Document:

Exhibit 10.13

 

EXECUTION VERSION

 

ASSET CONTRIBUTION AGREEMENT

 

by and among

 

SFX HOLDING CORPORATION,

 

SFX-NIGHTLIFE OPERATING LLC,

 

NIGHTLIFE HOLDINGS LLC,

 

MMG NIGHTLIFE LLC,

 

US NIGHTLIFE MANAGEMENT LLC,

 

PUNTA CANA VENUE LLC,

 

DAVE GRUTMAN, INC.,

 

SEBU CORP.,

 

BRIAN GORDON,

 

DAVID GRUTMAN

 

and

 

WORLD ON A STRING LLC

 

dated as of November 21, 2012

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1 DEFINITIONS
    	
2
    
	
 
    	
 
    
	
ARTICLE 2 CONTRIBUTION
    	
14
    
	
 
    	
 
    
	
2.1
    	
Contribution of Transferred Assets
    	
14
    
	
2.2
    	
Assumption of Liabilities
    	
16
    
	
2.3
    	
Excluded Assets
    	
16
    
	
2.4
    	
Retained Liabilities
    	
17
    
	
2.5
    	
Consideration
    	
17
    
	
2.6
    	
Tax Treatment; Allocation of Consideration
    	
17
    
	
2.7
    	
Withholding Rights
    	
18
    
	
2.8
    	
Earn-Out
    	
19
    
	
2.9
    	
Call/Put For Nightlife’s 20% Interest in Acquiror
    	
21
    
	
2.10
    	
Pre-Closing and Post-Closing Adjustment of Consideration
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE 3 REPRESENTATIONS   AND WARRANTIES OF TRANSFEROR PARTIES
    	
25
    
	
 
    	
 
    	
 
    
	
3.1
    	
Limited Liability Company Existence
    	
25
    
	
3.2
    	
Authorization
    	
25
    
	
3.3
    	
Capital Structure
    	
26
    
	
3.4
    	
Governmental Authorization
    	
26
    
	
3.5
    	
Non-Contravention
    	
26
    
	
3.6
    	
Ownership and Absence of Liens
    	
27
    
	
3.7
    	
Sufficiency of the Transferred Assets
    	
27
    
	
3.8
    	
Litigation
    	
27
    
	
3.9
    	
Contracts
    	
27
    
	
3.10
    	
Permits; No Required Consents
    	
28
    
	
3.11
    	
Compliance with Applicable Laws
    	
28
    
	
3.12
    	
Intellectual Property
    	
28
    
	
3.13
    	
Advisory Fees
    	
31
    
	
3.14
    	
Taxes
    	
31
    
	
3.15
    	
Financial Statements
    	
32
    
	
3.16
    	
Absence of Liabilities, Changes and Events
    	
32
    
	
3.17
    	
Operation of the Business
    	
32
    
	
3.18
    	
Employment and Labor Matters
    	
33
    
	
3.19
    	
Employee Benefit Matters
    	
33
    
	
3.20
    	
Insurance
    	
35
    
	
3.21
    	
Real Property
    	
35
    
	
3.22
    	
Books and Records
    	
35
    
	
3.23
    	
Solvency
    	
35
    
	
3.24
    	
No Other Agreements to Sell the Transferred Assets or   Transferor Interests
    	
36
    
	
3.25
    	
Affiliates
    	
36
    

 

 

	
3.26
    	
Securities Law Matters
    	
36
    
	
3.27
    	
Legends
    	
36
    
	
3.28
    	
Restricted Securities
    	
37
    
	
3.29
    	
Access to Information
    	
37
    
	
3.30
    	
Reliance Upon Representations
    	
37
    
	
3.31
    	
Exculpation
    	
38
    
	
3.32
    	
Material Misstatements Or Omissions
    	
38
    
	
 
    	
 
    	
 
    
	
ARTICLE 4 REPRESENTATIONS   AND WARRANTIES OF THE ACQUIRING PARTIES
    	
38
    
	
 
    	
 
    
	
4.1
    	
Corporate Existence and Power
    	
38
    
	
4.2
    	
Capital Structure
    	
39
    
	
4.3
    	
Authorization
    	
39
    
	
4.4
    	
Governmental Authorization, Other Consents
    	
40
    
	
4.5
    	
Litigation
    	
40
    
	
4.6
    	
Non-Contravention
    	
40
    
	
4.7
    	
[Intentionally omitted]
    	
40
    
	
4.8
    	
[Intentionally omitted]
    	
40
    
	
4.9
    	
Absence of Undisclosed Liabilities
    	
40
    
	
4.10
    	
Restrictions on Business Activities
    	
40
    
	
4.11
    	
Title to Property/Leases
    	
40
    
	
4.12
    	
Taxes
    	
41
    
	
4.13
    	
Employee Benefit Plans
    	
41
    
	
4.14
    	
Labor Matters
    	
41
    
	
4.15
    	
Compliance With Laws
    	
41
    
	
4.16
    	
No Material Misstatements or Omissions
    	
41
    
	
4.17
    	
No Other Representations and Warranties
    	
41
    
	
 
    	
 
    
	
ARTICLE 5 COVENANTS OF THE   PARTIES
    	
42
    
	
 
    	
 
    
	
5.1
    	
Further Assurances
    	
42
    
	
5.2
    	
Certain Filings
    	
42
    
	
5.3
    	
Public Announcements; Confidentiality
    	
42
    
	
5.4
    	
Offer of Employment
    	
43
    
	
5.5
    	
Assignment of Contracts and Claims
    	
43
    
	
5.6
    	
Third Party Notification
    	
44
    
	
5.7
    	
Non-Solicitation
    	
44
    
	
5.8
    	
Non-Competition
    	
45
    
	
5.9
    	
Business Examinations and Physical Investigations of   Transferred Assets
    	
46
    
	
5.10
    	
Required Consents
    	
46
    
	
5.11
    	
Conduct of the Business
    	
47
    
	
5.12
    	
No Solicitation or Negotiation
    	
48
    
	
5.13
    	
Satisfaction of Obligations to Creditors
    	
49
    
	
5.14
    	
Access to Information
    	
49
    
	
5.15
    	
Parent SEC Documents
    	
50
    

 

ii

 

	
ARTICLE 6 CONDITIONS TO THE   TRANSFEROR PARTIES’ OBLIGATIONS
    	
51
    
	
 
    	
 
    
	
6.1
    	
Representations, Warranties and Covenants
    	
51
    
	
6.2
    	
Governmental Authorizations; Regulatory Compliance
    	
51
    
	
6.3
    	
Required Consents
    	
51
    
	
6.4
    	
Amendments and/or Waivers to Transferred Contracts
    	
52
    
	
6.5
    	
No Injunction, etc.
    	
52
    
	
6.6
    	
Transaction Documents
    	
52
    
	
6.7
    	
Employment Agreement
    	
52
    
	
6.8
    	
Designated Employees
    	
52
    
	
6.9
    	
Audited Financial Statements
    	
52
    
	
6.10
    	
Corporate Authorizations
    	
52
    
	
6.11
    	
No Material Adverse Effect
    	
52
    
	
 
    	
 
    
	
ARTICLE 7 CONDITIONS TO THE   TRANSFEROR PARTIES’ OBLIGATIONS
    	
52
    
	
 
    	
 
    
	
7.1
    	
Representations, Warranties and Covenants
    	
53
    
	
7.2
    	
No Injunction, etc.
    	
53
    
	
7.3
    	
Transaction Documents
    	
53
    
	
 
    	
 
    
	
ARTICLE 8 CLOSING
    	
53
    
	
 
    	
 
    
	
8.1
    	
Closing Date
    	
53
    
	
8.2
    	
Closing Deliveries
    	
53
    
	
 
    	
 
    
	
ARTICLE 9 INDEMNIFICATION
    	
54
    
	
 
    	
 
    
	
9.1
    	
Transferor Parties’ Agreement to Indemnify
    	
54
    
	
9.2
    	
Acquiring Parties’ Agreement to Indemnify
    	
55
    
	
9.3
    	
Limitations on Duties to Indemnify
    	
55
    
	
9.4
    	
Survival of Representations, Warranties and Covenants
    	
56
    
	
9.5
    	
Claims for Indemnification
    	
56
    
	
9.6
    	
Defense of Claims
    	
57
    
	
9.7
    	
Nature of Payments
    	
57
    
	
9.8
    	
Exclusive Remedy
    	
58
    
	
9.9
    	
Acquiring Parties’ Right of Offset
    	
58
    
	
9.10
    	
[Intentionally omitted]
    	
58
    
	
9.11
    	
Miscellaneous Indemnity Provisions
    	
58
    
	
9.12
    	
Property Taxes
    	
58
    
	
9.13
    	
Transfer and Sales Tax Returns
    	
59
    
	
 
    	
 
    
	
ARTICLE 10 TERMINATION
    	
59
    
	
 
    	
 
    
	
10.1
    	
Termination Prior to Closing
    	
59
    
	
10.2
    	
Effect of Termination
    	
60
    
	
 
    	
 
    	
 
    
	
ARTICLE 11 MISCELLANEOUS
    	
60
    

 

iii

 

	
11.1
    	
Notices
    	
60
    
	
11.2
    	
Amendments; No Waivers
    	
61
    
	
11.3
    	
Expenses
    	
61
    
	
11.4
    	
Successors and Assigns
    	
61
    
	
11.5
    	
Governing Law
    	
61
    
	
11.6
    	
Consent to Jurisdiction; Venue; Service of Process
    	
61
    
	
11.7
    	
Waiver of Jury Trial
    	
62
    
	
11.8
    	
Counterparts; Effectiveness
    	
62
    
	
11.9
    	
Entire Agreement
    	
62
    
	
11.10
    	
Titles and Headings; Construction
    	
62
    
	
11.11
    	
Severability
    	
62
    
	
11.12
    	
No Third Party Beneficiaries
    	
63
    
	
11.13
    	
Specific Performance
    	
63
    

 

EXHIBITS

 

	
A
    	
Amended and Restated LLC Operating Agreement
    	
 
    
	
 
    	
 
    	
 
    
	
B
    	
Assignment and Assumption Agreement
    	
 
    
	
 
    	
 
    	
 
    
	
C
    	
Lockup Agreement
    	
 
    
	
 
    	
 
    	
 
    
	
D
    	
Registration Rights Agreement
    	
 
    
	
 
    	
 
    	
 
    
	
E
    	
Employment Agreement
    	
 
    
	
 
    	
 
    	
 
    
	
F
    	
Consulting Agreement
    	
 
    

 

iv

 

ASSET CONTRIBUTION AGREEMENT

 

This Asset Contribution Agreement (this “Agreement”) is dated as of November 21, 2012, by and among SFX Holding Corporation, a Delaware corporation (“Parent”), SFX-NIGHTLIFE OPERATING LLC, a Delaware limited liability company wholly owned by Parent (“Acquiror”, and together with Parent, the “Acquiring Parties”), NIGHTLIFE HOLDINGS LLC, a Florida limited liability company (“Nightlife”), MMG NIGHTLIFE LLC, a Florida limited liability company and a wholly owned subsidiary of Nightlife (“MMG”), PUNTA CANA VENUE LLC, a Delaware limited liability company and a wholly owned subsidiary of Nightlife (“Punta Cana”), US NIGHTLIFE MANAGEMENT LLC, a Florida limited liability company and a wholly owned subsidiary of Nightlife (“US Nightlife”),  DAVID GRUTMAN, INC., a Florida corporation and a member of Nightlife (“Grutman Inc.”), SEBU CORP., a Florida corporation and a member of Nightlife (“SEBU”), DAVE GRUTMAN, an individual resident of Florida  and sole stockholder of Grutman Inc. (“Grutman”), BRIAN GORDON, an individual resident of Florida and sole stockholder of SEBU (“Gordon”), and World on a String LLC, a New Jersey limited liability company and a member of Nightlife (“WOS” and, together with SEBU, Grutman Inc., Grutman and Gordon, the “Members”).  Nightlife, MMG, Punta Cana and US Nightlife are collectively referred to herein as the “Transferors” and each a “Transferor”.  The Members and the Transferors are collectively referred to herein as the “Transferor Parties”.  The Acquiring Parties and the Transferor Parties are collectively referred to herein as the “Parties” and each a “Party”.

 

WHEREAS, the Transferors are engaged in the business of nightlife operations and management (the “Business”);

 

WHEREAS, (i) the Transferor Parties desire to contribute to Acquiror all of the Transferred Assets for the consideration and on the terms and subject to the conditions set forth herein, and (ii) Acquiror desires to acquire all of the Transferred Assets from the Transferor Parties for the consideration and on the terms and subject to the conditions set forth herein;

 

WHEREAS, as part of an overall plan (the “Plan”) to enter into this Agreement and the Other Contribution Agreements, SFX Entertainment Inc. (“SFX”) entered into an exchange agreement with Parent (the “Exchange Agreement”), pursuant to which the stockholders of SFX, on the terms and subject to the conditions set forth therein, contributed all outstanding shares of common stock, par value $0.01 per share, of SFX to Parent in exchange for shares of common stock, par value $0.001 per share, of Parent (“Parent Common Stock”), with SFX continuing as a wholly owned Subsidiary of Parent (the “Exchange”);

 

WHEREAS, as part of the Plan, Parent and certain wholly owned limited liability company Subsidiaries of Parent entered into one or more contribution agreements (each, an “Other Contribution Agreement”) with one or more other individuals or entities engaged in businesses that are synergistic with those of Parent and the Transferors (the “Other Parties”), pursuant to which a wholly owned limited liability company Subsidiary of Parent will, on the terms and subject to the conditions set forth therein, acquire certain assets and assume certain liabilities thereof with a view to combining and expanding the overall business activities of Parent, the Transferors and the Other Parties in the field of live entertainment; and

 

 

WHEREAS, the parties to the Transaction Documents and each of the parties to the Other Contribution Agreements intend to consummate the transactions contemplated thereby in accordance with the Plan such that the transactions contemplated by the Transaction Documents and the Other Contribution Agreements will qualify as a tax-free exchange transaction pursuant to Section 351 of the Code to the extent that the Consideration and the consideration payable to the Other Parties is paid in Parent Common Stock.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

The following terms, as used herein, have the following meanings:

 

“Accounting Firm” means an independent auditor of recognized national standing jointly selected by Parent and Nightlife.

 

“Accredited Investor Representations” has the meaning ascribed to it in Section 3.30.

 

“Acquiror” has the meaning ascribed to it in the introduction to this Agreement.

 

“Acquiring Party Indemnitees” has the meaning ascribed to it in Section 9.1.

 

“Acquiring Parties” has the meaning ascribed to it in the introduction to this Agreement.

 

“Actions” means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

 

“Adjustment Amount” has the meaning ascribed to it in Section 2.10(a).

 

“Affiliate” means, with respect to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, the specified Person. For purposes of this definition, the term “control” (including the terms “controlling,” “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.  With respect to any determination herein that a Person is an Affiliate of a Transferor, the Acquiring Parties are relying solely on the representations, warranties and other information provided to them by the Transferor Parties.

 

“Agreement” has the meaning ascribed to it in the introduction to this Agreement.

 

“Allocation” has the meaning ascribed to it in Section 2.6(b).

 

2

 

“Amended and Restated LLC Operating Agreement” means an Amended and Restated Limited Liability Company Operating Agreement of Acquiror substantially in the form attached hereto as Exhibit A.

 

“Applicable Law” means any domestic or foreign, federal, state or local statute, law, common law, ordinance, binding policy, binding guidance, rule, administrative interpretation, regulation, order, writ, injunction, directive, judgment, decree, permit or other requirement of any Governmental Authority applicable to the Transferor Parties, the Business or the transactions contemplated hereby.

 

“Assignment and Assumption Agreement” means that certain Assignment and Assumption Agreement substantially in the form attached hereto as Exhibit B.

 

“Assumed Liability” or “Assumed Liabilities” has the meaning ascribed to it in Section 2.2.

 

“Balance Sheet Rules” means, collectively, the accounting principles, methods and practices used in preparing the MMG Audited Financial Statements, applied on a consistent basis and in accordance with GAAP.

 

“Business” has the meaning ascribed to it in the introduction to this Agreement.

