patents for filing with the
USPTO substantially in the form of Exhibit C or other form reasonably acceptable
to the Administrative Agent and (D) with regard to Trademarks, a Notice of Grant
of Security Interest in Trademarks for filing with the USPTO substantially in
the form of Exhibit D or other form reasonably acceptable to the Administrative
Agent, (ii) to consummate the transactions contemplated hereby and (iii) to
otherwise protect and assure the Administrative Agent of its rights and
interests hereunder. Furthermore, each Grantor also hereby irrevocably makes,
constitutes and appoints the Administrative Agent, its nominee or any other
person whom the Administrative Agent may designate, as such Grantor’s attorney
in fact with full power and for the limited purpose to prepare and file (and, to
the extent applicable, sign) in the name of such Grantor any financing
statements, or amendments and supplements to financing statements, renewal
financing statements, notices or any similar documents which in the
Administrative Agent’s reasonable discretion would be necessary or appropriate
in order to perfect and maintain perfection of the security interests granted
hereunder, such power, being coupled with an interest, being and remaining
irrevocable until the Facility Termination Date. Each Grantor hereby agrees that
a carbon, photographic or other reproduction of this Agreement or any such
financing statement is sufficient for filing as a financing statement by the
Administrative Agent without notice thereof to such Grantor wherever the
Administrative Agent may in its sole discretion desire to file the same.

 

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(e)           Collateral Held by Warehouseman, Bailee, etc.

 

(i)       If any Collateral with a value in excess of $700,000 is in the
possession or control of any one warehouseman, bailee or any agent or processor
of such Grantor or if there is any Collateral with a value in excess of
$1,800,000 in the aggregate for all such warehousemans, bailees or any agents or
processors of such Grantor (A) notify the Administrative Agent of such
possession, (B) notify such Person in writing of the Administrative Agent’s
security interest for the benefit of the Secured Parties in such Collateral, (C)
instruct such Person to hold all such Collateral for the Administrative Agent’s
account and subject to the Administrative Agent’s instructions and (D) unless
otherwise consented to in writing by the Administrative Agent, obtain (1) a
written acknowledgment from such Person that it is holding such Collateral for
the benefit of the Administrative Agent and (2) such other documentation
required by the Administrative Agent (including, without limitation,
subordination and access agreements).

 

(ii)       Perfect and protect such Grantor’s ownership interests in all
Inventory with a value in excess of $700,000 at any one location and $1,800,000
in the aggregate at all such locations, stored with a consignee against
creditors of the consignee by filing and maintaining financing statements
against the consignee reflecting the consignment arrangement filed in all
appropriate filing offices, providing any written notices required by the UCC to
notify any prior creditors of the consignee of the consignment arrangement, and
taking such other actions as may be appropriate to perfect and protect such
Grantor’s interests in such inventory under Section 2-326, Section 9-103,
Section 9-324 and Section 9-505 of the UCC or otherwise, which such financing
statements filed pursuant to this Section shall be assigned to the
Administrative Agent, for the benefit of the Secured Parties.

 

(f)            Treatment of Accounts. Not grant or extend the time for payment
of any Account, or compromise or settle any Account for less than the full
amount thereof, or release any person or property, in whole or in part, from
payment thereof, or amend, supplement or modify any Account in any manner that
could reasonably be likely to adversely affect the value thereof, or allow any
credit or discount thereon, other than as normal and customary in the ordinary
course of a Grantor’s business or in respect of Accounts with a face value of
less than $500,000. Each Grantor will deliver to the Administrative Agent a copy
of each material demand, notice or document received by it that questions or
calls into doubt the validity or enforceability of any Account, but only if the
amount of such Account subject to doubt or question, whether as to
enforceability or otherwise, exceeds $500,000.

 

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(g)           Commercial Tort Claims. Execute and deliver such statements,
documents and notices and do and cause to be done all such things as may be
required by the Administrative Agent, or required by Law to create, preserve,
perfect and maintain the Administrative Agent’s security interest in any
Commercial Tort Claims with a value in excess of $1,500,000 initiated by or in
favor of any Grantor.

 

(h)           Inventory. With respect to the Inventory of each Grantor:

 

(i)       At all times maintain inventory records reasonably satisfactory to the
Administrative Agent, keeping correct and accurate records itemizing and
describing the kind, type, quality and quantity of Inventory and such Grantor’s
cost therefore and daily withdrawals therefrom and additions thereto.

 

(ii)       Produce, use, store and maintain the Inventory with all reasonable
care and caution and in accordance with applicable standards of any insurance
and in conformity with applicable Laws (including the requirements of the
Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations
and orders related thereto).

 

(i)            Books and Records. Mark its books and records (and shall cause
the Issuer of the Pledged Equity of such Grantor to mark its books and records)
to reflect the security interest granted pursuant to this Agreement.

 

(j)            Nature of Collateral. At all times maintain the Collateral, other
than Collateral consisting of Fixtures or real property, as personal property
and not affix any of the Collateral to any real property in a manner which would
change its nature from personal property to real property or a Fixture to real
property, unless the Administrative Agent shall have a perfected Lien on such
Fixture or real property or the aggregate value of Collateral so affixed is less
than $500,000.

 

(k)           Issuance or Acquisition of Equity Interests in Partnerships or
Limited Liability Companies.

 

(i)       Not without executing and delivering, or causing to be executed and
delivered, to the Administrative Agent such agreements, documents and
instruments as the Administrative Agent may reasonably require, issue or acquire
any Pledged Equity consisting of an interest in a partnership or a limited
liability company, to the extent such Pledged Equity has an aggregate value of
$500,000 or more, that (A) is dealt in or traded on a securities exchange or in
a securities market, (B) by its terms expressly provides that it is a Security
governed by Article 8 of the UCC, (C) is an investment company security, (D) is
held in a Securities Account or (E) constitutes a Security or a Financial Asset.

 

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(ii)       Without the prior written consent of the Administrative Agent, no
Grantor will (A) vote to enable, or take any other action to permit, any
applicable Issuer to issue any Investment Property or Equity Interests
constituting partnership or limited liability company interests, except for
those additional Investment Property or Equity Interests constituting
partnership or limited liability company interests that will be subject to the
security interest granted herein in favor of the Secured Parties, or (B) enter
into any agreement or undertaking, except in connection with a Disposition
permitted under Sections 7.04, 7.05, 7.06 or 7.08 of the Credit Agreement,
restricting the right or ability of such Grantor or the Administrative Agent to
sell, assign or transfer any Investment Property or Pledged Equity or Proceeds
thereof. The Grantors will take commercially reasonable efforts to defend the
right, title and interest of the Administrative Agent in and to any Investment
Property and Pledged Equity against the claims and demands of all Persons
whomsoever.

