Exhibit 10.67

 

EXECUTION VERSION


 



 

FIRST LIEN GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

EACH OF THE GRANTORS PARTY HERETO

 

in favor of

 

BARCLAYS BANK PLC,
 as Collateral Agent

 

Dated as of February 7, 2014


 



 











 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1.
    	
DEFINED TERMS
    	
1
    
	
 
    	
 
    	
 
    
	
1.1
    	
Definitions
    	
1
    
	
1.2
    	
Other Definitional   Provisions
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
GUARANTEE
    	
4
    
	
 
    	
 
    	
 
    
	
2.1
    	
Guarantee
    	
4
    
	
2.2
    	
Right of Contribution
    	
5
    
	
2.3
    	
No Subrogation
    	
5
    
	
2.4
    	
Amendments, Etc. with Respect to the Guaranteed Obligations
    	
6
    
	
2.5
    	
Guarantee Absolute and   Unconditional
    	
6
    
	
2.6
    	
Reinstatement
    	
8
    
	
2.7
    	
Payments
    	
8
    
	
2.8
    	
Information
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
GRANT OF SECURITY INTEREST
    	
8
    
	
 
    	
 
    	
 
    
	
3.1
    	
Grant of Security Interests
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
REPRESENTATIONS AND   WARRANTIES
    	
9
    
	
 
    	
 
    	
 
    
	
4.1
    	
Representations in Credit Agreement
    	
9
    
	
4.2
    	
Title; No Other Liens
    	
9
    
	
4.3
    	
Names; Jurisdiction of   Organization; Chief Executive Office
    	
10
    
	
4.4
    	
Pledged Securities
    	
10
    
	
4.5
    	
Pledged Notes
    	
10
    
	
4.6
    	
Intellectual Property
    	
10
    
	
4.7
    	
Commercial Tort Claims
    	
10
    
	
4.8
    	
Deposit   Accounts; Securities Accounts and   Commodity Accounts
    	
10
    
	
4.9
    	
Specific   Collateral
    	
11
    
	
4.10
    	
Perfection   and Priority
    	
11
    
	
4.11
    	
Enforcement
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
COVENANTS
    	
11
    
	
 
    	
 
    	
 
    
	
5.1
    	
Covenants in Credit   Agreement
    	
11
    
	
5.2
    	
Investment Property
    	
11
    
	
5.3
    	
Commercial Tort Claims
    	
11
    
	
5.4
    	
Maintenance of Perfected   Security Interest; Defense of Claims
    	
12
    
	
5.5
    	
Delivery   of Instruments and Tangible Chattel Paper and Control of Investment Property,   Letter-of-Credit Rights and Electronic Chattel Paper
    	
12
    
	
5.6
    	
Deposit   Accounts, Securities Accounts and Commodity Accounts
    	
13
    
	
5.7
    	
Intellectual Property
    	
13
    
	
5.8
    	
Maintenance   of Perfected Security Interest; Further Documentation and Consents
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
REMEDIAL PROVISIONS
    	
14
    
	
 
    	
 
    	
 
    
	
6.1
    	
Certain Matters Relating to   Receivables
    	
14
    
	
6.2
    	
Communications with Grantors;   Grantors Remain Liable
    	
15
    


 

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TABLE OF CONTENTS

(con’t)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
6.3
    	
Pledged Securities; Dividends
    	
15
    
	
6.4
    	
Intellectual Property
    	
16
    
	
6.5
    	
Proceeds to be Turned Over   To Collateral Agent
    	
17
    
	
6.6
    	
Application of Proceeds
    	
17
    
	
6.7
    	
Code and Other Remedies
    	
17
    
	
6.8
    	
Private Sales
    	
20
    
	
6.9
    	
Deficiency
    	
20
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
THE COLLATERAL AGENT
    	
20
    
	
 
    	
 
    	
 
    
	
7.1
    	
Collateral Agent’s   Appointment as Attorney-in-Fact, etc.
    	
20
    
	
7.2
    	
Duty of Collateral Agent
    	
21
    
	
7.3
    	
Authorization of Financing Statements
    	
22
    
	
7.4
    	
Authority of Collateral   Agent
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
MISCELLANEOUS
    	
22
    
	
 
    	
 
    	
 
    
	
8.1
    	
Amendments in Writing
    	
22
    
	
8.2
    	
Notices
    	
23
    
	
8.3
    	
No Waiver by Course of   Conduct; Cumulative Remedies
    	
23
    
	
8.4
    	
Enforcement Expenses;   Indemnification
    	
23
    
	
8.5
    	
Successors and Assigns
    	
23
    
	
8.6
    	
Set-Off
    	
23
    
	
8.7
    	
Counterparts
    	
24
    
	
8.8
    	
Severability
    	
24
    
	
8.9
    	
Section Headings
    	
24
    
	
8.10
    	
Integration
    	
24
    
	
8.11
    	
Governing Law; Jurisdiction;   Etc.
    	