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

“Business Net Income” means, for the applicable fiscal period, total revenues minus total expenses, in each case, of a Transferor, Parent or any Affiliate of Parent (including Acquiror) that is directly or indirectly attributable to the conduct of the Business by the Transferors, Parent or any Affiliate of Parent (including Acquiror), determined in conformity with GAAP.

 

“Call/Put Average Per Share Price” means the volume-weighted average closing price per share of Parent Common Stock as reported on any national securities exchange or the over-the-counter-bulletin board for the thirty (30) consecutive trading-day period ending on the second (2nd) trading day immediately prior to the Call/Put Exercise Date (rounded down to the nearest whole share) or if shares of Parent Common Stock are not listed on any national securities exchange or traded on the over-the-counter-bulletin board, the price per share of Parent Common Stock as determined in good faith by the Parent Board.

 

“Call/Put Consideration” has the meaning ascribed to it in Section 2.9(b).

 

“Call/Put Consideration Objection Notice” has the meaning ascribed to it in Section 2.9(e).

 

“Call/Put Consideration Statement” has the meaning ascribed to it in Section 2.9(d).

 

“Call/Put Exercise Date” has the meaning ascribed to it in Section 2.9(a).

 

3

 

“Call/Put Interest” has the meaning ascribed to it in Section 2.9(a).

 

“Call/Put Period” has the meaning ascribed to it in Section 2.9(a).

 

“Call/Put Shares” has the meaning ascribed to it in Section 2.9(c).

 

“Cash Payment” has the meaning ascribed to it in Section 2.5.

 

“Closing” has the meaning ascribed to it in Section 8.1.

 

“Closing Date” has the meaning ascribed to it in Section 8.1.

 

“Closing Statement” has the meaning ascribed to it in Section 2.10(b).

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law.

 

“Compensation Programs” has the meaning ascribed to it in Section 3.19(d).

 

“Confidential Information” has the meaning ascribed to it in Section 5.3(b).

 

“Consideration” has the meaning ascribed to it in Section 2.5.

 

“Contract(s)” means contracts, agreements, permits, leases, licenses, franchises, warranties, guaranties, mortgages, notes, bonds, options, warrants, rights, commitments, understandings and other obligations in each case, whether written or oral, proposed, contingent or otherwise.

 

“Consulting Agreement” has the meaning ascribed to it in Section 5.4.

 

“Current Assets” means the consolidated current assets of the Business of the Transferors only to the extent acquired pursuant to the terms of this Agreement, which current assets shall include only the line items set forth on the Pre-Closing Statement under the heading “Current Assets” and no other assets.

 

“Current Liabilities” means the consolidated current liabilities of the Business of the Transferors only to the extent assumed pursuant to the terms of this Agreement, which current liabilities shall include only the line items set forth on the Pre-Closing Statement under the heading “Current Liabilities” and no other liabilities.

 

“Damages” means any actual loss, liability, claim, damage or expense (including reasonable costs of investigation and defense and reasonable attorneys’ fees), net of (a) insurance proceeds actually received, and proceeds from related third party indemnification, contribution or similar claims actually received, and (b) an amount equal to any net reduction in cash Taxes actually payable which directly relate to such Damages.  With respect to a Transferor Party, for the avoidance of doubt, in no event shall Damages include any loss, liability, claim, damage or

 

4

 

expense (including reasonable costs of investigation and defense and reasonable attorneys’ fees) incurred by Parent or any of its Subsidiaries.

 

“David Grutman, Inc.” has the meaning ascribed to it in the introduction to this Agreement.

 

“Designated Employees” has the meaning ascribed to it in Section 3.18.

 

“Difference” has the meaning ascribed to it in Section 2.10(e).

 

“Dispute” has the meaning ascribed to it in Section 2.10(c).

 

“Domain Names” means all identifiers or URL registrations for Internet websites.

 

“Earn-Out Average Per Share Price” means the volume-weighted average closing price per share of Parent Common Stock as reported on any national securities exchange or the over-the-counter-bulletin board for the thirty (30) consecutive trading-day period ending on the second (2nd) trading day immediately prior to the Earn-Out Period Payment Date (rounded down to the nearest whole share) or if shares of Parent Common Stock are not listed on any national securities exchange or traded on the over-the-counter-bulletin board, the price per share of Parent Common Stock as determined in good faith by the Parent Board.

 

“Earn-Out Objection Notice” has the meaning ascribed to it in Section 2.8(c).

 

“Earn-Out Payment” has the meaning ascribed to it in Section 2.8.

 

“Earn-Out Period” has the meaning ascribed to it in Section 2.8.

 

“Earn-Out Period Payment Date” has the meaning ascribed to it in Section 2.8(d)(i).

 

“Earn-Out Shares” has the meaning ascribed to it in Section 2.8(d)(i).

 

“Earn-Out Statement” has the meaning ascribed to it in Section 2.8(b).

 

“EBITDA” means an amount equal to Business Net Income plus (A) the following, to the extent deducted in calculating Business Net Income (without duplication): (1) Interest Charges, (2) all federal, state, local and foreign income Tax expense, (3) depreciation and amortization expense, (4) non-cash impairment of assets (tangible and intangible) and related non-cash charges, (5) non-cash charges and expenses related to equity-based compensation awards, (6) all inventory step-up expense recognized in conjunction with Consideration accounting adjustments, (7) one-time and non-recurring extraordinary expenses, (8) allocated or indirect expenses, other than reasonable allocated or indirect expenses as determined by Parent in its reasonable discretion, (9) compensation and benefits and other business expenses of a Transferor that are not directly and solely attributable to the management of  Acquiror, and minus (B) the following to the extent included in calculating Business Net Income (without duplication): (1) federal, state, local and foreign income Tax credits and (2) all

 

5

 

 

non-cash items increasing Business Net Income, including interest income, in each case with respect to the applicable fiscal period.

 

“EBITDA Target” means $5,270,000.

 

“Employee Assets” means all of the Transferors’ assets, including without limitation, computers, work stations, third party software licensed for such computers or work stations, electronic files, multi-function printers and copiers, office furniture and other tangible assets presently used or formerly used principally by the Members or the Designated Employees that Parent elects to employ, which are necessary or useful for the Members or each Designated Employee to continue to perform his or their respective duties for Parent or any of its Subsidiaries after the Closing without interruption.

 

“Employment Agreement” has the meaning ascribed to it in Section 5.4.

 

“Equipment” means all servers, hardware, other equipment and Equipment Embodiments and Documentation used in connection with the Business.

 

“Equipment Embodiments and Documentation” means all object code, source code, technical documentation, engineering notes, information sheets, specifications, compilers, tools, data schema, databases, data warehouses, software, marketing and promotional materials, software libraries, know-how, invention disclosures and technology used in connection with the Business.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Exchange” has the meaning ascribed to it in the introduction to this Agreement.

 

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

 

“Exchange Agreement” has the meaning ascribed to it in the introduction to this Agreement.

 

“Excluded Assets” has the meaning ascribed to it in Section 2.3.

 

“Excluded Representations and Warranties” means the representations and warranties set forth in Sections 3.1, 3.2, 3.4, 3.6, 3.13, 3.14, 3.15, 3.18, 3.19, 4.1, 4.2, 4.3, 4.5, 4.9, 4.10,  4.11 and 4.12.

 

“Existing Patents and Applications” has the meaning ascribed to it in the definition of “Transferor IP” in Article 1.

 

“Final Adjustment Amount” has the meaning ascribed to it in Section 2.10(e).

 

“GAAP” means generally accepted accounting principles in the United States as in effect on the date hereof and applied on a consistent basis.

 

6

 

“Gordon” has the meaning ascribed to it in the introduction to this Agreement.

 

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

 

“Governmental Authorization” means any approval, consent, ratification, waiver or other authorization, license, franchise, permit, exemption, clearance or registration issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Applicable Law.

 

“Grutman” has the meaning ascribed to it in the introduction to this Agreement.

 

“Indemnifying Party” means:  (a) with respect to any Acquiring Party Indemnitee asserting a claim under Section 9.1, the Transferor Parties, jointly and severally; and (b) with respect to any Transferor Party Indemnitee asserting a claim under Section 9.2, the Acquiring Parties, jointly and severally.

 

“Indemnitee” means:  (a) the Acquiring Party Indemnitees with respect to any claim for which any Transferor Party is an Indemnifying Party under Section 9.1; and (b) the Transferor Party Indemnitees with respect to claims for which any Acquiring Party is an Indemnifying Party under Section 9.2.

 

“Intellectual Property” means United States and foreign patents, copyrights, Trade Secrets, Marks, any registrations or applications with respect to any of the foregoing, any similar or other intellectual property rights, and any rights under or with respect to any of the foregoing, including, without limitation, the right to file patent applications with respect to inventions that have been conceived or reduced to practice in whole or part as of the date hereof, any such applications that are in fact filed, the right to file applications to register copyrights in copyrightable works that have been created in whole or part as of the date hereof, and any such applications that are in fact filed.

 

“Intellectual Property Embodiments and Documentation” means all object code, source code, technical documentation, engineering notes, information sheets, specifications, compilers, tools, data schema, databases, data warehouses, software, marketing and promotional materials, software libraries, know-how, invention disclosures and technology.

 

“Interest Charges” means, for the applicable fiscal period, the sum (without duplication) of (A) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred consideration of assets, in each case to the extent treated as interest in accordance with GAAP and (B) the portion of rent expense with respect to such period under capitalized leases that is treated as interest in accordance with GAAP.

 

“IP Agreements” has the meaning ascribed to it in Section 3.12(h).

 

7

 

“IRS” means the U.S. Internal Revenue Service.

 

“IT Assets” means all computers, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment (including any such assets as may be used to support any electronic information and ordering web-based or virtual platform) owned, leased or licensed by any Transferor and used in connection with the Business, wherever located, and all associated documentation.

 

“Knowledge of SFX” or “SFX’s Knowledge” has the meaning ascribed to it in Article 4.

 

“Knowledge of Transferor” or “Transferor’s Knowledge” means the actual knowledge of any of the Members, after a reasonable inquiry of the surrounding circumstances.

 

“Leased Real Property” means all real property leased or licensed to a Person, or to which such Person, has any other rights, under the Leases.

 

“Leases” means all of the existing leases, subleases, licenses, occupancy agreements, options, rights, concessions or other agreements or arrangements, written or oral, with respect to real property to which a Person is a party or by which such Person or the Transferred Assets, as applicable, is bound, but with respect to Transferred Assets, only to the extent that the foregoing are used in connection with the Business.

 

“Liability” means, with respect to any Person, any liability, debt or other obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise and whether or not the same is required to be accrued on the financial statements of such Person or is disclosed on any schedule to this Agreement.

 

“Lien” means, with respect to any asset, any mortgage, title defect or objection, lien, pledge, charge, claim, security interest, equitable interest, option, hypothecation, easement, right of way, restriction, encumbrance, preference, priority, right of first refusal, condition or limitation of any kind in respect of such asset and any agreement to grant any of the foregoing, excluding (a) liens for Taxes that are not due and payable or that are being contested in good faith by appropriate legal proceedings in a manner that will prevent foreclosure of the applicable lien during the pendency of such proceedings, (b) statutory liens of landlords and liens of carriers, warehousemen, mechanics, materialmen and other similar Persons and other liens imposed by Applicable Law incurred in the Ordinary Course of Business for sums not yet delinquent, (c) liens relating to deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other types of social security, and (d) liens securing any Assumed Liability.

 

“Lockup Agreement” means a lockup agreement among Parent and Nightlife with respect to shares of Parent Stock owned by Nightlife, substantially in the form of Exhibit C.

 

“Marks” means trademarks, service marks, trade dress and others indicators of source, origin, sponsorship, certification or endorsement, and all goodwill in and to any such

 

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trademarks, service marks, trade dress and other indicators of source, origin, sponsorship, certification or endorsement.

 

“Material Adverse Effect” means, with respect to any Person, any change, event, circumstance, development or effect that has, or could reasonably be expected to have, either individually or in the aggregate, a material adverse effect on (i) such Person’s consolidated  financial condition, business, assets, properties, results of operations, operations, Liabilities, reserves or prospects, (ii) with respect to the Transferors, the Transferred Assets or the Assumed Liabilities, other than, in the case of clauses (i) and (ii) above, any change, event, circumstance, development or effect that directly results from (a) changes in United States or global economic conditions that do not disproportionately impact the Business, the Transferred Assets or the Assumed Liabilities or (b) changes in the industry in which the Business operates that do not disproportionately impact the Business, the Transferred Assets or the Assumed Liabilities and (iii) with respect to the Transferors, the ability of the Transferor Parties to consummate the transactions contemplated by the Transaction Documents or to timely perform any of their respective obligations under the Transaction Documents.

 

“Members” has the meaning ascribed to it in the introduction to this Agreement.

 

“MMG” has the meaning ascribed to it in the introduction to this Agreement.

 

“MMG Audited Financial Statements” has the meaning ascribed to it in Section 3.15.

 

“Net Working Capital” means Current Assets, minus Current Liabilities as determined in accordance with the Balance Sheet Rules, each calculated immediately before, and without giving effect to, the Closing, of the Business of the Transferors.

 

“Nightlife” has the meaning ascribed to it in the introduction to this Agreement.

 

“Nightlife Interest” has the meaning ascribed to it in Section 2.5.

 

“Objections Statement” has the meaning ascribed to it in Section 2.10(c).

 

“Ordinary Course of Business” means (a) consistent with the past practices of such Person or (b) in the ordinary course of the normal day-to-day operations of such Person.

 

“Other Contribution Agreement” has the meaning ascribed to it in the introduction to this Agreement.

 

“Other Parties” has the meaning ascribed to it in the introduction to this Agreement.

 

“Parent” has the meaning ascribed to it in the introduction to this Agreement.

 

“Parent Board” means the Board of Directors of Parent.

 

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“Parent Common Stock” has the meaning ascribed to it in the introduction to this Agreement.

 

“Parent SEC Documents” has the meaning ascribed to it in Section 5.15(a).

 

“Party” or “Parties” has the meaning ascribed to it in the introduction to this Agreement.

 

“Pension Plans” has the meaning ascribed to it in Section 3.19(b).

 

“Person” means an individual, corporation, partnership, limited liability company, joint venture, unincorporated organization, association, trust, estate or other entity or organization, including a Governmental Authority.

 

“Plan” has the meaning ascribed to it in the introduction to this Agreement.

 

“Post-Closing Tax Period” has the meaning ascribed to it in Section 9.12.

 

“Pre-Closing Statement” has the meaning ascribed to it in Section 2.10(a).

 

“Pre-Closing Tax Period” has the meaning ascribed to it in Section 9.12.

 

“Per Share Price” means, (a) for the purposes of Section 2.10, $5.00 per share of Parent Common Stock, subject to adjustment for stock splits and dividends, and (b) for the purposes of Section 9.9, $5.00 per share of Parent Common Stock, subject to adjustment for stock splits and dividends, unless, in either case, the shares of Parent Common Stock are then listed on a national securities exchange or traded on the over-the-counter market, in which case the Per Share Price shall be the volume weighted average closing prices of the Parent Common Stock on such exchange or market during the thirty (30) trading days ending on the second (2nd) trading day immediately preceding measurement.

 

“Property Taxes” has the meaning ascribed to it in Section 9.12.

 

“Punta Cana” has the meaning ascribed to it in the introduction to this Agreement.

 

“Receivables” means any and all accounts receivable, notes and other amounts receivable from third parties, including customers and employees, arising from the conduct of the Business before the Closing, whether or not in the ordinary course and including any and all accounts receivables that have been written off or otherwise accounted for or reserved against as bad debts, together with any unpaid financing charges accrued thereon.

 

“Registration Rights Agreement” means a registration rights agreement among Parent and Nightlife with respect to shares of Parent Stock owned by Nightlife, substantially in the form of Exhibit D.

 

“Regulations” means all laws, statutes, ordinances, regulations, rules, notice requirements, court decisions, agency guidelines, principles of law and orders of any Governmental Authority, including environmental laws, and laws with respect to energy, motor

 

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vehicle safety, public utility, zoning, building and health codes, occupational safety and health, employment practices, employee documentation, terms and conditions of employment and wages and hours.