 

(iii)       If any Grantor shall become entitled to receive or shall receive (A)
any Certificated Securities (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the
ownership interests of any Issuer, whether in addition to, in substitution of,
as a conversion of, or in exchange for, any Investment Property, or otherwise in
respect thereof, or (B) any sums paid upon or in respect of any Investment
Property upon the liquidation or dissolution of any Issuer, such Grantor shall
accept the same as the agent of the Secured Parties, hold the same in trust for
the Secured Parties, segregated from other funds of such Grantor, and, if the
aggregate value thereof is in excess of $500,000, promptly deliver the same to
the Administrative Agent, on behalf of the Secured Parties, in accordance with
the terms hereof.

 

(l)             Intellectual Property.

 

(i)       Not do any act or omit to do any act whereby any material Copyright
may become invalidated and (A) not do any act, or omit to do any act, whereby
any material Copyright may become injected into the public domain; (B) notify
the Administrative Agent immediately if it knows that any material Copyright may
become injected into the public domain or of any materially adverse
determination or development (including, without limitation, the institution of,
or any such determination or development in, any court or tribunal in the United
States or any other country) regarding a Grantor’s ownership of any such
Copyright or its validity; (C) take all necessary steps as it shall deem
appropriate under the circumstances, to maintain and pursue each application
(and to obtain the relevant registration) of each material Copyright owned by a
Grantor and to maintain each registration of each material Copyright owned by a
Grantor including, without limitation, filing of applications for renewal where
necessary; and (D) promptly notify the Administrative Agent of any material
infringement, misappropriation, dilution or impairment of any material Copyright
of a Grantor of which it becomes aware and take such actions as it shall
reasonably deem appropriate under the circumstances to protect such Copyright,
including, where appropriate, the bringing of suit for infringement, dilution or
impairment or seeking injunctive relief and seeking to recover any and all
damages for such infringement, misappropriation, dilution or impairment.

 

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(ii)       Not make any assignment or agreement in conflict with the security
interest in the Copyrights of each Grantor hereunder (except as permitted by the
Credit Agreement or the other Loan Documents).

 

(iii)       (A) Continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (B) maintain as in
the past the quality of products and services offered under such Trademark, (C)
employ such Trademark with the appropriate notice of registration, if
applicable, (D) not adopt or use any mark that is confusingly similar or a
colorable imitation of such Trademark unless the Administrative Agent, for the
benefit of the Secured Parties, shall obtain a perfected security interest in
such mark pursuant to this Agreement, and (E) not (and not permit any licensee
or sublicensee thereof to) do any act or omit to do any act whereby any such
Trademark may become invalidated.

 

(iv)       Not do any act, or omit to do any act, whereby any material Patent
may become abandoned or dedicated.

 

(v)       Notify the Administrative Agent immediately if it knows that any
application or registration relating to any material Patent or Trademark may
become abandoned or dedicated, or of any materially adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the USPTO or any court or
tribunal in any country) regarding such Grantor ownership of any Patent or
Trademark or its right to register the same or to keep and maintain the same.

 

(vi)       Take all reasonable and necessary steps, including, without
limitation, in any proceeding before the USPTO, or any similar office or agency
in any other country or any political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant registration) and to
maintain each registration of each material Patent and Trademark, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

 

(vii)       Promptly notify the Administrative Agent after it learns that any
material Patent or Trademark included in the Collateral is infringed,
misappropriated, diluted or impaired by a third party and promptly sue for
infringement, misappropriation, dilution or impairment, to seek injunctive
relief where appropriate and to recover any and all damages for such
infringement, misappropriation, dilution or impairment, or to take such other
actions as it shall reasonably deem appropriate under the circumstances to
protect such material Patent or Trademark.

 

(viii)       Not make any assignment or agreement in conflict with the security
interest in the Patents or Trademarks of each Grantor hereunder (except as
permitted by the Credit Agreement or the other Loan Documents).

 

(ix)       Grants to the Administrative Agent a royalty free license to use such
Grantor’s Intellectual Property in connection with the enforcement of the
Administrative Agent’s rights hereunder, but only to the extent any license or
agreement granting such Grantor rights in such Intellectual Property do not
prohibit such use by the Administrative Agent.

 

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Notwithstanding the foregoing, the Grantors may, in their reasonable business
judgment, fail to maintain, pursue, preserve or protect any Copyright, Patent or
Trademark which is not material to their businesses.

 

(m)           Equipment. Maintain each item of Equipment in good working order
and condition (reasonable wear and tear and obsolescence excepted).

 

(n)           Government Contracts. Promptly notify the Administrative Agent, in
writing, if it enters into any contract with a Governmental Authority under
which such Governmental Authority, as account debtor, owes a monetary obligation
to any Grantor under any Account.

 

(o)           Vehicles. Upon the request of the Administrative Agent upon the
occurrence and during the continuance of an Event of Default, file or cause to
be filed in each office in each jurisdiction which the Administrative Agent
shall deem reasonably advisable to perfect its Liens on the Vehicles, all
applications for certificates of title or ownership (and any other necessary
documentation) indicating the Administrative Agent’s first priority Lien on the
Vehicle (subject to any Permitted Liens) covered by such certificate, in each
case to the extent such Vehicle has a fair market value of $100,000 or more.

 

(p)           Internet Property Rights. Upon the request of the Administrative
Agent made after the occurrence and during the continuance of an Event of
Default, with respect to its rights, titles and interests in and to any internet
domain names or registration rights relating thereto, and any internet websites
or the content thereof (collectively, “Internet Property Rights”) whether now
existing or hereafter created or acquired and wheresoever located, each Grantor
shall cause to be delivered to the Administrative Agent an undated transfer
document with respect to each of its internet domain names, duly executed in
blank by such Grantor and in the form required by the applicable internet domain
name registrar, sufficient to effect the transfer of each internet domain name
to the transferee thereof named in such transfer form upon delivery to such
registrar. Notwithstanding anything to the contrary in the immediately preceding
sentence, the requirements of this Section 4(p) shall not apply to any domain
names permitted to be disposed of pursuant to Section 7.05(k) of the Credit
Agreement.

 

(q)           Further Assurances.