24
    
	
8.12
    	
Acknowledgements
    	
25
    
	
8.13
    	
Additional Grantors
    	
25
    
	
8.14
    	
Releases
    	
25
    
	
8.15
    	
WAIVER OF JURY TRIAL
    	
26
    
	
8.16
    	
Reinstatement
    	
26
    
	
8.17
    	
Independent   Obligations
    	
26
    
	
8.18
    	
Intercreditor Agreement   Governs
    	
26
    


 

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TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
SCHEDULES
    	
 
    	
 
    
	
Schedule 1
    	
Notice Addresses
    	
 
    
	
Schedule 2
    	
Investment Property
    	
 
    
	
Schedule 3
    	
Legal Name, Jurisdictions of Organization and   Organizational Identification Number
    	
 
    
	
Schedule 4(a)
    	
Intellectual Property
    	
 
    
	
Schedule 4(b)
    	
License Arrangements and Agreements
    	
 
    
	
Schedule 5
    	
Commercial Tort Claims
    	
 
    
	
Schedule 6
    	
Deposit Accounts; Securities Accounts; Commodity Accounts
    	
 
    
	
Schedule 7
    	
Perfection and   Priority
    	
 
    
	
 
    	
 
    	
 
    
	
ANNEXES
    	
 
    	
 
    
	
Annex I
    	
Assumption Agreement
    	
 
    


 

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FIRST LIEN GUARANTEE AND COLLATERAL AGREEMENT

 

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

 

W I T N E S S E T H:

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 1.                            DEFINED TERMS

 

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

 

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

 











 

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

 

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

 

“Additional Grantors”: as defined in Section 8.13.

 

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

 

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

 

“Borrower”: as defined in the preamble hereto.

 

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

 

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

 

“Collateral”:  as defined in Section 3.1.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Lenders”:  as defined in the preamble hereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 2.                            GUARANTEE

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 3.                            GRANT OF SECURITY INTEREST

 

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

 

(a)  all Accounts;

 

(b)  all Chattel Paper;

 

(c)  all cash and Cash Equivalents;

 

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

 

(e)  all Documents;

 

(f)  all Equipment;

 

(g)  all Fixtures;

 

(h)  all General Intangibles;

 

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

 

(j)  all Instruments, including the Pledged Notes;

 

(k)  all Pledged Stock;

 

(l)  all Intellectual Property;

 

(m)  all Inventory;

 

(n)  all Investment Property;

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 4.                            REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.6                               Intellectual Property.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 5.                            COVENANTS

 

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

 

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

 

5.2                               Investment Property.  (a) [Reserved].

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.7                               Intellectual Property.  Each Grantor agrees that:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 6.                            REMEDIAL PROVISIONS

 

6.1                               Certain Matters Relating to Receivables.

 

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

 

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

 

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

 

6.2                               Communications with Grantors; Grantors Remain Liable.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.4                               Intellectual Property.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 7.                            THE COLLATERAL AGENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

SECTION 8.                            MISCELLANEOUS

 

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

 

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

 

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

 

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

 

8.5                               Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Collateral Agent and the other Secured Parties and their successors and permitted assigns; provided, that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Collateral Agent (it being understood that Sales and fundamental changes permitted under the Credit Agreement shall not be subject to this proviso).

 

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

 

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

 

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

 

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

 

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

 

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

 

8.11                        Governing Law; Jurisdiction; Etc.

 

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

 

(b)                                 Jurisdiction.  Each Grantor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or tort or otherwise, against the Collateral Agent, any other Secured Party, any Related Party of any of the foregoing, in any way relating to this Agreement or the transactions relating hereto or thereto, in a forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable Law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.  Nothing in this Agreement or in any other Loan Document shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or its properties in the courts of any jurisdiction.

 

(c)                                  Waiver of Venue.  Each Grantor irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) above.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

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(d)                                 Service of Process.  Each party hereto irrevocably and unconditionally consents to service of process in the manner provided for notices in Section 9.01 of the Credit Agreement.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Law.