 

“Related Person” means:  (a) with respect to a particular individual:  (i) each other member of such individual’s Family; (ii) any Person that is directly or indirectly controlled by such individual or one or more members of such individual’s Family; and (iii) any Person with respect to which such individual or one or more members of such individual’s Family serves as a director, officer, partner, manager, executor, or trustee (or in a similar capacity); and (b) with respect to a specified Person other than an individual:  (i) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person; (ii) each Person that serves as a director, officer, partner, manager, executor, or trustee of such specified Person (or in a similar capacity); and (iii) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity); and (c) any Related Person of any individual described in clause (b) or (c).  For purposes of this definition, “Family” of an individual means (A) the individual, (B) the individual’s spouse (or any former spouse), (C) any other natural person who is an immediate family member of the individual or the individual’s spouse(s), and (D) any individual who resides with such individual, and “control” of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise and, in any event and without limitation of the previous sentence, any Person owning fifty percent (50%) or more of the voting securities of a second Person shall be deemed to control that second Person.

 

“Required Consents” means any approval, consent, ratification, waiver or other authorization of the other party or parties to each Transferred Contract that is required by the terms of such Transferred Contract to be obtained by any of the Transferor Parties by virtue of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby to avoid the invalidity of such Transferred Contract, the termination thereof, the incurrence of any penalty or fee or adverse change in amounts payable to or by either of the Acquiring Parties or obligations of either of the Acquiring Parties as compared to the Transferor Parties or a breach or default thereunder (whether with or without the passage of time, the giving of notice or both), and all other approvals, consents, ratifications, waivers or other authorizations required to be obtained prior to the Closing Date for the consummation of the transactions contemplated by the Transaction Documents.

 

“Restricted Activity” means any activity that is competitive with any aspect of the Business (i) as operated immediately prior to the date of this Agreement, the Closing Date, or upon termination of the applicable Member’s employment with an Acquiring Party or one of its Affiliates or (ii) as reasonably contemplated to be operated in the future on the date of this Agreement or upon termination of the applicable Member’s employment with an Acquiring Party or one of its Affiliates; provided, however, that what constitutes a “Restricted Activity” hereunder with respect to a Member shall be subject to the definition of “Restricted Activity” set forth in such Member’s Employment Agreement or Consulting Agreement, as the case may be, and any activities of a Member that are expressly permitted under such Member’s Employment Agreement or Consulting Agreement, as the case may be, shall be permitted under Section 5.8.

 

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“Retained Liabilities” has the meaning ascribed to it in Section 2.4.

 

“SEBU” has the meaning ascribed to it in the introduction to this Agreement.

 

“SEC” means the Securities and Exchange Commission.

 

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

 

“SFX” has the meaning ascribed to it in the introduction to this Agreement.

 

“SFX Disclosure Schedule” has the meaning ascribed to it in Article 4.

 

“SFX’s Accountant” means an independent auditor of recognized national standing selected by Parent, in its sole discretion.

 

“Software” means all (a) computer programs, applications, systems and code, in both object code and Source Code, including software implementations of algorithms, models and methodologies and program interfaces and (b) Internet and intranet websites, databases and compilations, including data and collections of data, whether machine-readable or otherwise, but with respect to clauses (a) and (b), only to the extent used in connection with the Business.

 

“Source Code” means the human-readable version of a computer program that can be compiled into executable or object code.

 

“Stock Consideration” has the meaning ascribed to it in Section 2.5.

 

“Stock Earn-Out Payment” has the meaning ascribed to it in Section 2.8(d)(i).

 

“Straddle Period” has the meaning ascribed to it in Section 9.12.

 

“Subsidiary” of any Person means any corporation, partnership, joint venture or other legal entity of which such Person (either alone or through or together with any other Subsidiary), owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, joint venture or other legal entity, or otherwise owns, directly or indirectly, such equity interests, that would confer control of any such corporation, partnership, joint venture or other legal entity, or any Person that would otherwise be deemed a “subsidiary” under Rule 12b-2 promulgated under the Exchange Act.

 

“Tax” means (a) all taxes imposed of any nature including federal, state, local or foreign net income tax, alternative or add-on minimum tax, profits or excess profits tax, franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any withholding or back up withholding tax, value added tax, severance tax, prohibited transaction tax, premiums tax, environmental tax, intangibles tax, business license tax, transfer tax, occupation tax, customs tax, duties or other taxes, fees, assessments or charges, together with any interest, penalty, or addition to tax  imposed by any Governmental Authority (domestic or foreign) responsible for

 

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the imposition of any such tax, (b) any liability for payment of amounts described in clause (a) whether as a result of transferee liability, of being a member of an Affiliated, consolidated, combined or unitary group for any period, or otherwise through operation of law and (c) any obligations under any tax sharing, tax allocation, or tax indemnity agreements or arrangements with respect to any amounts described in clause (a) or (b) above.

 

“Tax Return” means any return, declaration, report, election, claim for refund or information return or other statement or form relating to Tax, filed or required to be filed with any Governmental Authority, including any schedule or attachment thereto or any amendment thereof.

 

“Threshold Amount” has the meaning ascribed to it in Section 9.3(a).

 

“Trade Secrets” means all “Trade Secrets” as defined in the Uniform Trade Secrets Act.

 

“Transaction Documents” means this Agreement, the Exchange Agreement, the Other Contribution Agreements, the Amended and Restated LLC Operating Agreement, the Lockup Agreement, the Registration Rights Agreement, the Assignment and Assumption Agreement, the Employment Agreement, the Consulting Agreement and all other agreements and documents entered into by one or more of the Parties as contemplated by or in connection with this Agreement and the transactions contemplated hereby.

 

“Transferred Assets” has the meaning ascribed to it in Section 2.1.

 

“Transferred Contracts” has the meaning ascribed to it in Section 2.1(c).

 

“Transfer and Sales Taxes” means all sales tax, use taxes, stamp taxes, conveyance taxes, transfer taxes, filing fees and other similar duties, taxes and fees, if any, imposed upon, or resulting from, the transfer of the Transferred Assets.

 

“Transferor” has the meaning ascribed to it in the introduction to this Agreement.

 

“Transferor Financial Statements” has the meaning ascribed to it in Section 3.15.

 

“Transferor Interests” has the meaning ascribed to it in Section 3.3.

 

“Transferor Interim Financial Statements” has the meaning ascribed to it in Section 3.15.

 

“Transferor IP” means all Intellectual Property, Intellectual Property Embodiments and Documentation, Domain Names or Software used in or relating to the Business.  For avoidance of doubt, Transferor IP includes, without limitation, (a) all of the patents and patent applications referenced in the foregoing sentence that are or have been issued or filed as of the Closing Date (the “Existing Patents and Applications”), (b) all other patent applications that are filed after the Closing Date that disclose or claim any inventions first conceived or reduced to practice in whole or part on or before the Closing Date that relate to the Intellectual Property Embodiments and Documentation, including, without limitation, all

 

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continuations, continuations-in-part, divisional, reexamined and reissued patent applications and patents that relate to the Existing Patents and Applications, (c) all foreign counterparts with respect to any of the foregoing, and (d) all patents that issue with respect to any of the foregoing patent applications.

 

“Transferor Organization Documents” has the meaning ascribed to it in Section 3.1.

 

“Transferor Party Indemnitees” has the meaning ascribed to it in Section 9.2.

 

“Transferor Parties” has the meaning ascribed to it in the introduction to this Agreement.

 

“Transferor Registered IP” has the meaning ascribed to it in Section 3.12(c).

 

“Transferor’s Disclosure Schedule” has the meaning ascribed to it in Article 3.

 

“US Nightlife” has the meaning ascribed to it in the introduction to this Agreement.

 

“WOS” has the meaning ascribed to it in the introduction to this Agreement.

 

“Welfare Plans” has the meaning ascribed to it in Section 3.19(c).

 

ARTICLE 2
 CONTRIBUTION

 

2.1          Contribution of Transferred Assets.  On the terms and subject to the conditions of this Agreement, at the Closing, the Transferor Parties shall contribute, sell, transfer, convey, assign and deliver to Acquiror, and Acquiror shall purchase, accept and acquire from the Transferor Parties, free and clear of any Liens, all of the assets constituting the Business, including without limitation, the following properties, assets, rights and claims, whether tangible or intangible, including goodwill and going concern value but excluding the Excluded Assets (the “Transferred Assets”):

 

(a)           all of the Transferor IP and IT Assets, including, without limitation, the Transferor IP identified on Schedule 2.1(a);

 

(b)           all of the Equipment, including, without limitation, the assets identified on Schedule 2.1(b);

 

(c)           all of the Contracts identified on Schedule 2.1(c) (the “Transferred Contracts”);

 

(d)           all of the Employee Assets which are listed on Schedule 2.1(d) (as it may be adjusted at Closing to reflect the Designated Employees who have accepted employment offers, if any, from Parent or any of its Affiliates as of the Closing);

 

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(e)           all websites, URLs, Domain Names and webpages used, held for use or under development in connection with the Business, whether or not registered, including without limitation, www.miami-mg.com and the other Domain Names identified on Schedule 2.1(e), together with all Intellectual Property associated therewith other than trademarks set forth therein which are not otherwise part of the Transferred Assets;

 

(f)            all advertising, marketing and sales materials developed for, or used in connection with, the Business together with all Intellectual Property embodied therein other than trademarks set forth therein which are not otherwise part of the Transferred Assets;

 

(g)           all files, invoices, customer lists, records pertaining to customers and end-users (present, past and potential), all supplier lists and records pertaining to suppliers, books of account, files and ledgers, and other records to the extent solely and specifically for the Transferred Assets or the Assumed Liabilities and copies of the Tax books and records (redacted to exclude information not relating to the Transferred Assets or the Assumed Liabilities) relating to the Transferred Assets of the Assumed Liabilities and not otherwise provided pursuant to this clause (g);

 

(h)           without limiting anything set forth in clause (g) of this Section 2.1, electronic media including complete and accurate copies of all Intellectual Property Embodiments and Documentation;

 

(i)            all Governmental Authorizations of all Governmental Authorities necessary for the operation of the Transferred Assets and the Business set forth on Schedule 2.1(i);

 

(j)            all rights relating to deposits, advances, loan repayments, return of investments, prepaid expenses and other upfront payments, claims for refunds and rights of offset that are not excluded under Section 2.3(c);

 

(k)           all rights to insurance proceeds to the extent such rights arise from or are related to any casualty or Liability affecting the Transferred Assets or the Assumed Liabilities;

 

(l)            all legal and equitable privileges, rights and claims against any third parties, and all choses in action relating to the Transferred Assets, the Business or the Assumed Liabilities;

 

(m)          all goodwill of the Business;

 

(n)           all Receivables of each Transferor; and

 

(o)           all of the Transferor Parties’ right, title and interest in and to the corporate names “Nightlife Holdings LLC,” “MMG Nightlife LLC,” “Punta Cana Venue LLC,” “US Nightlife Management LLC” and any other corporate name formerly used in connection with the Business.

 

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Notwithstanding the foregoing, the transfer of the Transferred Assets pursuant to this Agreement does not include the assumption of any Liability related to the Transferred Assets unless Parent expressly assumes that Liability pursuant to Section 2.2.

 

2.2          Assumption of Liabilities.  On the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties, covenants and agreements of the Transferor Parties set forth herein, Acquiror agrees, effective at the Closing, to assume, perform and timely pay and discharge only the following (collectively, the “Assumed Liabilities” and each an “Assumed Liability”):  (a) those executory obligations arising after the Closing under the Transferred Contracts which do not relate to (i) any breach of, or failure to comply with, prior to the Closing, any representation, warranty, covenant or obligation in any such Transferred Contract, (ii) any event that occurred prior to the Closing which, with or without notice, lapse of time or both, would constitute such a breach or failure, or (iii) any indemnification claim relating to any of the matters set forth in clauses (i) or (ii) of this Section 2.2 and (b) unless such liability is specifically retained under Section 2.4, all obligations of the Transferors with respect to Current Liabilities set forth on the Closing Statement.

 

2.3          Excluded Assets.  Notwithstanding anything to the contrary herein, the following assets (the “Excluded Assets”) shall be excluded from the Transferred Assets and retained by the Transferor Parties:

 

(a)           all cash, cash equivalents and marketable securities of each Transferor on hand or on deposit with any financial institution;

 

(b)           any bank or brokerage accounts of each Transferor;

 

(c)           all prepaid Taxes and other expenses included on Schedule 2.3(c), and any tax refunds relating to periods prior to Closing or any deferred tax assets;

 

(d)           original copies of all minute books, records, stock ledgers, Tax records and other materials each Transferor is required by law to retain;

 

(e)           all Contracts that are not Transferred Contracts, including those Contracts set forth on Schedule 2.3(e);

 

(f)            all assets of the Transferors which are not used in the Business listed on Schedule 2.3(f);

 

(g)           all legal and equitable privileges, rights and claims against any third parties, and all choses in action relating to the Excluded Assets or Retained Liabilities;

 

(h)           all rights to insurance proceeds to the extent such rights arise from or are related to any casualty or Liability affecting the Excluded Assets or the Retained Liabilities;

 

(i)            all ownership and other rights with respect to any Pension Plan, Welfare Plan and Compensation Program of the Transferors; and

 

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(j)            payments made and to be made to the Transferor Parties and other rights of the Transferor Parties under this Agreement.

 

2.4          Retained Liabilities.  Notwithstanding any other provision of this Agreement or any of the other Transaction Documents or any other writing to the contrary, and regardless of any information disclosed to the Acquiring Parties or any of their respective Affiliates or representatives, neither Acquiror nor any Affiliates of Acquiror assumes, and Acquiror and Affiliates of Acquiror shall not at any time hereafter (including on or after the Closing) become liable or responsible for, any Liabilities of any of the Transferor Parties other than the Assumed Liabilities (such unassumed Liabilities, the “Retained Liabilities”).  The Transferors shall remain bound by and liable and responsible for, and shall retain, pay, perform and discharge when due, all Retained Liabilities.

 

2.5          Consideration. Upon the terms and subject to the conditions contained in this Agreement, as consideration for the sale, transfer, assignment, conveyance and delivery of the Transferred Assets and in full payment therefor, the Acquiring Parties shall pay or cause to be paid to Nightlife: (i) $13,491,200 in cash by wire transfer to an account designated by Nightlife at least one (1) Business Day prior to Closing (the “Cash Payment”), (ii) 674,560 shares of Parent Common Stock (the “Stock Consideration”), (iii) a 20% non-dilutable membership interest in Acquiror (the “Nightlife Interest”), (iv) the Earn-Out Payment (as defined below), if any, and (v) Parent shall assume the Assumed Liabilities as provided in Section 2.2 (together, the “Consideration”).

 

2.6          Tax Treatment; Allocation of Consideration.

 

(a)           Tax Treatment. The Parties agree that all Consideration pursuant to Sections 2.5(i), (ii), (iv) and (v) shall be treated as consideration for an undivided 80% interest in the Transferred Assets and not characterized in any other manner (except as otherwise required pursuant to a final determination within the meaning of Section 1313(a) of the Code as if such provision applies in the relevant jurisdiction).  The Parties further agree that (i) such 80% undivided interest in the Transferred Assets shall be deemed contributed by the Transferors to Parent and then further contributed by Parent to Acquiror in exchange for a membership interest in Acquiror as set forth in the Amended and Restated LLC Operating Agreement, and (ii) the remaining 20% undivided interest in the Transferred Assets shall be deemed contributed by the Transferors to Acquiror in exchange for a membership interest in Acquiror as set forth in the Amended and Restated LLC Operating Agreement.  For purposes of recognizing gain or loss on the undivided 80% interest in the Transferred Assets, each of the Transferred Assets shall be considered transferred separately in exchange for a portion of each of the above categories of Consideration received, and the fair market value of each category of such Consideration shall be separately allocated to each of the Transferred Assets in proportion to the relative fair market values of each of the Transferred Assets.