 

(i)       Promptly upon the request of the Administrative Agent and at the sole
expense of the Grantors, duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (A) the assignment of any
Material Contract, other than Governmental Contracts governed by clause (B) of
this Section 4(q)(i), (B) with respect to Government Contracts, assignment
agreements and notices of assignment, in form and substance satisfactory to the
Administrative Agent, duly executed by any Grantors party to such Government
Contract in compliance with the Assignment of Claims Act (or analogous state
applicable Law), and (C) all applications, certificates, instruments,
registration statements, and all other documents and papers the Administrative
Agent may reasonably request and as may be required by law in connection with
the obtaining of any consent, approval, registration, qualification, or
authorization of any Person deemed necessary or appropriate for the effective
exercise of any rights under this Agreement; provided that no Grantor shall be
required to take any action to perfect a security interest in any Collateral
that the Administrative Agent reasonably determines in its sole discretion that
the costs and burdens to the Grantors of perfecting a security interest in such
Collateral (including any applicable stamp, intangibles or other taxes) are
excessive in relation to value to the Lenders afforded thereby.

 

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(ii)       From time to time upon the Administrative Agent’s reasonable request,
promptly furnish such updates to the information disclosed pursuant to this
Agreement and the Credit Agreement, including any Schedules hereto or thereto,
such that such updated information is true and correct in all material respects
as of the date so furnished.

 

5.             Authorization to File Financing Statements. Each Grantor hereby
authorizes the Administrative Agent to prepare and file such financing
statements (including continuation statements) or amendments thereof or
supplements thereto or other instruments as the Administrative Agent may from
time to time deem necessary or appropriate in order to perfect and maintain the
security interests granted hereunder in accordance with the UCC, which such
financing statements may describe the Collateral in the same manner as described
herein or may contain an indication or description of Collateral that describes
such property in any other manner as the Administrative Agent may determine, in
its reasonable discretion, is necessary, advisable or prudent to ensure the
perfection of the security interest in the Collateral granted herein, including,
without limitation, describing such property as “all assets, whether now owned
or hereafter acquired” or “all personal property, whether now owned or hereafter
acquired.”

 

6.             Advances. On failure of any Grantor to perform any of the
covenants and agreements contained herein or in any other Loan Document, the
Administrative Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Administrative Agent may
reasonably deem advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien, expenditures made in
defending against any Adverse Claim and all other expenditures which the
Administrative Agent may make for the protection of the security hereof or which
may be compelled to make by operation of Law. All such sums and amounts so
expended shall be repayable by the Grantors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the date said
amounts are expended at the Default Rate. No such performance of any covenant or
agreement by the Administrative Agent on behalf of any Grantor, and no such
advance or expenditure therefor, shall relieve the Grantors of any Default or
Event of Default. The Administrative Agent may make any payment hereby
authorized in accordance with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax assessment, sale, forfeiture, tax lien, title or claim, in
each case, except to the extent such payment is being contested in good faith by
a Grantor in appropriate proceedings and against which adequate reserves are
being maintained in accordance with GAAP.

 

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7.             Remedies.

 

(a)       General Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, the Administrative Agent on behalf of the
Secured Parties shall have, in addition to the rights and remedies provided
herein, in the Loan Documents, in any other documents relating to the Secured
Obligations, or by any applicable Law (including, but not limited to, levy of
attachment, garnishment and the rights and remedies set forth in the UCC of the
jurisdiction applicable to the affected Collateral), the rights and remedies of
a secured party under the UCC (regardless of whether the UCC is the law of the
jurisdiction where the rights and remedies are asserted and regardless of
whether the UCC applies to the affected Collateral), and further, the
Administrative Agent may, with or without judicial process or the aid and
assistance of others, subject to (A) rights reserved to any landlord,
warehouseman and/or bailee in an agreement between such party and the
Administrative Agent in all cases where such types of agreements are executed in
accordance with the terms of the Credit Agreement and (B) rights of landlords,
warehousemen and/or bailees, in all other instances, (i) enter on any premises
on which any of the Collateral may be located and, without resistance or
interference by the Grantors, take possession of the Collateral, (ii) dispose of
any Collateral on any such premises, (iii) require the Grantors to assemble and
make available to the Administrative Agent at the expense of the Grantors any
Collateral at any place and time designated by the Administrative Agent which is
reasonably convenient to both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other disposition thereof, (v)
without demand and without advertisement, notice, hearing or process of law, all
of which each of the Grantors hereby waives to the fullest extent permitted by
Law, at any place and time or times, 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 any or
all Collateral held by or for it at public or private sale (which in the case of
a private sale of Pledged Equity, shall be to a restricted group of purchasers
who will be obligated 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), at any exchange or broker’s board or elsewhere, by one or more
contracts, in one or more parcels, for money, upon credit or otherwise, at such
prices and upon such terms as the Administrative Agent deems advisable, in its
sole discretion (subject to any and all mandatory legal requirements) and/or
(vi) complete and tender each internet domain name transfer document in its own
name, place and stead of the Grantor in order to effect the transfer of any
internet domain name registration, either to the Administrative Agent or to
another transferee, as the case may be and maintain, obtain access to, and
continue to operate, in its own name or in the name, place and stead of such
Grantor, such Grantor’s internet website and the contents thereof, and all
related advertising, linking and technology licensing and other contractual
relationships, in each case in connection with the maintenance, preservation,
operation, sale or other disposition of the Collateral or for any other purpose
permitted under the Loan Documents or by applicable Law. Each Grantor
acknowledges that any such private sale may be at prices and on terms less
favorable to the seller than the prices and other terms which might have been
obtained at a public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially reasonable
manner and, in the case of a sale of Pledged Equity, that the Administrative
Agent shall have no obligation to delay sale of any such securities for the
period of time necessary to permit the Issuer of such securities to register
such securities for public sale under the Securities Act of 1933. The
Administrative Agent or any other Secured Party shall have the right upon any
such public sale or sales, and, to the extent permitted by applicable Law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold. Neither the Administrative Agent’s compliance with
applicable Law nor its disclaimer of warranties relating to the Collateral shall
be considered to adversely affect the commercial reasonableness of any sale. To
the extent the rights of notice cannot be legally waived hereunder, each Grantor
agrees that any requirement of reasonable notice shall be met if such notice,
specifying the place of any public sale or the time after which any private sale
is to be made, is personally served on or mailed, postage prepaid, to the
Borrower in accordance with the notice provisions of Section 11.02 of the Credit
Agreement at least 10 days before the time of sale or other event giving rise to
the requirement of such notice. Each Grantor further acknowledges and agrees
that any offer to sell any Pledged Equity which has been (A) publicly advertised
on a bona fide basis in a newspaper or other publication of general circulation
in the financial community of Los Angeles, California (to the extent that such
offer may be advertised without prior registration under the Securities Act of
1933), or (B) made privately in the manner described above shall be deemed to
involve a “public sale” under the UCC, notwithstanding that such sale may not
constitute a “public offering” under the Securities Act of 1933, and the
Administrative Agent may, in such event, bid for the purchase of such
securities. The Administrative Agent shall not be obligated to make any sale or
other disposition of the Collateral regardless of notice having been given. To
the extent permitted by applicable Law, any Secured Party may be a purchaser at
any such sale. To the extent permitted by applicable Law, each of the Grantors
hereby waives all of its rights of redemption with respect to any such sale.
Subject to the provisions of applicable Law, the Administrative Agent may
postpone or cause the postponement of the sale of all or any portion of the
Collateral by announcement at the time and place of such sale, and such sale
may, without further notice, to the extent permitted by Law, be made at the time
and place to which the sale was postponed, or the Administrative Agent may
further postpone such sale by announcement made at such time and place. To the
extent permitted by applicable Law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Secured Party
arising out of the exercise by them of any rights hereunder except to the extent
any such claims, damages or demands result solely from the gross negligence or
willful misconduct of the Administrative Agent or any other Secured Party as
determined by a final non-appealable judgment of a court of competent
jurisdiction, in each case against whom such claim is asserted. Each Grantor
agrees that the internet shall constitute a “place” for purposes of Section
9-610(b) of the UCC and that any sale of Collateral to a licensor pursuant to
the terms of a license agreement between such licensor and a Grantor is
sufficient to constitute a commercially reasonable sale (including as to method,
terms, manner, and time) within the meaning of Section 9-610 of the UCC.