 

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

 

8.12                        Acknowledgements.  Each Grantor hereby acknowledges that:

 

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

 

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

 

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

 

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

 

8.14                        Releases.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(Signature Pages Follow)

 

26









 

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

 

	
 
    	
SFX   ENTERTAINMENT, INC.
    
	
 
    	
430   ACQUISITION LLC
    
	
 
    	
430R   ACQUISITION LLC
    
	
 
    	
BEATPORT   JAPAN, LLC
    
	
 
    	
BEATPORT,   LLC
    
	
 
    	
EZ FESTIVALS,   LLC
    
	
 
    	
ID&T/SFX   MYSTERYLAND LLC
    
	
 
    	
ID&T/SFX   NORTH AMERICA LLC
    
	
 
    	
ID&T/SFX   Q-DANCE LLC
    
	
 
    	
ID&T/SFX   SENSATION LLC
    
	
 
    	
ID&T/SFX   TOMORROWWORLD LLC
    
	
 
    	
MADE   EVENT, LLC
    
	
 
    	
MICHIGAN   JJ HOLDINGS LLC
    
	
 
    	
PITA   I LLC
    
	
 
    	
PITA   III LLC
    
	
 
    	
SFX   ACQUISITION, LLC
    
	
 
    	
SFX   EDM HOLDINGS CORPORATION
    
	
 
    	
SFX   EX IP LLC
    
	
 
    	
SFX   EXPERIENCE, LLC
    
	
 
    	
SFX   INTERMEDIATE HOLDCO I LLC
    
	
 
    	
SFX   INTERMEDIATE HOLDCO II LLC
    
	
 
    	
SFX   INTERNATIONAL, INC.
    
	
 
    	
SFX   IP LLC
    
	
 
    	
SFX   MADE IP LLC
    
	
 
    	
SFX   MARKETING LLC
    
	
 
    	
SFX   NIGHTLIFE TELEVISION LLC
    
	
 
    	
SFX-320   LINCOLN OPERATING LLC
    
	
 
    	
SFX-CAMEO   OPERATING LLC
    
	
 
    	
SFX-DISCO   INTERMEDIATE HOLDCO LLC
    
	
 
    	
SFX-DISCO   OPERATING LLC
    
	
 
    	
SFXE   IP LLC
    
	
 
    	
SFX-HUDSON   LLC
    
	
 
    	
SFX-HUKA   OPERATING LLC
    
	
 
    	
SFX-IDT   N.A. HOLDING II LLC
    
	
 
    	
SFX-IDT   N.A. HOLDING LLC
    
	
 
    	
SFX-LIC   OPERATING LLC
    
	
 
    	
SFX-MOKAI   OPERATING LLC
    
	
 
    	
SFX-NIGHTLIFE   OPERATING LLC
    
	
 
    	
SFX-OPIUM   GROUP OPERATING LLC
    
	
 
    	
SFX-REACT   OPERATING LLC
    
	
 
    	
SFX-STAR   ISLAND OPERATING LLC
    
	
 
    	
SFX-VMX   HOLDING LLC
    
	
 
    	
SFX-VMX   OPERATING LLC
    
	
 
    	
STEREOSONIC   US IP LLC
    
	
 
    	
 
    
	
 
    	
By
    	
/s/   Richard Rosenstein
    
	
 
    	
Name:
    	
Richard   Rosenstein
    
	
 
    	
Title:
    	
Chief   Financial Officer
    


 

First Lien Guarantee and Collateral Agreement

 











 

	
 
    	
BARCLAYS BANK PLC, as Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Craig Malloy
    
	
 
    	
Name:
    	
Craig Malloy
    
	
 
    	
Title:
    	
Director
    


 

First Lien Guarantee and Collateral Agreement

 











 

Annex I to
 First Lien Guarantee and Collateral Agreement

 

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

 

W I T N E S S E T H :

 

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

 

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

 

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

 

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

 

NOW, THEREFORE, IT IS AGREED:

 

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

 

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

 

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

 











 

	
 
    	
[ADDITIONAL GRANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    


 

2











 

Annex I-A to
  Assumption Agreement

 

Supplement to Schedule 1

 

Supplement to Schedule 2

 

Supplement to Schedule 3

 

Supplement to Schedule 4(a)

 

Supplement to Schedule 4(b)

 

Supplement to Schedule 5

 

Supplement to Schedule 6

 

Supplement to Schedule 7