 

(b)           Basis Allocation.  The Parties agree that any portion of the Consideration that results in an increase in the basis of the Transferred Assets in the hands of Acquiror over the amount of such basis in the hands of the applicable Transferor shall be allocated among the Transferred Assets in proportion to the amounts by which their values exceed such Transferor’s bases in such assets immediately prior to the transfer (the “Allocation”).  Within sixty (60) days

 

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after the Closing, Acquiror shall provide the applicable Transferor with a proposed Allocation for such Transferor’s review and comment.  If such Transferor does not provide any comments to Acquiror in writing within ten (10) Business Days following delivery by Acquiror of the proposed Allocation, then the Allocation proposed by Acquiror shall be deemed to be final and binding absent manifest error.  If, however, such Transferor submits comments to Acquiror within such ten (10) Business Day period, Acquiror and such Transferor shall negotiate in good faith to resolve any differences within ten (10) Business Days.  If such Transferor and Acquiror are unable to reach a resolution within such ten (10) Business Day period, then all remaining disputed items shall be submitted for resolution by an Accounting Firm, which shall make a final determination as to the disputed items within twenty (20) Business Days after such submission, and such determination shall be final, binding and conclusive on such Transferor and Acquiror.  The fees and disbursements of the Accounting Firm shall be shared equally between the applicable Transferor and Acquiror.  Any subsequent adjustments to the sum of the Consideration shall be reflected in the Allocation in a manner consistent with the above procedure.  For all Tax purposes, Acquiror and the Transferors agree that the transactions contemplated in this Agreement shall be reported in a manner consistent with the terms of this Agreement, including the Allocation, and that none of them will take any position inconsistent therewith in any Tax Return, in any refund claim, in any litigation, or otherwise.  Each of Acquiror and the Transferors agrees that, with respect to the transfer by the Transferor Parties to Parent of the undivided 80% interest in the Transferred Assets, it will file with its Tax Return for the year in which the Closing occurs the statement required by Treasury Regulation 1.351-3(a) or 1.351-3(b), as applicable.

 

2.7          Withholding Rights.

 

(a)           Each of the Acquiring Parties shall be entitled to deduct and withhold from the Consideration otherwise payable pursuant to this Agreement to Nightlife such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law, and to pay the same to any U.S. federal, state, local or foreign Governmental Authority as required by Applicable Law.  To the extent that amounts are so withheld and paid by the Acquiring Parties, such amounts shall be treated for all purposes of this Agreement as having been paid as Consideration to Nightlife in respect of which such deduction or withholding and payment was made.

 

(b)           If any of the Acquiring Parties are required to make any payment to a Governmental Authority in respect of a withholding obligation arising out of the payment of the Consideration to Nightlife and the Cash Payment portion of the Consideration payable with respect to Nightlife is not sufficient to make such payment, then Nightlife shall provide to such Acquiring Party, on demand, the amount of the shortfall, and such Acquiring Party shall pay such amount to the Governmental Authority.

 

(c)           Nightlife agrees to furnish each of the Acquiring Parties with such representations and forms as it shall reasonably request to assist it in determining the extent of, and in fulfilling, any obligations it may have to withhold and pay over amounts to any Governmental Authority and/or to file any Tax Returns or information returns with respect to the payment of the Consideration to Nightlife or the payment of any Taxes to any Governmental Authority in respect of Nightlife arising in connection with this Agreement.

 

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(d)           The Transferor Parties agree, jointly and severally, to indemnify and hold harmless the Acquiring Parties and their respective officers, directors, employees and agents, from and against any liability with respect to Taxes, interest or penalties which may be asserted by reason of (i) the failure to deduct and withhold Tax on the Consideration payable to Nightlife or (ii) the failure to file any Tax or information returns with respect to Nightlife due in connection with this Agreement, unless such failure described in either phrase (i) or (ii) of this sentence was attributable to the fraud, gross negligence or willful misconduct of the Acquiring Parties or any of their respective officers, directors, employees, agents or Affiliates.  Notwithstanding the foregoing, to the extent the Acquiring Parties fail to deduct and withhold Tax on the Consideration payable to Nightlife, Nightlife shall remain liable for payment of such Tax.

 

2.8          Earn-Out.  Following the Closing Date, Parent agrees to make an additional payment to Nightlife (the “Earn-Out Payment”) upon the terms and subject to the conditions of this Section 2.8, for the one-year period commencing on the Closing Date (the “Earn-Out Period”), which Earn-Out Payment, if any, will be paid to Nightlife in accordance with Section 2.8(d) below.

 

(a)           Earn-Out Payment Amount.

 

(i)            If Acquiror’s EBITDA for the Earn-Out Period equals or exceeds the EBITDA Target, the Earn-Out Payment shall be equal to the product of (A) $5,059,200 and (B) the quotient of (x) the Acquiror’s EBITDA for the Earn-Out Period divided by (y) the EBITDA Target, payable as set forth in Section 2.8(d).

 

(ii)           If Acquiror’s EBITDA for the Earn-Out Period is less than the EBITDA Target but exceeds $3,372,000, the Earn-Out Payment shall be equal to the product of (A) $4,216,000 and (B) the quotient of (x) the amount by which Acquiror’s EBITDA for the Earn-Out Period exceeds $3,372,000 divided by (y) $1,898,000.

 

(iii)          If Acquiror’s EBITDA for the Earn-Out Period is equal to or less than $3,372,000, no Earn-Out Payment shall be due or payable to Nightlife.

 

(iv)          The parties acknowledge and agree that the economic benefit to Transferors in respect of the sale and purchase of the Business is based on the economic assumption that any gains to the owners of the Transferors in respect of the sale of the Business will be taxed at the long-term capital gains tax rates in effect as of the date of this Agreement (the “2012 Rates” i.e., a Federal tax rate of 15% and a New Jersey tax rate of 8.97%, or a total of 23.97%).  Therefore, the amount of the Earn Out Payment Amount and the Call/Put Consideration (as defined below) (each a, “Future Payment”) shall be increased (but not decreased) by applying the following formula: (x) (the Future Payment times 0.7603)  divided by (1 minus the tax rate applicable to such Future Payment using the methodology as was used in computing the 2012 Rates (as if a Transferor received the entire Future Payment) at the time it is included in the gross income of a Transferor).

 

(b)           Earn-Out Statement.  Within ninety (90) days after the end of the Earn-Out Period, Parent shall calculate Acquiror’s EBITDA for the Earn-Out Period and shall deliver

 

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to Nightlife a report setting forth in reasonable detail the amount of Acquiror’s EBITDA for the Earn-Out Period. The written report delivered to Nightlife shall be accompanied by documentation appropriate to support the calculation of Acquiror’s EBITDA for the Earn-Out Period, which shall include a statement by the Chief Financial Officer of Parent that the calculation was made in accordance with the terms of this Agreement.  The written report and the accompanying back-up documentation for the Earn-Out Period are collectively referred to herein as the “Earn-Out Statement”.  The Earn-Out Statement shall be used for purposes of determining whether the Earn-Out Payment is to be made to Nightlife in accordance with Section 2.8(a) above.

 

(c)           Disputed Earn-Out Statement.  The Earn-Out Statement for the Earn-Out Period shall be final, binding and conclusive unless Nightlife notifies Parent in writing of any disagreement therewith (an “Earn-Out Objection Notice”) within twenty (20) Business Days after its receipt thereof, specifying (i) those items as to which there is disagreement and (ii) a reasonably detailed description of the basis, nature, dollar amount and extent of the dispute or disagreement.  If Nightlife delivers an Earn-Out Objection Notice within such period, then for a period of thirty (30) Business Days from the date of delivery of the Earn-Out Objection Notice, Parent shall afford Nightlife and its agents or other representatives with reasonable access during normal business hours to the books and records of Acquiror and Parent so as to enable its review of the Earn-Out Statement.  Nightlife and Parent shall attempt in good faith to resolve such dispute, and any resolution by them as to any disputed amounts shall be final, binding and conclusive.  If Nightlife and Parent are unable to resolve all disputes reflected in the Earn-Out Objection Notice within thirty (30) Business Days after the date of delivery of the Earn-Out Objection Notice (or such longer period as Parent and Nightlife may mutually agree upon), then Nightlife and Parent shall request the Accounting Firm to resolve any remaining disagreements.  Parent and Nightlife shall use their commercially reasonable efforts to cause the Accounting Firm to make its determination within forty five (45) Business Days of accepting its selection.  The determination by the Accounting Firm shall be final, binding and conclusive on the Parties and shall not be appealable.  Nightlife and Parent shall deliver to the Accounting Firm all work papers and back-up materials relating to the unresolved disputes requested by the Accounting Firm to the extent available to Nightlife, Parent and their respective agents or other representatives.  Nightlife and Parent shall be afforded the opportunity to present to the Accounting Firm any material related to the unresolved disputes and to discuss the issues with the Accounting Firm; provided, however, that no such presentation or discussion shall occur without the presence of agents or other representatives of Nightlife and Parent.  The determination of the Accounting Firm shall be limited to the disagreements submitted to the Accounting Firm.  Upon resolution by the Accounting Firm to its satisfaction of all such disputed matters, the Accounting Firm shall cause to be prepared and shall deliver to Nightlife and Parent a final Earn-Out Statement setting forth Acquiror’s EBITDA for the Earn-Out Period, and the date of such delivery by the Accounting Firm shall be deemed the date on which the Earn-Out Statement and Acquiror’s EBITDA for the Earn-Out Period shall become final, binding and conclusive.  The fees and expenses of the Accounting Firm shall be borne by Parent.

 

(d)           Parent shall pay to Nightlife the Earn-Out Payment due and payable in accordance with Section 2.8(a), if any, as follows:

 

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(i)            Parent shall pay to Nightlife, on or before the fifth (5th) Business Day following the date that the Earn-Out Statement in respect of the Earn-Out Period becomes final, binding and conclusive in accordance with Section 2.8(c) above (the date on which such payment is made being referred to as the “Earn-Out Period Payment Date”), the Earn-Out Payment (if such Earn-Out Payment shall become due and payable to Nightlife under the terms of Section 2.8(a)).  Such Earn-Out Payment, if any, shall be payable as follows: (A) eighty percent (80%) in cash and (B) the remainder paid in restricted (within the meaning of Rule 144 under the Securities Act) shares of Parent Common Stock (the “Stock Earn-Out Payment”), subject however, to the rights granted to Nightlife under the Registration Rights Agreement.  For purposes of determining the aggregate number of shares of Parent Common Stock to be issued as the Stock Earn-Out Payment (the “Earn-Out Shares”), if any, such number of Earn-Out Shares shall be equal to (x) twenty percent (20%) of the Earn-Out Payment divided by (y) the Earn-Out Average Per Share Price.  The cash portion of such Earn-Out Payment, if any, shall be paid by wire transfer of immediately available funds to an account designated by Nightlife prior to the Earn-Out Period Payment Date.

 

(ii)           Notwithstanding anything in this Agreement to the contrary, the Earn-Out Payment for the Earn-Out Period, if any, shall constitute part of the Consideration for the contribution, sale, transfer, assignment, conveyance and delivery of the Transferred Assets under this Agreement, and shall not be construed as consideration for the services of the Members in their respective capacities as an employee, consultant or officer of Parent or any of its Affiliates.

 

(e)           Operation of the Business.  During the Earn-Out Period, Parent shall operate the Business in good faith and shall not take any actions the primary purpose of which is to avoid making the Earn-Out Payment to Nightlife.  Except as expressly provided in the immediately preceding sentence, from and after the Closing Date, Parent may operate the Business in its sole discretion without restriction.

 

2.9          Call/Put For Nightlife’s 20% Interest in Acquiror.

 

(a)           Nightlife hereby irrevocably grants to Parent a call option, and Parent hereby irrevocably grants to Nightlife a put right, in each case, exercisable at any time during the period from and including January 1, 2015 through and including June 30, 2015 (the “Call/Put Period”) to acquire or cause Parent to acquire, as the case may be, from Nightlife the Nightlife Interest (for purposes of this Section 2.9, the Nightlife Interest shall be referred to as the “Call/Put Interest,” and the date on which either such call option or such put right is exercised being referred to as the “Call/Put Exercise Date”), in each case, upon the terms set forth in this Section 2.9.  The Call/Put Period may be extended only by mutual consent of Parent and Nightlife.

 

(b)           Upon exercise of the call option or the put right set forth in Section 2.9(a), as consideration for the sale, transfer, assignment, conveyance and delivery of the Call/Put Interest and in full payment therefor, Parent shall pay or cause to be paid to Nightlife an amount (the “Call/Put Consideration”) equal to twenty percent (20%) of the product of (i) Acquiror’s EBITDA for fiscal year 2014 and (ii) six (6), subject to the potential increase in such amount as contemplated by Section 2.8(a)(iv) above.

 

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(c)           The Call/Put Consideration shall be paid to Nightlife within sixty (60) days following the Call/Put Exercise Date and shall be payable eighty percent (80%) in cash and the remaining twenty percent (20%) of the Call/Put Consideration shall be paid, to the extent not otherwise covered by an effective registration statement, in the form of restricted (within the meaning of Rule 144 under the Securities Act) shares of Parent Common Stock, subject however to the rights granted under the Registration Rights Agreement.  For purposes of determining the aggregate number of shares of Parent Common Stock to be issued as the stock portion of the Call/Put Consideration (the “Call/Put Shares”), such number of Call/Put Shares shall be equal to (x) the dollar amount of such Call/Put Consideration to be paid in shares of Parent Common Stock divided by (y) the Call/Put Average Per Share Price.  The cash portion of the Call/Put Consideration shall be paid by wire transfer of immediately available funds to an account designated by Nightlife.

 

(d)           Call/Put Consideration Statement.  Within sixty (60) days after the end of Acquiror’s fiscal year 2014, Parent shall calculate Acquiror’s EBITDA for fiscal year 2014 and shall deliver to Nightlife a report setting forth in reasonable detail the amount of Acquiror’s EBITDA for fiscal year 2014.  The written report delivered to Nightlife shall be accompanied by documentation appropriate to support the calculation of Acquiror’s EBITDA for fiscal year 2014, which shall include a statement by the Chief Financial Officer of Parent that the calculation was made in accordance with the terms of this Agreement.  The written report and the accompanying back-up documentation for fiscal year 2014 are collectively referred to herein as the “Call/Put Consideration Statement”.  The Call/Put Consideration Statement shall be used for purposes of calculating the amount of the Call/Put Consideration in accordance with Section 2.9(b).

 

(e)           Disputed Call/Put Consideration Statement.  The Call/Put Consideration Statement for fiscal year 2014 shall be final, binding and conclusive unless Nightlife notifies Parent in writing of any disagreement therewith (an “Call/Put Consideration Objection Notice”) within twenty (20) Business Days after its receipt thereof, specifying (i) those items as to which there is disagreement and (ii) a reasonably detailed description of the basis, nature, dollar amount and extent of the dispute or disagreement.  If Nightlife delivers an Call/Put Consideration Objection Notice within such period, then for a period of thirty (30) Business Days from the date of delivery of the Call/Put Consideration Objection Notice, Parent shall afford Nightlife and its agents or other representatives with reasonable access during normal business hours to the books and records of Parent so as to enable its review of the Call/Put Consideration Statement.  Nightlife and Parent shall attempt in good faith to resolve such dispute, and any resolution by them as to any disputed amounts shall be final, binding and conclusive.  If Nightlife and Parent are unable to resolve all disputes reflected in the Call/Put Consideration Objection Notice within thirty (30) Business Days after the date of delivery of the Call/Put Consideration Objection Notice (or such longer period as Parent and Nightlife may mutually agree upon), then Nightlife and Parent shall request the Accounting Firm to resolve any remaining disagreements.  Parent and Nightlife shall use their commercially reasonable efforts to cause the Accounting Firm to make its determination within forty five (45) Business Days of accepting its selection.  The determination by the Accounting Firm shall be final, binding and conclusive on the Parties and shall not be appealable.  Nightlife and Parent shall deliver to the Accounting Firm all work papers and back-up materials relating to the unresolved disputes requested by the Accounting Firm to the extent available to Nightlife, Parent and their respective agents or other

 

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representatives.  Nightlife and Parent shall be afforded the opportunity to present to the Accounting Firm any material related to the unresolved disputes and to discuss the issues with the Accounting Firm; provided, however, that no such presentation or discussion shall occur without the presence of agents or other representatives of Nightlife and Parent.  The determination of the Accounting Firm shall be limited to the disagreements submitted to the Accounting Firm.  Upon resolution by the Accounting Firm to its satisfaction of all such disputed matters, the Accounting Firm shall cause to be prepared and shall deliver to Nightlife and Parent a final Call/Put Consideration Statement setting forth Acquiror’s EBITDA for fiscal year 2014, and the date of such delivery by the Accounting Firm shall be deemed the date on which the Call/Put Consideration Statement and Acquiror’s EBITDA for fiscal year 2014 shall become final, binding and conclusive.  The fees and expenses of the Accounting Firm shall be borne by Parent.