 

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(b)           Remedies Relating to Accounts.

 

(i)       During the continuation of an Event of Default, whether or not the
Administrative Agent has exercised any or all of its rights and remedies
hereunder, (A) each Grantor shall, promptly following the Administrative Agent’s
written request, notify (such notice to be in form and substance satisfactory to
the Administrative Agent) its Account Debtors and parties to the Material
Contracts subject to a security interest hereunder that such Accounts and the
Material Contracts have been assigned to the Administrative Agent, for the
benefit of the Secured Parties and promptly upon written request of the
Administrative Agent, instruct all account debtors to remit all payments in
respect of Accounts to a mailing location selected by the Administrative Agent
and (B) the Administrative Agent shall have the right to enforce any Grantor’s
rights against its customers and account debtors, and the Administrative Agent
or its designee may notify any Grantor’s customers and account debtors that the
Accounts of such Grantor have been assigned to the Administrative Agent or of
the Administrative Agent’s security interest therein, and may (either in its own
name or in the name of a Grantor or both) demand, collect (including without
limitation by way of a lockbox arrangement), receive, take receipt for, sell,
sue for, compound, settle, compromise and give acquittance for any and all
amounts due or to become due on any Account, and, in the Administrative Agent’s
discretion, file any claim or take any other action or proceeding to protect and
realize upon the security interest of the Secured Parties in the Accounts.

 

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(ii)       Each Grantor acknowledges and agrees that the Proceeds of its
Accounts remitted to or on behalf of the Administrative Agent in accordance with
the provisions hereof shall be solely for the Administrative Agent’s own
convenience and that such Grantor shall not have any right, title or interest in
such Accounts or in any such other amounts except as expressly provided herein.
Neither the Administrative Agent nor the Secured Parties shall have any
liability or responsibility to any Grantor for acceptance of a check, draft or
other order for payment of money bearing the legend “payment in full” or words
of similar import or any other restrictive legend or endorsement or be
responsible for determining the correctness of any remittance.

 

(iii)       During the continuation of an Event of Default, (A) the
Administrative Agent shall have the right, but not the obligation, to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and the Grantors shall furnish all such
assistance and information as the Administrative Agent may require in connection
with such test verifications, (B) upon the Administrative Agent’s request and at
the expense of the Grantors, the Grantors shall cause independent public
accountants or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts and (C) the
Administrative Agent in its own name or in the name of others may communicate
with account debtors on the Accounts to verify with them to the Administrative
Agent’s satisfaction the existence, amount and terms of any Accounts.

 

(iv)       Upon the request of the Administrative Agent during the continuation
of an Event of Default, each Grantor shall forward to the Administrative Agent,
on the last Business Day of each week, deposit slips related to all cash, money,
checks or any other similar items of payment received by the Grantor during such
week, and, if requested by the Administrative Agent, copies of such checks or
any other similar items of payment, together with a statement showing the
application of all payments on the Collateral during such week and a collection
report with regard thereto, in form and substance satisfactory to the
Administrative Agent.

 

(c)           Deposit Accounts/Securities Accounts. Upon the occurrence of an
Event of Default and during continuation thereof, the Administrative Agent may
prevent withdrawals or other dispositions of funds in Deposit Accounts and
Securities Accounts subject to control agreements or held with any Secured
Party, in each case, except for any Excluded Accounts.

 

19 

 

 

(d)           Investment Property/Pledged Equity. Upon the occurrence of an
Event of Default and during the continuation thereof: the Administrative Agent
shall have the right to (but shall not be required to) receive any and all cash
dividends, payments or distributions made in respect of any Investment Property
or Pledged Equity or other Proceeds paid in respect of any Investment Property
or Pledged Equity, and any or all of any Investment Property or Pledged Equity
may, at the option of the Administrative Agent, be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (i) all voting, corporate and other rights pertaining to
such Investment Property, or any such Pledged Equity at any meeting of
shareholders, partners or members of the relevant Issuers or otherwise and (ii)
any and all rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such Investment Property or Pledged
Equity as if it were the absolute owner thereof (including, without limitation,
the right to exchange at its discretion any and all of the Investment Property
or Pledged Equity upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate, partnership or
limited liability company structure of any Issuer or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option pertaining
to such Investment Property or Pledged Equity, and in connection therewith, the
right to deposit and deliver any and all of the Investment Property or Pledged
Equity with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except to account for property actually
received by it; but the Administrative Agent shall have no duty to any Grantor
to exercise any such right, privilege or option and the Administrative Agent and
the other Secured Parties shall not be responsible for any failure to do so or
delay in so doing. In furtherance thereof, each Grantor hereby authorizes and
instructs each Issuer with respect to any Collateral consisting of Investment
Property and/or Pledged Equity to (A) comply with any instruction received by it
from the Administrative Agent in writing that (1) states that an Event of
Default has occurred and is continuing and (2) 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 following receipt of such notice and prior to notice that such Event
of Default is no longer continuing, and (B) except as otherwise expressly
permitted hereby, pay any dividends, distributions or other payments with
respect to any Investment Property or Pledged Equity directly to the
Administrative Agent. Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to the relevant
Grantor of the Administrative Agent’s intent to exercise its corresponding
rights pursuant to this Section 7, each Grantor shall be permitted to receive
all cash dividends, payments or other distributions made in respect of any
Investment Property and any Pledged Equity, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent permitted in the Credit Agreement, and to exercise all voting and
other corporate, company and partnership rights with respect to any Investment
Property and Pledged Equity to the extent not inconsistent with the terms of
this Agreement and the other Loan Documents.

 

(e)           Material Contracts. Upon the occurrence of an Event of Default and
during the continuation thereof, the Administrative Agent shall be entitled to
(but shall not be required to): (i) proceed to perform any and all obligations
of the applicable Grantor under any Material Contract and exercise all rights of
such Grantor thereunder as fully as such Grantor itself could, (ii) do all other
acts which the Administrative Agent may deem necessary or proper to protect its
security interest granted hereunder, provided such acts are not inconsistent
with or in violation of the terms of any of the Credit Agreement, of the other
Loan Documents or applicable Law, and (iii) sell, assign or otherwise transfer
any Material Contract in accordance with the Credit Agreement, the other Loan
Documents and applicable Law, subject, however, to the prior approval of each
other party to such Material Contract, to the extent required under such
Material Contract.

 

20 

 

 

(f)            Access. In addition to the rights and remedies hereunder, upon
the occurrence of an Event of Default and during the continuance thereof,
subject to (A) rights reserved to any landlord, warehouseman and/or bailee in an
agreement between such party and the Administrative Agent in all cases where
such types of agreements are executed in accordance with the terms of the Credit
Agreement and (B) rights of landlords, warehousemen and/or bailees, in all other
instances, the Administrative Agent shall have the right to enter and remain
upon the various premises of the Grantors without cost or charge to the
Administrative Agent, and use the same, together with materials, supplies, books
and records of the Grantors for the purpose of collecting and liquidating the
Collateral, or for preparing for sale and conducting the sale of the Collateral,
whether by foreclosure, auction or otherwise. In addition, subject to rights
reserved to any landlord, warehouseman or bailee in an agreement between such
party and the Administrative Agent, the Administrative Agent may remove
Collateral, or any part thereof, from such premises and/or any records with
respect thereto, in order to effectively collect or liquidate such Collateral.
If the Administrative Agent exercises its right to take possession of the
Collateral, each Grantor shall also at its expense perform any and all other
steps reasonably requested by the Administrative Agent to preserve and protect
the security interest hereby granted in the Collateral, such as placing and
maintaining signs indicating the security interest of the Administrative Agent,
appointing overseers for the Collateral and maintaining inventory records.

 

(g)       Nonexclusive Nature of Remedies. Failure by the Administrative Agent
or the Secured Parties to exercise any right, remedy or option under this
Agreement, any other Loan Document, any other document relating to the Secured
Obligations, or as provided by Law, or any delay by the Administrative Agent or
the Secured Parties in exercising the same, shall not operate as a waiver of any
such right, remedy or option. No waiver hereunder shall be effective unless it
is in writing, signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated, which in the case of
the Administrative Agent or the Secured Parties shall only be granted as
provided herein. To the extent permitted by Law, neither the Administrative
Agent, the Secured Parties, nor any party acting as attorney for the
Administrative Agent or the Secured Parties, shall be liable hereunder for any
acts or omissions or for any error of judgment or mistake of fact or law other
than their gross negligence or willful misconduct hereunder as determined by a
final non-appealable judgment of a court of competent jurisdiction. The rights
and remedies of the Administrative Agent and the Secured Parties under this
Agreement shall be cumulative and not exclusive of any other right or remedy
which the Administrative Agent or the Secured Parties may have.

 

(h)           Retention of Collateral. In addition to the rights and remedies
hereunder, the Administrative Agent may, in compliance with Sections 9-620 and
9-621 of the UCC or otherwise complying with the requirements of applicable Law
of the relevant jurisdiction, accept or retain the Collateral in satisfaction of
the Secured Obligations. Unless and until the Administrative Agent shall have
provided such notices, however, the Administrative Agent shall not be deemed to
have retained any Collateral in satisfaction of any Secured Obligations for any
reason.

 

21 

 

 

(i)            Waiver; Deficiency. Each Grantor hereby waives, to the extent
permitted by applicable Laws, all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any applicable
Laws in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof. In the event that the
proceeds of any sale, collection or realization are insufficient to pay all
amounts to which the Administrative Agent or the Secured Parties are legally
entitled, the Grantors shall be jointly and severally liable for the deficiency,
together with interest thereon at the Default Rate, together with the costs of
collection and the fees, charges and disbursements of counsel. Any surplus
remaining after the full payment and satisfaction of the Secured Obligations
shall be returned to the Grantors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.

 

(j)            Registration Rights.

 

(i)       If the Administrative Agent shall determine that in order to exercise
its right to sell any or all of the Collateral it is necessary or advisable to
have such Collateral registered under the provisions of the Securities Act (any
such Collateral, the “Restricted Securities Collateral”), the relevant Grantor
will cause each applicable Issuer (acting through the officers and directors
thereof) that is a Grantor or a Subsidiary of a Grantor to (A) execute and
deliver all such instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Administrative Agent, necessary or
advisable to register such Restricted Securities Collateral, or that portion
thereof to be sold, under the provisions of the Securities Act, (B) use its
commercially reasonable efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of such Restricted Securities
Collateral, or that portion thereof to be sold, and (C) make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause each applicable Issuer (acting through the officers and directors thereof)
to comply with the provisions of the securities or “Blue Sky” laws of any and
all jurisdictions which the Administrative Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of the Securities
Act.

 

(ii)       Each Grantor agrees to use its commercially reasonable efforts to do
or cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Restricted Securities Collateral valid and
binding and in compliance with any and all other applicable Laws. Each Grantor
further agrees that a breach of any of the covenants contained in this Section 7
will cause irreparable injury to the Administrative Agent and the other Secured
Parties, that the Administrative Agent and the other Secured Parties have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.