 

2.10        Pre-Closing and Post-Closing Adjustment of Consideration.  The Consideration shall be subject to adjustment at and after the Closing as specified in this Section 2.10:

 

(a)           Pre-Closing Statement.  Not fewer than three (3) Business Days prior to the anticipated Closing Date, (i) the Transferors shall deliver to Parent a certificate (the “Pre-Closing Statement”) setting forth the Transferors’ good faith estimates of the Net Working Capital and the amount, if any, by which the estimated Net Working Capital set forth in the Pre-Closing Statement is less than One Hundred Thousand Dollars ($100,000) (the “Adjustment Amount”), in each case, determined in accordance with the Balance Sheet Rules, together with supporting documentation for such estimates and any additional information reasonably requested by Parent.  The Pre-Closing Statement shall be prepared in consultation with Parent and shall be reasonably acceptable to Parent.  If the estimated Net Working Capital set forth in the Pre-Closing Statement is less than One Hundred Thousand Dollars ($100,000) then the Consideration payable by Parent to the Transferors shall be reduced by an amount equal to the Adjustment Amount; if the estimated Net Working Capital set forth in the Pre-Closing Statement is more than One Hundred Thousand Dollars ($100,000), then the Consideration payable by Parent to the Transferors shall be increased by an amount equal to the Adjustment Amount.  Any downward or upward adjustment to the  Consideration under this Section 2.10(a) shall be effected, at the election of Parent in its sole discretion, as follows:  (x)  Parent shall deduct or increase, as applicable an amount in cash equal to the Adjustment Amount from the Cash Payment, (y) Parent shall cancel in the manner set forth in Section 9.9 or issue, as applicable, a number of fully paid non-assessable shares of Parent Common Stock equal to the Adjustment Amount divided by the Per Share Price or (z) the obligations under this Section 2.10(a) shall be satisfied using a combination of a reduction or increase, as applicable to the Cash Payment under (x) and a cancellation or issuance, as applicable, of Parent Common Stock under (y).

 

(b)           Closing Statement.  Within 90 days following the Closing Date, Parent shall prepare and deliver to the Transferors a certificate (the “Closing Statement”) setting forth Parent’s determination of Net Working Capital and the Adjustment Amount, in each case determined in accordance with the Balance Sheet Rules.  Following delivery of the Closing Statement, Parent shall provide the Transferors with any supporting documentation for the Closing Statement that the Transferors may reasonably request.

 

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(c)           Dispute Resolution.  Within 30 days after the Transferors’ receipt of the Closing Statement, the Transferors shall deliver to Parent a written statement either accepting the Closing Statement or specifying any objections thereto in reasonable detail (an “Objections Statement”), which objections shall be in reasonable detail describing the nature and amount of the disagreement(s) asserted.  If the Transferors do not deliver an Objections Statement within such 30-day period, then the Closing Statement shall become final and binding upon all parties.  If the Transferors do deliver an Objections Statement within such 30-day period, then the Transferors and Parent shall negotiate in good faith for 15 days following Parent’s receipt of such Objections Statement to resolve such objections (any unresolved objection, a “Dispute”).  After such 15-day period, any item or matter set forth in the Closing Statement that is not a Dispute shall become final and binding upon all parties.  If Parent and the Transferors are unable to resolve all objections during such 15-day period, then any remaining Disputes, and only such remaining Disputes, shall be resolved by an Accounting Firm.  The Accounting Firm shall be instructed to resolve any such remaining Disputes in accordance with the terms of this Agreement within 30 days after its appointment (or such longer period as the Parent and the Transferors may agree).  The resolution of such Disputes by the Accounting Firm (i) shall be set forth in writing, (ii) shall be within the range of dispute between Parent and the Transferors, (iii) shall constitute an arbitral award, and (iv) shall be conclusive and binding upon all the parties upon which a judgment may be rendered by a court having proper jurisdiction thereover.  Upon delivery of such resolution, the Closing Statement, as modified in accordance with such resolution, shall become final and binding upon all parties.

 

(d)           Fees and Expenses of Accounting Firm.  The fees, costs and expenses of the Accounting Firm shall be borne by either Parent or the Transferors as follows:  (i) if the Accounting Firm determines that the Final Adjustment Amount is more than two percent (2%) greater or lower than the Adjustment Amount determined by Parent, then Parent shall bear the fees, costs and expenses of the Accounting Firm, and (ii) if the Accounting Firm determines that the Final Adjustment Amount is less than two percent (2%) greater or lower than the Adjustment Amount determined by Parent, then the Transferors shall bear the fees, costs and expenses of the Accounting Firm through the payment of such fees, costs and expenses by Parent.

 

(e)           Final Adjustment Amount.  As used herein, “Final Adjustment Amount” means (i) if the Transferors fail to deliver an Objections Statement in accordance with Section 2.10(c), the Adjustment Amount as set forth in the Closing Statement, or (ii) if the Adjustment Amount set forth in the Closing Statement is resolved by resolution of Parent and the Transferors or by submission of any remaining Disputes to the Accounting Firm, as contemplated by Section 2.10(c), the Adjustment Amount as so resolved.  If the Final Adjustment Amount exceeds the Adjustment Amount set forth in the Pre-Closing Statement, then the Consideration payable by Parent to the Transferor shall be reduced by an amount equal to the difference (the “Difference”) between the Final Adjustment Amount and the Adjustment Amount; if the Final Adjustment Amount is less than the Adjustment Amount set forth in the Pre-Closing Statement, then the Consideration payable by Parent to the Transferor shall be increased by an amount equal to the Difference.  Any downward or upward adjustment to the Consideration under this Section 2.10(e) shall be effected, at the election of Parent in its sole discretion, as follows: (x) the Transferor Parties or Parent, as applicable, shall promptly, but in no event later than five (5) Business Days following determination of the Final Adjustment Amount in accordance with this Section 2.10, pay to Parent or the Transferor Parties, as applicable, an amount in cash equal to

 

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the Difference, (y) Parent shall cancel, in the manner set forth in Section 9.9 or issue, as applicable, a number of fully paid non-assessable shares of Parent Common Stock equal to the Difference divided by the Per Share Price or (z) the obligations under this Section 2.10(e) shall be satisfied using a combination of a cash payment under (x) and a cancellation or issuance, as applicable, of Parent Common Stock under (y).

 

ARTICLE 3
 REPRESENTATIONS AND WARRANTIES OF TRANSFEROR PARTIES

 

As an inducement to the Acquiring Parties to enter into this Agreement and to consummate the transactions contemplated herein and except as set forth on the Transferors’ disclosure schedule attached hereto and incorporated herein, comprising schedules numbered according to the sections of this Article 3 and as specifically set forth herein (the “Transferor’s Disclosure Schedule”) corresponding to the Section of this Agreement to which any of the following representations and warranties specifically relate or as disclosed in another section of the Transferor’s Disclosure Schedule if it is reasonably apparent from the nature of the disclosure that it is applicable to another Section of this Agreement, the Transferors, jointly and severally  make the following representations and warranties to the Acquiring Parties, as of the date of this Agreement (except if another date is specified in the representation or warranty).

 

3.1          Limited Liability Company Existence.  Each Transferor is a limited liability company duly formed, validly existing and in good standing under the laws of the State of which it was organized, each with requisite limited liability company power and authority to conduct its business as it is presently being conducted and to own and lease its properties and assets.  Each Transferor is duly qualified to do business as a foreign limited liability company and is in good standing in each jurisdiction where the character of its properties owned or leased or the nature of its activities make such qualification necessary, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect with respect to such Transferor.  Copies of the certificate of formation and operating agreement of each Transferor, and all amendments thereto, heretofore delivered to Parent (the “Transferor Organization Documents”) are accurate and complete as of the date hereof.

 

3.2          Authorization.  Each Transferor has all requisite limited liability company power and authority, and has taken all limited liability company action necessary, to execute and deliver this Agreement, to consummate the transactions contemplated by this Agreement and the Transaction Documents to which such Transferor is party and to perform its obligations hereunder and thereunder.  Each Member has the right, power and authority, and has taken all action necessary, to execute and deliver this Agreement and the Transaction Documents to which such Member is a party, to consummate the transactions contemplated hereby and thereby and to perform his obligations hereunder and thereunder.  The execution and delivery by each Transferor of this Agreement and the Transaction Documents to which it is a party, and the consummation by each Transferor of the transactions contemplated hereby and thereby, have been duly authorized and approved by each Member.  No other limited liability company proceedings on the part of any Transferor are necessary to authorize this Agreement and the Transaction Documents to which each Transferor is a party and the transactions contemplated

 

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hereby and thereby.  This Agreement and the Transaction Documents to which each Transferor is a party have been duly executed and delivered by such Transferor and are the legal, valid and binding obligations of such Transferor enforceable against such Transferor in accordance with their terms, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.  This Agreement and the Transaction Documents to which each Member is a party have been duly executed and delivered by such Member and are the legal, valid and binding obligations of such Member enforceable against such Member in accordance with their terms, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.

 

3.3          Capital Structure.  The capitalization of each Transferor consists of the issued and outstanding limited liability company interests or units, membership interests or equivalent ownership interests in such Transferor (collectively, the “Transferor Interests”), that have the rights, preferences, privileges and restrictions set forth in the Transferor Organization Documents and Applicable Law.  The Members are the record and beneficial owner of one hundred percent (100%) of the Transferor Interests of Nightlife, free and clear of any Liens.  Nightlife is the record and beneficial owner of one hundred percent (100%) of the Transferor Interests of MMG, Punta Cana and US Nightlife.  All of the Transferor Interests are uncertificated.  All Transferor Interests have been duly authorized and validly issued in compliance with Applicable Laws.  Other than Transferor Interests held by the Members and Nightlife, there are no other Transferor Interests or other limited liability company interests or units, membership interests or equivalent ownership interests in any Transferor outstanding.  Set forth on Schedule 3.3 are all options, warrants and other securities of each Transferor that are exercisable for or convertible into any Transferor Interests.

 

3.4          Governmental Authorization.  Except as set forth on Schedule 3.4, the execution, delivery and performance by each of the Transferor Parties of this Agreement and the Transaction Documents to which he or it is a party requires no Governmental Authorization from any Governmental Authority other than (a) any Governmental Authorizations otherwise expressly referred to in this Agreement or any schedule hereto; (b) any filings required to be made by any of the Acquiring Parties in accordance with Applicable Law; (c) notice filings that are not material to the Business; and (d) Governmental Authorizations required by Governmental Authorities outside of the U.S. to effectuate or record the transfer of any Transferred Assets.

 

3.5          Non-Contravention.  The execution, delivery and performance by each of the Transferor Parties of this Agreement and the Transaction Documents does not and will not (a) contravene or conflict with the Transferor Organization Documents, true and correct copies of which have been delivered to Parent by each Transferor (b) to Transferors’ Knowledge, contravene or conflict with or constitute a violation of any provision of any Applicable Law binding upon any of the Transferor Parties, the Business or any of the Transferred Assets; (c) result in the creation or imposition of any Lien on any of the Transferred Assets; or (d) materially contravene, conflict with or constitute a material violation or breach of any agreement to which any of the Transferor Parties is a party or by which any of the Transferor Parties has any obligation to third parties pursuant to any Transferred Contracts.

 

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3.6          Ownership and Absence of Liens. The Transferors are the sole owners of all of the Transferred Assets, free and clear of any Liens.  To Transferor’s Knowledge, no third party has made any claim or assertion challenging any Transferor’s sole and exclusive ownership of all right, title and interest in and to the Transferred Assets, free and clear of all Liens.  The tangible Transferred Assets are in normal operating condition and free from any significant defects, ordinary wear and tear excepted, and have been properly serviced and maintained by the Transferors.  To Transferor’s Knowledge, no third party has made any claim or assertion challenging the Members’ or Transferors’ sole and exclusive ownership of all right, title and interest in and to the Transferor Interests and any options, warrants and other securities of any Transferor that are exercisable for or convertible into Transferor Interests, free and clear of all Liens.

 

3.7          Sufficiency of the Transferred Assets.  Upon consummation of the transactions contemplated by this Agreement (including, without limitation, payment of the Cash Payment and the Stock Consideration), the Transferor Parties will have sold, assigned, transferred and conveyed to Acquiror the Transferred Assets, free and clear of all Liens.  Except as noted on Schedule 3.7, the Transferred Assets comprise all of the assets utilized by the Transferors in the Business and will enable Acquiror to conduct the Business in the manner that the Transferors have conducted the Business during the period ended September 30, 2012.  Without limiting the foregoing, the Transferred Assets are all assets (other than personnel) necessary for Acquiror to fulfill the obligations under the Transferred Contracts, and are all operating assets of the Transferors used in the Business.  No assets necessary for or related to the conduct of the Business are owned or used by any Person other than the Transferors.

 

3.8          Litigation.  Except as set forth on Schedule 3.8, there are no Actions that have been brought by or against or before any Governmental Authority or any other Person pending or, to the Knowledge of Transferor, threatened, nor have any of the Transferor Parties received any correspondence regarding any such pending or threatened Actions, with respect to any of the Transferor Parties that seek to enjoin or rescind the transactions contemplated by this Agreement or the Transaction Documents, and there are no existing Actions, orders, judgments or decrees against or binding upon any of the Transferor Parties or any of the Transferred Assets, or that would prevent the performance by any of the Transferor Parties of the transactions contemplated by this Agreement.

 

3.9          Contracts.

 

(a)           The Transferor Parties have provided Parent with true, correct and complete copies of all Transferred Contracts.  Each of the Transferred Contracts is valid and effective in accordance with its terms, and is binding and enforceable against the Transferor party thereto and, to the Transferor’s Knowledge, against each other party thereto and in full force and effect, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.  The Transferors and, to the Transferor’s Knowledge, the other parties to the Transferred Contracts have performed, in all material respects, all of their respective obligations required to be performed under the Transferred Contracts.  Except as set forth on Schedule 3.9 hereto, there is not under any of such Transferred Contracts (i) any existing or claimed default by any of the Transferor Parties or event which, with the notice or lapse in

 

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time, or both, would constitute a default by such Transferor Party or (ii) to the Knowledge of Transferor, any existing or claimed default by any other party or event which with notice or lapse of time, or both, would constitute a material default by any such party.  There is no actual or, to the Knowledge of Transferor, threatened termination, cancellation or limitation of any of the Transferred Contracts.  To the Knowledge of Transferor, there is no pending or threatened bankruptcy, insolvency or similar proceeding with respect to any other party to the Transferred Contracts.

 

(b)           The Transferred Contracts constitute all Contracts relating to the Business.

 

(c)           Except as set forth on Schedule 3.9 hereto, the Transferred Contracts, respectively, do not contain provisions relating to any of the following matters:

 

(i)            any covenant not to compete or confidentiality agreement of any of the Transferor Parties or for the benefit of another Person;

 

(ii)           any arrangement limiting the freedom of any of the Transferor Parties to conduct the Business in any manner or use the Transferred Assets in any manner;

 

(iii)          any agreement restricting transfer or sale by the Transferor Parties of the Transferor IP or the other Transferred Assets; and

 

(iv)          any rights granted to, or retained by, any Affiliate of any of the Transferor Parties or any member, manager, officer or employee of any Transferor.

 

3.10        Permits; No Required Consents.  Schedule 2.1(i) sets forth all Governmental Authorizations of all Governmental Authorities, necessary for the operation of the Transferred Assets and the Business in substantially the same manner as currently operated by the Transferors.  No Governmental Authorization of any Governmental Authorities are required to manufacture, use, sell or otherwise exploit the Transferred Assets consistent with the manner in which the Transferred Assets are or have been manufactured, used, sold or otherwise exploited by the Transferors.  Schedule 3.10 sets forth the Required Consents that must be obtained prior to the Closing Date.  Except as set forth in Schedules 2.1(i) and 3.10, no consents are required for the Transferor Parties to sell the Transferred Assets.