 

22 

 

 

8.             Rights of the Administrative Agent.

 

(a)            Power of Attorney. In addition to other powers of attorney
contained herein, each Grantor hereby designates and appoints the Administrative
Agent, on behalf of the Secured Parties, and each of its designees or agents, as
attorney-in-fact of such Grantor, irrevocably and with power of substitution,
with authority to take any or all of the following actions upon the occurrence
and during the continuance of an Event of Default:

 

(i)       to demand, collect, settle, compromise, adjust, give discharges and
releases, all as the Administrative Agent may reasonably determine;

 

(ii)       to commence and prosecute any actions at any court for the purposes
of collecting any Collateral and enforcing any other right in respect thereof;

 

(iii)       to defend, settle or compromise any action brought and, in
connection therewith, give such discharge or release as the Administrative Agent
may deem reasonably appropriate;

 

(iv)       to receive, open and dispose of mail addressed to a Grantor and
endorse checks, notes, drafts, acceptances, money orders, bills of lading,
warehouse receipts or other instruments or documents evidencing payment,
shipment or storage of the goods giving rise to the Collateral of such Grantor
on behalf of and in the name of such Grantor, or securing, or relating to such
Collateral;

 

(v)       to sell, assign, transfer, make any agreement in respect of, or
otherwise deal with or exercise rights in respect of, any Collateral or the
goods or services which have given rise thereto, as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes;

 

(vi)       to adjust and settle claims under any insurance policy relating to
any Collateral;

 

(vii)       to execute and deliver all assignments, conveyances, statements,
financing statements, continuation financing statements, security agreements,
affidavits, notices and other agreements, instruments and documents that the
Administrative Agent may determine necessary in order to perfect and maintain
the security interests and liens granted in this Agreement and in order to fully
consummate all of the transactions contemplated herein;

 

(viii)       to institute any foreclosure proceedings that the Administrative
Agent may deem appropriate;

 

(ix)       to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Collateral;

 

23 

 

 

(x)       to exchange any of the Pledged Equity or other property upon any
merger, consolidation, reorganization, recapitalization or other readjustment of
the Issuer thereof and, in connection therewith, deposit any of the Pledged
Equity with any committee, depository, transfer agent, registrar or other
designated agency upon such terms as the Administrative Agent may reasonably
deem appropriate;

 

(xi)       to vote for a shareholder resolution, or to sign an instrument in
writing, sanctioning the transfer of any or all of the Pledged Equity into the
name of the Administrative Agent or one or more of the Secured Parties or into
the name of any transferee to whom the Pledged Equity or any part thereof may be
sold pursuant to Section 7 hereof;

 

(xii)       to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral;

 

(xiii)       to direct any parties liable for any payment in connection with any
of the Collateral to make payment of any and all monies due and to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct;

 

(xiv)       to receive payment of and receipt for any and all monies, claims,
and other amounts due and to become due at any time in respect of or arising out
of any Collateral;

 

(xv)       in the case of any Intellectual Property, execute and deliver, and
have recorded, any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the security interests created
hereby in such Intellectual Property and the goodwill and General Intangibles of
such Grantor relating thereto or represented thereby; and

 

(xvi)       do and perform all such other acts and things as the Administrative
Agent may reasonably deem to be necessary, proper or convenient in connection
with the Collateral.

 

This power of attorney is a power coupled with an interest and shall be
irrevocable until the Facility Termination Date. The Administrative Agent shall
be under no duty to exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly granted to the
Administrative Agent in this Agreement, and shall not be liable for any failure
to do so or any delay in doing so. The Administrative Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of fact or
law in its individual capacity or its capacity as attorney-in-fact except acts
or omissions resulting from its gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction. This power of attorney is conferred on the Administrative Agent
solely to protect, preserve and realize upon its security interest in the
Collateral and shall not impose any duty upon the Administrative Agent or any
other Secured Party to exercise any such powers.

 

(b)           Assignment by the Administrative Agent. The Administrative Agent
may from time to time assign the Secured Obligations to a successor
Administrative Agent appointed in accordance with the Credit Agreement, and such
successor shall be entitled to all of the rights and remedies of the
Administrative Agent under this Agreement in relation thereto.

 

24 

 

 

(c)           The Administrative Agent’s Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the Collateral while being held
by the Administrative Agent hereunder, the Administrative Agent shall have no
duty or liability to preserve rights pertaining thereto, it being understood and
agreed that the Grantors shall be responsible for preservation of all rights in
the Collateral, and the Administrative Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Grantors. The Administrative Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Administrative Agent accords its own property, which shall be no
less than the treatment employed by a reasonable and prudent agent in the
industry, it being understood that the Administrative Agent shall not have
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any of the Collateral. In the event of a public or
private sale of Collateral pursuant to Section 7 hereof, the Administrative
Agent shall have no responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Collateral, whether or not the Administrative Agent has or is
deemed to have knowledge of such matters, or (ii) taking any steps to clean,
repair or otherwise prepare the Collateral for sale.

 

(d)           Liability with Respect to Accounts. Anything herein to the
contrary notwithstanding, each of the Grantors shall remain liable under each of
the Accounts 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 to each such Account. Neither the Administrative Agent nor
any Secured Party shall have any obligation or liability under any Account (or
any agreement giving rise thereto) by reason of or arising out of this Agreement
or the receipt by the Administrative Agent or any Secured Party of any payment
relating to such Account pursuant hereto, nor shall the Administrative Agent or
any Secured Party be obligated in any manner to perform any of the obligations
of a Grantor under or pursuant to any Account (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 under any Account (or any agreement giving rise
thereto), 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.

 

(e)            Releases of Collateral.

 

(i)       If any Collateral shall be sold, transferred or otherwise disposed of
by any Grantor in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Grantor, shall
promptly execute and deliver to such Grantor all releases and other documents,
and take such other action, reasonably necessary for the release of the Liens
created hereby or by any other Collateral Document on such Collateral.

 

(ii)       The Administrative Agent may release any of the Pledged Equity from
this Agreement or may substitute any of the Pledged Equity for other Pledged
Equity without altering, varying or diminishing in any way the force, effect,
lien, pledge or security interest of this Agreement as to any Pledged Equity not
expressly released or substituted, and this Agreement shall continue as a first
priority lien on all Pledged Equity not expressly released or substituted.

 

25 

 

 

9.             Application of Proceeds. After the exercise of remedies provided
for in Section 8.02 of the Credit Agreement (or after the Loans have
automatically become immediately due and payable as set forth in Section 8.02 of
the Credit Agreement) any payments in respect of the Secured Obligations and any
proceeds of the Collateral, when received by the Administrative Agent or any
Secured Party in cash or Cash Equivalents will be applied in reduction of the
Secured Obligations in the order set forth in the Credit Agreement.

 

10.           Continuing Agreement.

 

(a)          This Agreement shall remain in full force and effect until the
Facility Termination Date, at which time this Agreement shall be automatically
terminated (other than obligations under this Agreement which expressly survive
such termination) and the Administrative Agent shall, upon the request and at
the expense of the Grantors, forthwith release all of its liens and security
interests hereunder and shall execute and deliver all UCC termination statements
and/or other documents reasonably requested by the Grantors evidencing such
termination.

 

(b)           This Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Secured Party as a preference,
fraudulent conveyance or otherwise under any Debtor Relief Law, all as though
such payment had not been made; provided that in the event payment of all or any
part of the Secured Obligations is rescinded or must be restored or returned,
all reasonable and documented out-of-pocket costs and expenses (including
without limitation any reasonable legal fees and disbursements of outside
counsel to the extent reimbursable pursuant to Section 11.04 of the Credit
Agreement) incurred by the Administrative Agent or any Secured Party in
defending and enforcing such reinstatement shall be deemed to be included as a
part of the Secured Obligations.

 

11.           Amendments; Waivers; Modifications, etc. This Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 11.01 of the Credit Agreement.

 

12.           Successors in Interest. This Agreement shall be binding upon each
Grantor, its successors and assigns and shall inure, together with the rights
and remedies of the Administrative Agent and the Secured Parties hereunder, to
the benefit of the Administrative Agent and the Secured Parties and their
successors and permitted assigns.

 

13.          Notices. All notices required or permitted to be given under this
Agreement shall be in conformance with Section 11.02 of the Credit Agreement;
provided that notices and communications to the Grantors shall be directed to
the Grantors, at the address of the Borrowers set forth in Section 11.02 of the
Credit Agreement.

 

14.           Counterparts. This Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart. Delivery of an executed counterpart of a
signature page of this Agreement by fax transmission or other electronic mail
transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually
executed counterpart of this Agreement. Without limiting the foregoing, to the
extent a manually executed counterpart is not specifically required to be
delivered, upon the request of any party, such fax transmission or electronic
mail transmission shall be promptly followed by such manually executed
counterpart.

 

26 

 

 

15.           Headings. The headings of the sections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.

 

16.           Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY
TRIAL. The terms of Sections 11.14 and 11.15 of the Credit Agreement with
respect to governing law, submission to jurisdiction, venue and waiver of jury
trial are incorporated herein by reference, mutatis mutandis, and the parties
hereto agree to such terms.

 

17.           Severability. If any provision of this Agreement is determined to
be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

 

18.           Entirety. This Agreement, the other Loan Documents and the other
documents relating to the Secured Obligations represent the entire agreement of
the parties hereto and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Loan Documents, any other documents relating to
the Secured Obligations, or the transactions contemplated herein and therein.

 

19.           Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by a Grantor), or by a
guarantee, endorsement or property of any other Person, then the Administrative
Agent shall have the right to proceed against such other property, guarantee or
endorsement upon the occurrence of any Event of Default, and the Administrative
Agent shall have the right, in its sole discretion, to determine which rights,
security, liens, security interests or remedies the Administrative Agent shall
at any time pursue, relinquish, subordinate, modify or take with respect
thereto, without in any way modifying or affecting any of them or the Secured
Obligations or any of the rights of the Administrative Agent or the Secured
Parties under this Agreement, under any other of the Loan Documents or under any
other document relating to the Secured Obligations.

 

20.           Joinder. At any time after the date of this Agreement, one or more
additional Persons may become party hereto by executing and delivering to the
Administrative Agent a Joinder Agreement in the form of Exhibit D to the Credit
Agreement or such other form reasonably acceptable to the Administrative Agent.
Immediately upon such execution and delivery of such Joinder Agreement (and
without any further action), each such additional Person will become a party to
this Agreement as a “Grantor” and have all of the rights and obligations of a
Grantor hereunder and this Agreement and the schedules hereto shall be deemed
amended by such Joinder Agreement.

 

27 

 

 

21.           Consent of Issuers of Pledged Equity. Any Loan Party that is an
Issuer hereby acknowledges, consents and agrees to the grant of the security
interests in such Pledged Equity by the applicable Grantors pursuant to this
Agreement, together with all rights accompanying such security interest as
provided by this Agreement and applicable Law, notwithstanding any
anti-assignment provisions in any operating agreement, limited partnership
agreement or similar organizational or governance documents of such Issuer.

 

22.           Joint and Several Obligations of Grantors.

 

(a)       Each of the Grantors is accepting joint and several liability
hereunder in consideration of the financial accommodations to be provided by the
Lenders under the Credit Agreement, for the mutual benefit, directly and
indirectly, of each of the Grantors and in consideration of the undertakings of
each of the Grantors to accept joint and several liability for the obligations
of each of them.

 

(b)       Each of the Grantors jointly and severally hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a primary obligor,
joint and several liability with the other Grantors with respect to the payment
and performance of all of the Secured Obligations, it being the intention of the
parties hereto that (i) all the Secured Obligations shall be the joint and
several obligations of each of the Grantors without preferences or distinction
among them and (ii) a separate action may be brought against each Grantor to
enforce this Agreement whether or not the Borrower, any other Grantor or any
other person or entity is joined as a party.

 

(c)       Notwithstanding any provision to the contrary contained herein, in any
other of the Loan Documents, to the extent the obligations of a Grantor shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Grantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation,
Debtor Relief Laws).

 

23.           Marshaling. The Administrative Agent shall not be required to
marshal any present or future collateral security (including but not limited to
the Collateral) for, or other assurances of payment of, the Secured Obligations
or any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights and remedies, however existing
or arising. To the extent that it lawfully may, each Grantor hereby agrees that
it will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of the Administrative Agent’s rights
and remedies under this Agreement or under any other instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured
Obligations is outstanding or by which any of the Secured Obligations is secured
or payment thereof is otherwise assured, and, to the extent that it lawfully
may, each Grantor hereby irrevocably waives the benefits of all such laws.

 

28 

 

 

24.           Injunctive Relief.

 

(a)          Each Grantor recognizes that, in the event such Grantor fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement or any other Loan Document, any remedy of law may prove to be
inadequate relief to the Administrative Agent and the other Secured Parties.
Therefore, each Grantor agrees that the Administrative Agent and the other
Secured Parties, at the option of the Administrative Agent and the other Secured
Parties, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.

 

(b)            The Administrative Agent, the other Secured Parties and each
Grantor hereby agree that no such Person shall have a remedy of punitive or
exemplary damages against any other party to a Loan Document and each such
Person hereby waives any right or claim to punitive or exemplary damages that
they may now have or may arise in the future in connection with any dispute
under this Agreement or any other Loan Document, whether such dispute is
resolved through arbitration or judicially.