 

3.11        Compliance with Applicable Laws.  Except as set forth on Schedule 3.11, to the Knowledge of the Transferors, none of the Transferor Parties is in violation of any Applicable Law or any order, writ, injunction or decree of any Governmental Authority applicable to the Transferred Assets or the Business.  All documentation, correspondence, reports, data, analysis and certifications relating to or regarding the Transferred Assets filed or delivered (or, if amended, as of the date for which such amendment speaks) by or on its behalf to any Governmental Authority were true and accurate when so filed or delivered and remain, to the extent required by any Applicable Laws.

 

3.12        Intellectual Property.

 

(a)           Schedule 3.12(a) sets forth an accurate and complete list, as of the date hereof, of all Transferor IP and IT Assets.   The Transferors are the exclusive owners of the

 

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entire and unencumbered right, title and interest in and to, all Transferor IP and IT Assets purported to be owned by the Transferors, and the Transferors have a valid right to use all Transferor IP and IT Assets in the ordinary course of the Business as currently conducted or as contemplated to be conducted free and clear of any and all Liens.  The consummation of the transactions contemplated under the Transaction Documents will not alter, impair, or extinguish any Transferor IP.

 

(b)           Except as set forth on Schedule 3.12(b), the Transferors have taken all commercially reasonable actions to maintain and protect their rights in the Transferor IP including, without limitation, by maintaining the confidentiality of its related Trade Secrets.  All Persons (including, without limitation present and former employees and independent contractors of any Transferor) who have developed any Transferor IP have executed and delivered to the applicable Transferor a valid and enforceable agreement providing for an assignment to such Transferor with respect to such Person’s rights in any Transferor IP.  All Persons who have worked for a Transferor, whether as employees or independent contractors, in developing the Business or who had access to Transferor IP, also have executed and delivered to such Transferor a valid and enforceable agreement providing for the nondisclosure by such Person of any confidential information of such Transferor.  All of such agreements are listed in Schedule 3.12(b) and copies thereof have been delivered to Parent.  All such agreements are and will continue to be in effect after the Closing and, to the Knowledge of Transferor, there have been no breaches of such agreements or of any of the Transferors’ security measures or unauthorized access to the Transferor IP.  At no time during the conception or reduction to practice of any Transferor IP was any developer, inventor or other contributor to such Transferor IP operating directly or indirectly under any grants from any Governmental Authority or subject to any employment agreement, invention assignment, nondisclosure agreement or other Contract with any third Person that could adversely affect the rights of any Transferor, and upon the Closing, Acquiror to such Transferor IP.

 

(c)           To the Knowledge of Transferor, all of the Transferor IP is valid, enforceable and subsisting.  No Transferor has received any notice or claim challenging or questioning the ownership, validity or enforceability of any Transferor IP. The Transferor IP is not subject to any outstanding decree, order, injunction, judgment or ruling restricting the use of such Transferor IP or that would impair the validity or enforceability of such Transferor IP.  Each Transferor has timely paid all filing, examination, issuance, post registration and maintenance fees, annuities and the like associated with or required with respect to any of the registered and applied for Intellectual Property listed on Schedule 3.12(a) (the “Transferor Registered IP”), and all documents, assignments, recordations and certificates necessary to be filed by such Transferor to demonstrate its ownership of the Transferor Registered IP and/or maintain the effectiveness of the Transferor Registered IP have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, so that no item required to be listed in Schedule 3.12(a), has lapsed, expired or been abandoned or canceled other than in the ordinary course of the such Transferor’s business.  Except as set forth on Schedule 3.12(c), none of the Transferor Registered IP requires any maintenance fees to be paid, affidavit of use to be filed or Taxes or actions falling due within six (6) months after the Closing.

 

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(d)           To the Knowledge of Transferor, neither the Transferor IP nor the conduct by the Transferors of the Business as currently conducted or contemplated to be conducted conflicts with, infringes, misappropriates or dilutes any intellectual property or other proprietary rights, including rights of privacy, publicity and endorsement, of any third Person.  No Transferor has received any notice or claim asserting or suggesting that any such infringement, misappropriation or dilution may be occurring or has occurred (including, without limitation, offers to license), nor, to Transferor’s Knowledge, is there any basis therefor.  To Transferor’s Knowledge, no third party is misappropriating, infringing or diluting any Transferor IP.

 

(e)           [Intentionally omitted].

 

(f)            The Transferors have provided Acquiror complete and accurate copies of all Intellectual Property Embodiments and Documentation, if any.

 

(g)           In connection with the Business, to Transferor’s Knowledge, the activities of each Transferor’s current and past managers, members, employees, officers and contractors in connection with their employment or contractual or other relationship with such Transferor did not and do not violate any agreements or arrangements that any such employees or consultants had or have with any former employer or any other Person.  No litigation (or other proceeding in or before any Governmental Authority or arbitral body) charging any Transferor with infringement or unauthorized or unlawful use of any Transferor IP, or alleging that any services provided by, processes used by, or products manufactured or sold by any Transferor infringe or misappropriate any Intellectual Property right of any third party, is pending, or to Transferor’s Knowledge, threatened; nor, to Transferor’s Knowledge, is there any reasonable basis for any such litigation or proceeding.

 

(h)           Schedule 3.12(h)(1) identifies all licenses and other agreements currently in effect pursuant to which each Transferor has licensed, distributed or otherwise granted any rights to any third party with respect to any Transferor IP.  No Transferor has given any party an indemnity in connection with the Transferor IP.  Schedule 3.12(h)(2) identifies all licenses and other agreements currently in effect pursuant to which a third party has licensed, distributed or otherwise granted to any Transferor any rights to such third party’s Intellectual Property, Intellectual Property Embodiments and Documentation, Domain Names or Software that are used in connection with the Business (the foregoing constituting the “IP Agreements”). Except as set forth on Schedule 3.12(h)(3), the Transferor Parties are not obligated to pay any on-going license fees, royalties or any other amount to any other Person in connection with the IP Agreements, the operation of the Business, any license of the Transferor IP or any of the transactions contemplated hereunder, and have no liabilities thereunder.  Consummation of the transactions contemplated by this Agreement will not result in any increase of any fees with respect to any of the IP Agreements. Except as set forth on Schedule 3.12(h)(4), none of the parties to the Transferred Contracts have received, or have a right to receive, any discounts, special pricing or other benefits in connection with the Business other than those expressly set forth in the Transferred Contract entered into by such party.  No Transferor nor, to the Knowledge of Transferor, any other party to any IP Agreement, is in breach or default thereof, and each IP Agreement is fully valid and enforceable in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.

 

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(i)            The IT Assets operate and perform in all material respects in accordance with their operation and performance prior to the date of this Agreement. Each Transferor has implemented reasonable controls to prevent the introduction and use of any devices that enable or assist any Person to access without authorization the IT Assets or otherwise significantly adversely affect such IT Assets’ functionality.  To the Knowledge of Transferor, no Person has gained unauthorized access to the IT Assets.

 

(j)            To the Knowledge of Transferor, each Transferor’s operation of any web sites used in connection with the Business, and content thereof and data processed, collected, stored or disseminated in connection therewith, do not violate any Applicable Laws, or any Person’s right of privacy or publicity.  Each Transferor (i) has obtained all necessary permits, approvals, consents, authorizations or licenses to lawfully operate its web sites and to use its data and (ii) is operating its web sites and using its data in accordance with the scope of such permits, approvals, consents, authorizations or licenses.  Each Transferor has posted a privacy policy governing such Transferor’s use of data, and disclaimers of liability on its web sites, and such Transferor has complied with such privacy policy in all material respects.  Each Transferor has taken all steps in accordance with normal industry practice to secure its web sites and data, and any portion thereof, from unauthorized access or use by any Person.

 

3.13        Advisory Fees.  There is no broker, finder, agent or other intermediary who has been retained by or is authorized to act on behalf of any of the Transferor Parties or their respective Affiliates and is entitled to any fee, commission or reimbursement of expenses upon consummation of the transactions contemplated by the Transaction Documents. For the avoidance of doubt, no manager, member, employee or officer of any Transferor is considered to be a broker, finder, agent or other intermediary of such Transferor, even if they are acting as a finder for, or are planning to become employees of, an Acquiring Party.

 

3.14        Taxes.   Except as set forth on Schedule 3.14, each Transferor Party  has timely filed all Tax Returns required to be filed by such Transferor Party and all such Tax Returns have been true, correct, and complete in all material respects.  Except as set forth on Schedule 3.14, each Transferor Party has timely paid all Taxes imposed on such Transferor Party when the same have become due.  Except as set forth on Schedule 3.14, each Transferor Party has complied with all Applicable Laws relating to the withholding and collection of Tax with respect to the Business (including any withholding with respect to wages or other amounts paid or owing to any employee, independent contractor, creditor, member, shareholder or other third party), and has timely reported such amounts and paid them over to the applicable Governmental Authority.  Except as set forth on Schedule 3.14, there is no outstanding claim, audit or other examination or proceeding with respect to Taxes with respect to any Transferor Party and, to the Knowledge of Transferor, no such claim, audit, examination or proceeding is threatened.  Except as set forth on Schedule 3.14, no claim has ever been made by a Governmental Authority in a jurisdiction where the Transferors do not file Tax Returns that they are or may be subject to taxation by that jurisdiction. There are no Liens on any of the Transferred Assets that arose in connection with any failure (or alleged failure) to pay any Tax.  The Transferor Parties have complied in all material respects with all Applicable Laws with respect to the Business with respect to record retention of Tax records.  No Transferor has any obligation under any agreement providing for the allocation or sharing of Taxes or an agreement providing for an indemnification for Taxes.  True and complete copies of the Tax Returns of each Transferor for each of the three fiscal years

 

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ended as of December 31, 2011, December 31, 2010 and December 31, 2009, and the related schedules and work papers have been delivered by such Transferor to Parent.

 

3.15        Financial Statements.  True and complete copies of (i) the audited balance sheets and the related statements of income and expenses, members’ equity, and cash flows of MMG for each of the two fiscal years ended as of December 31, 2011 and December 31, 2010, together with all related notes and schedules thereto, accompanied by the reports thereon of MMG’s accountants (the “MMG Audited Financial Statements”); (ii) the audited consolidated balance sheet and the related consolidated statements of income and expenses, stockholders’ equity, and cash flows of the Business for the quarterly period ended September 30, 2011; (iii) the unaudited consolidated balance sheet and the related consolidated statement of income and expenses, stockholders’ equity, and cash flows of the Business for the quarterly period ended September 30, 2012, which have been reviewed by SFX’s Accountants; and (iv) for each of 2012 and 2011, the unaudited year-to-date period ended on the last day of the full calendar month immediately preceding the Closing together with all related notes and schedules thereto accompanied by the reports thereon of Transferor’s accountants (the “Transferor Interim Financial Statements” and, together with the MMG Audited Financial Statements, the “Transferor Financial Statements”) have been delivered or will be delivered by Transferor to Parent.  The Transferor Financial Statements (A) were prepared in accordance with the books of account and other financial records of the Transferors, (B) present fairly the consolidated financial condition and results of operations of the Transferors as of the dates thereof or for the periods covered thereby, (C) have been prepared in accordance with GAAP applied on a basis consistent with the past practices of the Transferors, except that the Transferor Financial Statements may not contain all footnotes required by GAAP and (D) include all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the consolidated financial condition of the Transferors and the results of the operations of the Transferors as of the dates thereof or for the periods covered thereby.

 

3.16        Absence of Liabilities, Changes and Events.  Except as set forth on Schedule 3.16, since September 30, 2012, none of the Transferors have (a) incurred any debts, liabilities, claims against or obligations, and to Transferor’s Knowledge, there is no reasonable legal basis therefor, that may adversely affect any of the Transferor Parties’ ability to perform his or its obligations hereunder or under the other Transaction Documents or may adversely affect the ownership of the Transferred Assets or the use thereof by Acquiror in the manner currently used by the Transferors, whether accrued, absolute, contingent or otherwise, and whether due or to become due, including but not limited to liabilities on account of Taxes, other governmental charges, duties, penalties, interest or fines; (b) sold, assigned, transferred or licensed any tangible or intangible asset of any Transferor used in the operation of the Business other than in the Ordinary Course of Business; (c) modified or terminated any IP Agreements; (d) increased any salaries, wages or employee benefits or made any arrangement for payment of any bonus or special compensation for any employee of any Transferor who primarily perform services with respect to the Business other than in the Ordinary Course of Business; (e) agreed to take any action described in (a) through (d) above, or (f) had a Material Adverse Effect with respect to any Transferor.

 

3.17        Operation of the Business.  Except as set forth on Schedule 3.17, since September 30, 2012, the Transferor Parties and their respective Affiliates have conducted the Business,

 

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including ownership and use of the Transferred Assets, only through the Transferors and not through any other divisions or any direct or indirect Subsidiary or Affiliate of any of the Transferor Parties.  Since September 30, 2012, the Transferors have operated the Business in the Ordinary Course of Business.  Except as set forth on Schedule 3.17, to the Knowledge of Transferor, as of the date hereof, there are no material adverse changes, modifications or amendments contemplated to be made to any of the Transferred Contracts or any of the Transferors’ existing, scheduled or planned revenue generating activities with respect to the Business.

 

3.18        Employment and Labor Matters.  Schedule 3.18 lists all employees of the Transferors who primarily perform services with respect to the Business (the “Designated Employees”).  Each Transferor has complied in all material respects with all Applicable Laws respecting employment and employment practices, terms and conditions of employment, wages and hours, and occupational safety and health.  With respect to the Designated Employees:

 

(a)           except for routine government inquiries, examinations and inspections which the Transferors have no reason to believe are material, there are no charges, governmental audits, investigations, administrative proceedings or complaints, grievances or actions concerning the employment practices of any Transferor pending, nor has any of the Transferor Parties been notified of any such matter being threatened, before any Governmental Authority and, to the Knowledge of Transferor, no basis for any such matter exists;

 

(b)           No Transferor is a party to any union or collective bargaining agreement, no union attempts to organize its employees have been made, nor are any such attempts now threatened;

 

(c)           No Transferor has experienced any organized slowdown, work interruption, strike, or work stoppage by any of its employees;

 

(d)           none of such employees have filed any complaints against any Transferor or any managers, members, officers or employees of any Transferor, or initiated any Actions against any of the Transferor Parties or been subject to any disciplinary actions by any Transferor;

 

(e)           No Transferor will incur any Liability to any such employee or, to the Knowledge of Transferors, violate any Applicable Laws respecting employment and employment practices as a result of the transactions contemplated by this Agreement; and

 

(f)            The Transferors have valid written documentation that each such employee is a U.S. resident or is authorized to work in the U.S. and has delivered such documentation to Acquiror.

 

3.19        Employee Benefit Matters.

 

(a)           A true, correct and complete list of the names, titles, base salaries, bonus information, date of hiring, sick and vacation leave that is accrued and unused and all other benefits of the Designated Employees as of the date hereof is included on Schedule 3.19.  To Transferor’s Knowledge, except as contemplated by this Agreement (i) it is not expected that any

 

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of the Designated Employees will be terminating employment with any Transferor prior to the Closing Date or will not commence employment with Acquiror as of the Closing Date,  (ii) to the Knowledge of Transferors,  none of the Designated Employees or former employees of any Transferor have violated any confidentiality agreement or covenant not to compete and (iii) to the Knowledge of Transferors, none of the Designated Employees have violated (A) any material Applicable Laws in the course of their employment with any Transferor, or (B) any material Transferors’ policies, in each case excepting such violations as would not be expected to have a Material Adverse Effect with respect to such Transferor.  All former or current employees (whether or not Designated Employees) which have or had information or access to information regarding the Transferred Assets have entered into a customary confidentiality and covenant not to compete agreement with any Transferor which are and will continue to be in effect after the Closing.

 

(b)           Arising from their employment with a Transferor, the Designated Employees receive benefits or are eligible under only the employee pension benefit plans, as defined in Section 3(2) of ERISA, as are listed in Schedule 3.19 (the “Pension Plans”).  No Transferor has maintained or contributed within the last six (6) years to any other employee pension benefit plan, as defined in Section 3(2) of ERISA, which was subject to Title IV of ERISA.

 

(c)           Arising from their employment with a Transferor, the Designated Employees receive benefits or are eligible under only the employee welfare benefit plans, as defined in Section 3(1) of ERISA (including but not limited to, life insurance, medical, hospitalization, holiday, vacation, disability dental and vision plans) as are listed on Schedule 3.19 (the “Welfare Plans”).

 

(d)           Arising from their employment with a Transferor, the Designated Employees receive benefits or are eligible under only unwritten incentive compensation, material fringe benefit, material payroll or employment practice, bonus, option, stock purchase, severance, sick pay, salary continuation, deferred compensation, supplemental executive compensation plans, employment agreements (other than those terminable at will without severance) and consulting agreements for the benefit of their officers, directors, employees, former employees, or independent contractors as are listed in Schedule 3.19 (the “Compensation Programs”).

 

(e)           Each Pension Plan and Welfare Plan has been operated and administered in substantial compliance with ERISA and the Code; each Pension Plan which is intended to be qualified under Section 401(a) of the Code has been determined by the IRS to be so qualified or a request for such determination has been timely filed with the IRS or the Pension Plan is a prototype plan for which the prototype sponsor has obtained a favorable IRS opinion letter (and to Transferor’s Knowledge no event has occurred between the date of the last such determination and the Closing Date that would reasonably be expected to cause the Internal Revenue Service to revoke such determination).

 

(f)            All amounts required to be paid by any Transferor with respect to any Designated Employee under each Pension Plan, Welfare Plan and Compensation Program on or before the Closing Date have or will be paid.

 

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(g)           Neither the execution and delivery of this Agreement nor the consummation of any of the transactions contemplated hereby or by the Transaction Documents will (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute or otherwise) becoming due to any Designated Employee, (ii) increase any benefits otherwise payable under any Pension Plan, Welfare Plan or Compensation Program to any Designated Employee, or (iii) result in any acceleration of the time of payment or vesting of any such benefits.

 

3.20        Insurance.  With respect to the Business, each Transferor maintains insurance policies that are adequate to cover the levels of coverage as mandated by the Transferred Contracts.  All such insurance policies are listed on Schedule 3.20 and are in full force and effect and enforceable in accordance with their terms, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.

 

3.21        Real Property.  No Transferor owns a fee interest in any real property.  Schedule 3.21 sets forth a true, correct and complete list of all the Transferors’ Leases.  The Transferors have delivered true, complete and correct copies of all such Leases (including, all amendments, modifications and supplements thereof) to Acquiror and each such Lease is in full force and effect. Each Transferor, as tenant under its Leases, is not in arrears in the payment of any rent under such Leases.

 

3.22        Books and Records.  Each Transferor has made and kept (and given the Acquiring Parties access to) the books of account, minute books, stock or other ownership record books and other records of such Transferor relating to the Business. At the time of the Closing, all of such books and records will be in the possession of the Transferors.

 

3.23        Solvency.

 

(a)           No Transferor is now insolvent nor will be rendered insolvent by the transactions contemplated by this Agreement. As used in this Section 3.23, “insolvent” means that the sum of the Liabilities of any Transferor exceeds the present fair market value of such Transferor’s assets.

 

(b)           Immediately after giving effect to the consummation of the transactions contemplated by this Agreement: (i) each Transferor will be able to pay its Liabilities as they become due in the ordinary course of its business; (ii) each Transferor will not have unreasonably small capital with which to conduct its present or proposed business; and (iii) taking into account all pending and threatened Actions, final judgments against each Transferor in actions for money damages are not reasonably anticipated to be rendered at a time when, or in amounts such that, such Transferor will be unable to satisfy any such judgments in accordance with their terms (taking into account the maximum probable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered) as well as all other obligations of such Transferor.

 

(c)           No bankruptcy, reorganization, debt arrangement or other case or Action under any bankruptcy or insolvency law has been commenced with respect to any Transferor.

 

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3.24                        No Other Agreements to Sell the Transferred Assets or Transferor Interests.  None of the Transferor Parties, nor any of their respective representatives or Affiliates, is a party to any Contract with any other Person (other than the Acquiring Parties with respect to clause (a) of this Section 3.24) to (a) sell, assign, transfer or effect a sale of the Business or any of the Transferred Assets, (b) issue, sell, assign, transfer or effect a sale of any Transferor Interests, or (c) effect any merger, consolidation, liquidation, dissolution or other reorganization of any Transferor, or to enter into any Contract or cause the entering into of any Contract with respect to any of the foregoing.

 

3.25                        Affiliates.  Other than the Members, no Transferor is controlled by any Person and no Transferor is in control of any other Person.  Schedule 3.25 lists each Transferred Contract to which a Transferor Party and any Party or any of their Related Persons is a party.  Neither the Members nor any of their respective Related Persons own, directly or indirectly, or otherwise has an interest in whole or in part, any tangible or intangible property (including the Transferor IP) that any Transferor uses or the use of which is necessary for the conduct of the Business or the ownership or operation of the Transferred Assets.

 

3.26                        Securities Law Matters.  The offer and sale of the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, to Nightlife is being made as a private placement pursuant to Section 4(a)(2) of the Securities Act and Regulation D thereunder, and is not being registered under the Securities Act.  Each of the Transferor Parties hereby acknowledges that the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, have not been registered under the Securities Act, or registered or qualified for sale under any state securities laws, and cannot be resold without registration thereunder or exemption therefrom.  Each of the Transferor Parties  is an “accredited investor,” as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D of the Securities Act, and will acquire the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, for his, her or its own account and not with a view to a sale or distribution thereof in violation of the Securities Act, and the rules and regulations thereunder, any applicable state “blue sky” laws or any other applicable securities laws.  Each of the Transferor Parties has sufficient knowledge and experience in financial and business matters to enable him or it to evaluate the risks of investment in the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, is acquiring the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, with a full understanding of all of the terms, conditions and risks thereof, and at the Closing Date will bear and has the ability to bear the economic risk of this investment for an indefinite period of time.  Each of the Transferor Parties understands and agrees to the terms and conditions under which the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, are being offered.

 

3.27                        Legends.  Each of the Transferor Parties acknowledges that, to the extent applicable, each certificate evidencing the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, shall be endorsed with a legend substantially in the form set forth below, as well as any additional legend imposed or required by applicable securities laws:

 

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“THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY U.S. STATE, NOR IS ANY SUCH REGISTRATION CONTEMPLATED. THIS SECURITY AND ANY SECURITY ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.

 

THE HOLDER OF THIS SECURITY AGREES THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO SFX HOLDING CORPORATION, OR ITS SUCCESSOR, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY THE BUYER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. IN ANY CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THE SECURITIES EXCEPT AS PERMITTED UNDER THE SECURITIES ACT.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A CERTAIN LOCK-UP AGREEMENT BETWEEN SFX HOLDING CORPORATION (THE “COMPANY”) AND THE REGISTERED OWNER OF THIS CERTIFICATE, AND SUCH AGREEMENT IS AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE OFFICE OF THE COMPANY.”

 

3.28                        Restricted Securities.  Each of the Transferor Parties acknowledges that the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, are “restricted securities” (as such term is defined in Rule 144 under the Securities Act) and must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available.

 

3.29                        Access to Information.  Each of the Transferor Parties acknowledges that he or it has been afforded an opportunity to request and to review all information considered by them to be necessary to make an investment decision with respect to the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any; provided, however, that Parent acknowledges it has not supplied the Transferor Parties with any information concerning the Other Contributions Agreements. Each of the Transferor Parties has received and reviewed information about Parent and has had an opportunity to discuss Parent’s business, management and financial affairs with its management; provided, however, that Parent acknowledges it has not supplied the Transferor Parties with any information concerning the Other Contributions Agreements.

 

3.30                        Reliance Upon Representations.  Each of the Transferor Parties understands and acknowledges that: (a) the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, have not been registered under the

 

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Securities Act; (b) the representations and warranties contained in Sections 3.26 - 3.31 (the “Accredited Investor Representations”) are being relied upon by Parent as a basis for exemption of the sale of the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, under the Securities Act; (c) the offering of the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, pursuant to this Agreement when issued will not be registered under the Securities Act on the ground that the sale provided for in this Agreement and the issuance of securities hereunder is exempt from the registration requirements of the Securities Act; and (d) no state or federal agency has made any finding or determination as to the fairness of the terms of the sale of the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, or any recommendation or endorsement thereof.  If any of the representations made by the Transferor Parties in connection with their acquisition of the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares and Call/Put Shares, if any, are no longer accurate prior to Closing, the Transferor Parties will promptly notify Parent.

 

3.31                        Exculpation.  Each of the Transferor Parties acknowledges that it is not relying upon any Person or firm, including, without limitation, any of the Acquiring Parties, in making its investment or decision to invest in Parent, other than the representations and warranties of the Acquiring Parties contained in this Agreement.

 

3.32                        Material Misstatements Or Omissions.  No representations or warranties by any of the Transferor Parties in this Agreement (including the Transferor’s Disclosure Schedule) or any Transaction Document to which any of them is a party contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary to make the statements or facts contained therein not misleading.

 

ARTICLE 4
 REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING PARTIES

 

In this Article 4, any reference to the “Knowledge of SFX” or “SFX’s Knowledge” means Parent’s actual knowledge after reasonable inquiry of Parent’s directors and executive officers (within the meaning of Rule 405 under the Securities Act) of the surrounding circumstances.

 

Except as disclosed in that section of the document of even date herewith delivered by Parent to Nightlife prior to the execution and delivery of this Agreement (the “SFX Disclosure Schedule”; all references in this Article 4 to a “Schedule” mean a Schedule of SFX Disclosure Schedule) corresponding to the Section of this Agreement to which any of the following representations and warranties specifically relate or as disclosed in another section of the SFX Disclosure Schedule if it is reasonably apparent from the nature of the disclosure that it is applicable to another Section of this Agreement, each Acquiring Party represents and warrants to the Transferor Parties as follows:

 

4.1                               Corporate Existence and Power.  Each of the Acquiring Parties is a corporation or limited liability company duly incorporated or formed, validly existing and in good standing, and no certificate of dissolution has been filed, under the laws of the jurisdiction of its incorporation

 

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or formation.  Each of the Acquiring Parties has the corporate or limited liability company power to own its properties and to carry on its respective business as now being conducted and as proposed to be conducted.  Each of the Acquiring Parties has delivered or made available to the Transferor Parties a true and correct copy of its charter, bylaws or equivalent organizational documents, each as amended to date.  No Acquiring Party is in violation of any of the provisions of its charter, bylaws or equivalent organizational documents.

 

4.2                               Capital Structure.  The authorized capital stock of Parent consists of (i) 300,000,000 shares of Parent Common Stock, of which there were issued and outstanding as of the close of business on the date hereof, 47,286,467 shares of Parent Common Stock and (ii) 100,000,000 shares of preferred stock, par value $0.001 per share, of which there were issued and outstanding as of the close of business on the date hereof, no shares of preferred stock of Parent.  Schedule 4.2 of the SFX Disclosure Schedule sets forth all of the shares of Parent Common Stock and other securities exercisable for or convertible into capital stock of Parent that will be outstanding as of the date hereof.  The shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares have been duly authorized by all necessary corporate action and, when issued and delivered against payment therefor in accordance with the terms of this Agreement, the shares of Parent Common Stock comprising the Stock Consideration and the Earn-Out Shares will be validly issued, fully paid and non-assessable.  Other than as set forth in this Agreement and as set forth on Schedule 4.2 of the SFX Disclosure Schedule, there are no other outstanding shares of capital stock or voting securities and no outstanding commitments to issue any shares of capital stock or voting securities of Parent after the date hereof.  All outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are free of any Liens other than any Liens created by or imposed upon the holders thereof, and are not subject to preemptive rights or rights of first refusal created by statute, the charter, bylaws or equivalent organizational documents of an, or any, agreement to which Parent is a party or by which it is bound.  There are no other options, warrants, calls, rights, commitments or Contracts of any character to which Parent is a party or by which it is bound obligating Parent to issue, transfer, deliver, sell, repurchase or redeem, or cause to be issued, transferred, delivered, sold, repurchased or redeemed, any shares of capital stock of Parent or obligating Parent to grant, extend, accelerate the vesting and/or repurchase rights of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment or Contract.  There are no Contracts relating to voting, purchase or sale of Parent Common Stock (i) between or among Parent and any of its stockholders and (ii) to SFX’s Knowledge, between or among any of Parent’s stockholders.  Securities issued by Parent to Other Parties under Other Contribution Agreements will be Parent Common Stock.

 

4.3                               Authorization.  Each of the Acquiring Parties has all requisite corporate or limited liability company, as the case may be, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by each of the Acquiring Parties of this Agreement and the consummation of the transactions contemplated by this Agreement and the Transaction Documents are within the corporate powers of each of the Acquiring Parties and have been duly authorized by all necessary corporate or limited liability company, as the case may be, action on the part of each of the Acquiring Parties.  This Agreement has been duly and validly executed by each of the Acquiring Parties and each of the Transaction Documents will be duly and validly executed by and does or will constitute the legal, valid and binding agreement of each of the Acquiring Parties, enforceable

 

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against such party in accordance with its terms (assuming execution by the other parties thereto), subject to general principles of equity (regardless of whether such enforceability is considered in an action in equity or at law).

 

4.4                               Governmental Authorization, Other Consents.  The execution, delivery and performance by each of the Acquiring Parties of this Agreement and the Transaction Documents to which such Acquiring Party is a party requires no action by, consent or approval of, or filing with any Governmental Authority or other Person other than any actions, consents or approvals otherwise expressly referred to in this Agreement and any filings that any Acquiring Party shall make in accordance with Applicable Law.

 

4.5                               Litigation.  There are no actions that have been brought by or against or before any Governmental Authority or any other Person pending or, to the Knowledge of SFX, threatened with respect to any Acquiring Party or any of their respective properties or officers or directors (in their capacities as such).  There are no actions that seek to enjoin or rescind the transactions contemplated by this Agreement or the Transaction Documents, and there are no existing actions, orders, judgments or decrees against or binding upon any Acquiring Party that could reasonably be expected to prevent the performance by any Acquiring Party of the transactions contemplated by this Agreement.

 

4.6                               Non-Contravention.  The execution, delivery and performance by each of the Acquiring Parties of this Agreement and the Transaction Documents to which such Acquiring Party is a party does not and will not (a) contravene or conflict with the organizational documents of any Acquiring Party, true and correct copies of which have been delivered to Nightlife by such Acquiring Party; (b) contravene or conflict with or constitute a violation of any provision of any Applicable Law binding upon any Acquiring Party; or (c) contravene, conflict with or constitute a violation or breach of any agreement to which any Acquiring Party is a party.

 

4.7                               [Intentionally omitted].

 

4.8                               [Intentionally omitted].

 

4.9                               Absence of Undisclosed Liabilities.  Parent has no Liabilities other than (i) as set forth on Schedule 4.9 of the SFX Disclosure Schedule, (ii) those incurred in the Ordinary Course of Business; (iii) those incurred in connection with this Agreement and (iv) those that would not reasonably be expected to have a Material Adverse Effect on Parent.

 

4.10                        Restrictions on Business Activities.  There is no agreement or order of a Governmental Authority binding upon any Acquiring Party which has or reasonably could be expected to have the effect of prohibiting or materially impairing any business practice of any Acquiring Party, any acquisition of property by any Acquiring Party or the conduct of business by any Acquiring Party.

 

4.11                        Title to Property/Leases.  Parent has good and valid title to all of its properties, interests in properties and assets, real and personal.  No Acquiring Party owns a fee interest in any real property.  Schedule 4.11 sets forth a true, correct and complete list of all Leases to which an Acquiring Party is party.  SFX, as tenant under the Leases set forth on Schedule 4.11, is not in arrears in the payment of any rent under the leases.  The Acquiring Parties enjoy peaceful

 

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and undisturbed possession of all the Leased Real Property in the manner provided for in the Leases set forth on Schedule 4.11 and there are no contractual or legal restrictions that preclude or restrict the ability to conduct and operate the Acquiring Parties’ respective businesses on such Leased Real Property as it is presently being conducted and operated thereon.