 

25.           Secured Parties. Each Secured Party that is not a party to the
Credit Agreement who obtains the benefit of this Agreement shall be deemed to
have acknowledged and accepted the appointment of the Administrative Agent
pursuant to the terms of the Credit Agreement, and with respect to the actions
and omissions of the Administrative Agent hereunder or otherwise relating hereto
that do or may affect such Secured Party, the Administrative Agent and each of
its Affiliates shall be entitled to all of the rights, benefits and immunities
conferred under Article IX of the Credit Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

29 

 

 

Each of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

 

GRANTORS BRPI ACQUISITION CO LLC,
a Delaware limited liability company       By:     Name:     Title:  

 

 

  UNITED ONLINE, INC.,a Delaware corporation       By:     Name:     Title:  

 

 

  YMAX CORPORATION, a Delaware corporation       By:     Name:     Title:  

 

 

  NETZERO, INC., a Delaware corporation       By:     Name:     Title:  

 

 

  JUNO ONLINE SERVICES, INC., a Delaware corporation       By:     Name:    
Title:  

 

Security and Pledge Agreement

 

 

 

 

  JUNO INTERNET SERVICES, INC., a Delaware corporation       By:     Name:    
Title:  

 

 

  CLASSMATES MEDIA CORPORATION, a Delaware corporation       By:     Name:    
Title:  

 

  NETZERO MODECOM, INC., a Delaware corporation       By:     Name:     Title:  

 

 

  NETZERO WIRELESS, INC., a Delaware corporation       By:     Name:     Title:
 

 

 

  UNITED ONLINE ADVERTISING NETWORK, INC., a Delaware corporation       By:    
Name:     Title:  

 

Security and Pledge Agreement

 

 

 

 

  UNITED ONLINE WEB SERVICES, a Delaware corporation       By:     Name:    
Title:  

 

  MAGICJACK HOLDINGS CORPORATION, a Delaware corporation       By:     Name:    
Title:  

 

  BROADSMART HOLDING CO INC., a Delaware corporation       By:     Name:    
Title:  

 

  BROADSMART GLOBAL, INC., a Florida corporation       By:     Name:     Title:
 

 

  MAGICJACK LP, a Delaware limited partnership       By:     Name:     Title:  

 

Security and Pledge Agreement

 

 

 

 

 

  YMAX COMMUNICATIONS CORP. OF VIRGINIA, a Virginia corporation       By:    
Name:     Title:  

 

 

  MAGICJACK SMB, INC., a Florida corporation       By:     Name:     Title:  

 

 

  TIGER JET NETWORK, INC., a California corporation       By:     Name:    
Title:  

 

Accepted and agreed to as of the date first above written.

 

 

BANC OF CALIFORNIA, N.A.,

as Administrative Agent

  By:     Name:     Title:    

 

Security and Pledge Agreement

 

 

 

 

EXHIBIT A
[FORM OF]

IRREVOCABLE STOCK POWER

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
__________________ the following Equity Interests of [___________], a
[_________] [corporation] [limited liability company]:

 

No. of Shares Certificate No.

  

and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such Equity Interests and to
take all necessary and appropriate action to effect any such transfer. The agent
and attorney-in-fact may substitute and appoint one or more persons to act for
him.

                    By:       Name:       Title:    

  

A-1 

 

 

EXHIBIT  B
[FORM OF]
NOTICE OF
GRANT OF SECURITY INTEREST
IN COPYRIGHTS

 

[United States Copyright Office] [Canadian Intellectual Property Office]

 

Ladies and Gentlemen:

 

Please be advised that pursuant to the Security and Pledge Agreement dated as of
December 19, 2018 (as amended, modified, extended, restated, renewed, replaced,
or supplemented from time to time, the “Agreement”) by and among the Grantors
party thereto (each a “Grantor” and collectively, the “Grantors”) and Banc of
California, N.A., as administrative agent (the “Administrative Agent”) for the
Secured Parties referenced therein, the undersigned Grantor has granted a
continuing security interest in and continuing lien upon the copyrights and
copyright applications shown on Schedule 1, attached hereto, to the
Administrative Agent for the ratable benefit of the Secured Parties.

 

The undersigned Grantor and the Administrative Agent, on behalf of the Secured
Parties, hereby acknowledge and agree that the security interest in the
foregoing copyrights and copyright applications (a) may only be terminated in
accordance with the terms of the Agreement and (b) is not to be construed as an
assignment of any copyright or copyright application.

 

  Very truly yours,     [GRANTOR]     By:     Name:     Title:  

 

Acknowledged and Accepted:   BANC OF CALIFORNIA, N.A.,   as Administrative Agent
  By:   Name:   Title:  

 

B-1 

 

 

EXHIBIT  C
[FORM OF]
NOTICE OF
GRANT OF SECURITY INTEREST
IN PATENTS

 

[United States Patent and Trademark Office] [Canadian Intellectual Property
Office]

 

Ladies and Gentlemen:

 

Please be advised that pursuant to the Security and Pledge Agreement dated as of
December 19, 2018 (as amended, modified, extended, restated, renewed, replaced,
or supplemented from time to time, the “Agreement”) by and among the Grantors
party thereto (each a “Grantor” and collectively, the “Grantors”) and Banc of
California, N.A., as administrative agent (the “Administrative Agent”) for the
Secured Parties referenced therein, the undersigned Grantor has granted a
continuing security interest in and continuing lien upon the patents and patent
applications shown on Schedule 1, attached hereto, to the Administrative Agent
for the ratable benefit of the Secured Parties.

 

The undersigned Grantor and the Administrative Agent, on behalf of the Secured
Parties, hereby acknowledge and agree that the security interest in the
foregoing patents and patent applications (a) may only be terminated in
accordance with the terms of the Agreement and (b) is not to be construed as an
assignment of any patent or patent application.

 

  Very truly yours,     [GRANTOR]     By:     Name:     Title:  

 

Acknowledged and Accepted:   BANC OF CALIFORNIA, N.A.,   as Administrative Agent
  By:   Name:   Title:  

 

C-1 

 

 

EXHIBIT  D
[FORM OF]
NOTICE OF
GRANT OF SECURITY INTEREST
IN TRADEMARKS

 

[United States Patent and Trademark Office] [Canadian Intellectual Property
Office]

 

Ladies and Gentlemen:

 

Please be advised that pursuant to the Security and Pledge Agreement dated as of
December 19, 2018 (as amended, modified, extended, restated, renewed, replaced,
or supplemented from time to time, the “Agreement”) and among the Grantors party
thereto (each a “Grantor” and collectively, the “Grantors”) and Banc of
California, N.A., as administrative agent (the “Administrative Agent”) for the
Secured Parties referenced therein, the undersigned Grantor has granted a
continuing security interest in and continuing lien upon the trademarks and
trademark applications shown on Schedule 1, attached hereto, to the
Administrative Agent for the ratable benefit of the Secured Parties.

 

The undersigned Grantor and the Administrative Agent, on behalf of the Secured
Parties, hereby acknowledge and agree that the security interest in the
foregoing trademarks and trademark applications (a) may only be terminated in
accordance with the terms of the Agreement and (b) is not to be construed as an
assignment of any trademark or trademark application.

 

  Very truly yours,     [GRANTOR]     By:     Name:     Title:  

 

Acknowledged and Accepted:   BANC OF CALIFORNIA, N.A.,   as Administrative Agent
  By:   Name:   Title:  

 

D-1