 

4.12                        Taxes.  Each Acquiring Party has timely filed all Tax Returns required to be filed by such Acquiring Party, if any, and all such Tax Returns have been true, correct, and complete in all material respects.  Each Acquiring Party has timely paid all Taxes imposed on such Acquiring Party, if any, when the same have become due.  Each Acquiring Party has complied with all Applicable Laws relating to the withholding and collection of Tax (including any withholding with respect to wages or other amounts paid or owing to any employee, independent contractor, creditor, member, shareholder or other third party related to such Acquiring Party), and has timely reported such amounts and paid them over to the applicable Governmental Authority.  There is no outstanding claim, audit or other examination or proceeding with respect to Taxes with respect to any Acquiring Party and, to the Knowledge of SFX, no such claim, audit, examination or proceeding is threatened.  Each Acquiring Party has complied  in all material respects with all Applicable Laws with respect to such Acquiring Party with respect to record retention.  No Acquiring Party has any obligation under any agreement providing for the allocation or sharing of Taxes or an agreement providing for an indemnification for Taxes.

 

4.13                        Employee Benefit Plans.  Other than as set forth on Schedule 4.13, no Acquiring Party has any employee compensation, incentive, fringe or benefit plans, programs, policies, commitments or other arrangements (whether or not set forth in a written document) covering any active or former employee, director or consultant of any Acquiring Party, or any trade or business (whether or not incorporated) which is under common control with any Acquiring Party, with respect to which any Acquiring Party has liability or obligation.

 

4.14                        Labor Matters.  No Acquiring Party is a party to any collective bargaining agreement or other labor union contract applicable to Persons employed by any Acquiring Party and, to the Knowledge of SFX, there are no activities or proceedings of any labor union to organize any such employees.

 

4.15                        Compliance With Laws.  Each Acquiring Party has complied with, is not in violation of, and has not received any notices of violation with respect to, any Applicable Law with respect to the conduct of its respective business, or the ownership or operation of its respective business.

 

4.16                        No Material Misstatements or Omissions.  No representations or warranties by any of the Acquiring Parties in this Agreement (including the Acquiring Parties’ Disclosure Schedule) or any Transaction Document to which any of them is a party contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary to make the statements or facts contained therein not misleading.

 

4.17                        No Other Representations and Warranties.  Except as expressly set forth in this Article 4, no Acquiring Party makes any representation or warranty, express or implied, at law or in equity, with respect to the Acquiring Parties, their affiliates, their businesses or financial

 

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condition or any of their assets, Liabilities or operations or any other matter, and any such other representations or warranties are hereby expressly disclaimed.

 

ARTICLE 5
 COVENANTS OF THE PARTIES

 

5.1                               Further Assurances.  The Parties agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement on a timely basis the transactions contemplated by this Agreement.  In addition, at such times and from time to time on and after the Closing Date, upon reasonable request by any of the Acquiring Parties, the Transferor Parties will execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, deeds, assignments, transfers, conveyances, licenses, powers of attorney, and assurances that may reasonably be required for the better conveying, transferring, assigning, delivering and confirming ownership to, or reducing to the possession of, Acquiror all of the Transferred Assets and to otherwise carry out the purposes of this Agreement.

 

5.2                               Certain Filings. Without limiting the generality of Section 5.1, the Parties shall cooperate with one another in determining whether any action by or in respect of, or filing with, any Governmental Authority is reasonably necessary or appropriate, or any action, consent, approval or waiver from any party to any of the Transferred Contracts is reasonably necessary or appropriate, in connection with the consummation of the transactions contemplated by this Agreement.  Subject to the terms and conditions of this Agreement, in taking such actions or making any such filings, the Parties shall furnish information reasonably required in connection therewith and seek timely to obtain any such actions, consents, approvals or waivers.

 

5.3                               Public Announcements; Confidentiality.

 

(a)                                 The Parties agree that prior to issuing any other press release or public announcement concerning any provisions of this Agreement or the transactions contemplated hereby, each party shall so advise the other party hereto, and the Parties shall thereafter use their reasonable efforts to cause a mutually agreeable release or announcement to be issued.  Notwithstanding anything to the contrary contained herein, the Parties may, on a confidential basis, release information regarding the existence and content of this Agreement or the transactions contemplated hereby to their respective Affiliates, agents, accountants, attorneys, prospective lenders, advisors or investors.  Nothing in this Section 5.3 shall prevent Parent or any of its Affiliates from disclosing any information regarding the Transferor Parties, the Business, this Agreement or the transactions contemplated hereby to Other Parties or from the Transferor Parties to inquire of Parent with respect to information concerning the Other Parties.

 

(b)                                 Confidential Information means any confidential business or technical information relating to the operations, business plans, or intellectual property of the Business (and not the other operations of a Transferor) and includes without limitation the Transferors’ Software, the Transferor IP, the Intellectual Property Embodiments and Documentation, the Equipment Embodiments and Documentation, in each case, relating to the Business, and all other confidential information relating to the Business, but excludes (i) information any of the Acquiring Parties discloses to any third party who has not agreed to non-disclosure restrictions

 

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similar to those contained in this Section 5.3(b); (ii) information that is or becomes known to the public or enter the public domain, other than by any fault of any of the Transferor Parties; (iii) information rightfully disclosed to any Transferor Party by a third party that is legally free to disclose such matters; and (iv) information developed by any Transferor Party, alone or with others, that does not utilize the Confidential Information.  Except as otherwise required by Applicable Law, a court of competent jurisdiction or the enforcement of this Agreement or the other Transaction Documents, from and after the Closing Date, none of the Transferor Parties shall, without the prior written consent of Parent, not to be unreasonably withheld or delayed, disclose to any other Person or use (whether for the account of a Transferor or any other party) any Confidential Information; provided, however that each Transferor Party may disclose to its members, accountants, attorneys and lenders Tax and financial information relating to its ownership and operation of the Business.  In the event that any Transferor Party believes that it is required to disclose any such Confidential Information pursuant to Applicable Laws, such Transferor Party shall give timely written notice to Parent so that Parent and its Affiliates may have an opportunity to obtain a protective order or other appropriate relief at the Acquiring Parties’ sole expense.  The Transferor Parties shall use commercially reasonable efforts to cooperate in any such action by Parent and its Affiliates at the Acquiring Parties’ sole expense.

 

5.4                               Offer of Employment.  To the extent a Designated Employee is not party to an employment agreement with a Transferor that is a Transferred Contract, the Transferors shall cooperate with the Acquiring Parties and shall use commercially reasonable efforts to seek to obtain on behalf of the Acquiring Parties the acceptance of an offer of employment by any Designated Employees that the Acquiring Parties may hereafter elect to employ, and the Transferors consent to the Acquiring Parties or any of their respective Affiliates communicating along with a designee of the Transferors with such Designated Employees about offers of employment commencing ten (10) days prior to the Closing Date or such earlier date as the Transferors may agree to in their sole discretion.  Each Member has agreed by his execution of this Agreement to execute and deliver at Closing an employment agreement, substantially in the form attached hereto as Exhibit E (the “Employment Agreement”), or a consulting agreement, substantially in the form attached hereto as Exhibit F (the “Consulting Agreement”), to Parent or, if directed by Parent, one of Parent’s Affiliates.  Except for obligations to the Transferors, to the Knowledge of Transferor, no Member is obligated under or bound by any agreement or instrument, or any judgment, decree, or order of any court of administrative agency, that (a) conflicts with their agreements and obligations to use their commercially reasonable efforts to promote the interests of the Acquiring Parties, or (b) conflicts with the business or operations of the Acquiring Parties.  Without regard to whether Acquiror employs the Members or the Designated Employees, each Transferor shall be solely responsible for all outstanding payments due to the Members and the Designated Employees under their existing terms of employment with such Transferor (including but not limited to salary, severance obligations, vacation pay or any other payment) through the Closing Date and the Transferors acknowledge and agrees that none of the Acquiring Parties shall assume or in any fashion be bound by any employment Contract between any Transferor and the Members or a Designated Employee.

 

5.5                               Assignment of Contracts and Claims.  Notwithstanding any other provisions of this Agreement, nothing in this Agreement or any related document shall be construed as an attempt to assign (a) any Contract which, as a matter of law or by its terms, is nonassignable without the consent of the other parties thereto unless such consent has been given or (b) any

 

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Contract or claim as to which all of the remedies for the enforcement thereof enjoyed by any Transferor would not, as a matter of law or by their terms, pass to Acquiror as an incident of the transfers and assignments to be made under this Agreement.  Nothing in this Section 5.5 shall relieve any Transferor of its obligations to obtain any Required Consents required for the transfer of the Transferred Assets and all rights thereunder to Acquiror.

 

5.6                               Third Party Notification.  Each Party agrees to inform any actual or potential third party purchasers, licensees, or transferees of the restrictions imposed by the Transaction Documents on the rights licensed to or retained by any Transferor, and on the rights acquired by Acquiror, in this transaction.

 

5.7                               Non-Solicitation.

 

(a)                                 Restricted Conduct.  Each Member agrees that he shall not, and shall cause his controlled Affiliates not to, until the first (1st) anniversary of the date of termination of such Member’s employment with an Acquiring Party or one of their Affiliates, directly or indirectly (i) hire or offer employment to or seek to hire any Designated Employee or any other employee of any Acquiring Party or any successor or Affiliate thereof, unless such Acquiring Party first terminates the employment of such employee or gives its written consent to such employment or offer of employment, (ii) induce, solicit, persuade or encourage (or in any manner attempt to induce, solicit, persuade or encourage), or cause or authorize any other Person to induce, solicit, persuade or encourage, any such Designated Employee or any other such employee of any Acquiring Party or any successor or Affiliate thereof, to leave the employ of his or her employer, unless such Person’s employment was terminated by such Acquiring Party or successor or Affiliate thereof, or such Person responded to a “blind advertisement”, (iii) induce, solicit, persuade or encourage (or in any manner attempt to induce, solicit, persuade or encourage), or cause or authorize any other Person to induce, solicit, persuade or encourage, any Person to cease, diminish or not commence doing business with any Acquiring Party or any successor or Affiliate thereof or (iv) disparage the Business or any Acquiring Party or any successor or Affiliate thereof to any Person.

 

(b)                                 Enforceability.  The terms of this Section 5.7 are a material inducement to the Acquiring Parties to enter into this Agreement and the Transaction Documents to which they are a party and to consummate the transactions contemplated hereunder and thereunder.  The Parties acknowledge and agree that any violation of this Section 5.7 will result in irreparable injury to the Acquiring Parties and agree that the Acquiring Parties shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of this Section 5.7, which rights shall be cumulative and in addition to any other rights or remedies to which the Acquiring Parties may be entitled.  The Parties acknowledge and agree that the restrictive covenants contained herein are reasonable under the circumstances and further agree that the covenants contained in this Section 5.7 should be interpreted in such a manner as to be effective and valid under Applicable Law.  In the event any portion of this Section 5.7 shall be held to be illegal or unenforceable, the remainder of this Section 5.7 shall remain in full force and effect.  If any of the restrictions contained in this Section 5.7 shall for any reason be held to be excessively broad as to duration, scope, activity or subject, such provision shall be construed

 

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by limiting or reducing it so as to be enforceable to the maximum extent compatible with Applicable Law.

 

5.8                               Non-Competition.

 

(a)                                 Until the first (1st) anniversary of the date of termination of their respective employment or consultancy with an Acquiring Party or one of their respective Affiliates, each Member agrees that he shall not, and shall cause his controlled Affiliates not to, directly or indirectly, (i) solicit, induce or cause any Person with whom any Transferor Party had a business relationship with respect to the Business to reduce or terminate such Person’s business relationship with an Acquiring Party or any of their respective Affiliates or their successors or assigns; and none of the Transferor Parties shall, directly or indirectly, approach any such Person for any such purpose, or authorize or assist in the taking of any of such actions for any such purpose or authorize or assist in the taking of any such actions by any Person, (ii) engage in any Restricted Activity, (iii) acquire, or own in any manner, any interest in any Person that engages in any Restricted Activity, or that engages in any business, activity or enterprise that competes with any aspect of any of Restricted Activity, or (iv) be interested in (whether as an owner, director, officer, partner, member, manager, joint venturer, lender, shareholder, vendor, consultant, employee, advisor, agent, independent contractor or otherwise), or otherwise participate in the management or operation of, any Person that engages in any Restricted Activity or in any business, activity or enterprise that competes with any Restricted Activity; provided, however, that this Section 5.8(a) shall not apply to (x) the ownership of less than five percent (5%) of the outstanding stock of any Person who has a class of securities that is publicly traded, or (y) with respect to any Member, those circumstances set forth in Section 10(a)(iii) and (iv) of such Member’s Employment Agreement.

 

(b)                                 The Parties acknowledge that the acquisition of the Business and the goodwill of the Business is an essential component of the transactions contemplated hereby, and believe that the goodwill of the Transferors and of the Business is a valuable asset and an essential inducement to the Acquiring Parties to enter into this Agreement and to consummate the transactions to be consummated pursuant to this Agreement.  The Parties acknowledge that it could substantially dilute the value of such goodwill if any of the Transferor Parties violated any of the provisions of Section 5.8.  In order to induce the Acquiring Parties to enter into this Agreement and as a condition precedent to the consummation of the transactions contemplated by this Agreement, each of the Transferor Parties agrees, insofar as he or it acts in its capacity as a selling equity holder, or a controlling person thereof, and not as an employee, a manager, a member of a management board or a consultant, to accept and be bound by the restrictions as set forth in Section 5.8(a).  In addition, the Parties acknowledge and agree that the provisions of Section 5.8(a) and the period of time, geographic area and scope and type of restrictions on its activities set forth in such Section, are reasonable and necessary for the protection of the Acquiring Parties, which are paying substantial consideration and other benefits to the Transferor Parties in consideration for the covenants of the Transferor Parties hereunder.

 

(c)                                  If any provision contained in any of Section 5.8(a) shall be determined by any court or other tribunal of competent jurisdiction to be invalid or unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, (i) such provision shall be interpreted to extend over

 

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the maximum period of time for which it may be enforceable and/or over the maximum geographical area as to which it may be enforceable and/or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court or other tribunal making such determination, and (ii) in its reduced form, such provision shall then be enforceable, but such reduced form of provision shall only apply with respect to the operation of such provision in the particular jurisdiction in or for which such adjudication is made.  It is the intention of the Parties that the provisions of Section 5.8(a) shall be enforceable to the maximum extent permitted by Applicable Law.

 

(d)           The Parties acknowledge and agree that any breach or threatened breach of the covenants or other provisions contained in Section 5.8(a) may cause the Acquiring Parties material and irreparable damage, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, the Acquiring Parties shall, in addition to all other available rights and remedies (including, but not limited to, seeking such damages as it can show it has sustained by reason of such breach and recovery of costs and expenses including, but not limited to, attorneys’ fees and expenses), be entitled to seek specific performance and injunctive relief (including, without limitation, a temporary and/or permanent restraining order and/or a permanent injunction) in respect of any breach or threatened breach of any of such covenants or provisions.

 

5.9          Business Examinations and Physical Investigations of Transferred Assets.  Prior to the Closing, the Acquiring Parties shall be entitled, through their respective employees and representatives, including, without limitation, their respective auditors, and consultants and advisors, to make such investigations and examinations of the Business, the Transferred Assets, the books and records of Transferor relating to the Business and the affairs and financial condition of Transferor relating to the Business as the Acquiring Parties may request for the purpose of familiarizing the Acquiring Parties with the Business.  In order that the Acquiring Parties may have the full opportunity to do so, Transferor shall furnish the Acquiring Parties and their respective representatives during such period with all information concerning the Business, the Transferred Assets and the affairs and financial condition of Transferor as the Acquiring Parties or such representatives may reasonably request and cause Transferor’s officers, employees, consultants, agents, accountants and attorneys to use commercially reasonable efforts to cooperate with the Acquiring Parties and such representatives and to provide all such information and documents requested by the Acquiring Parties and/or such representatives.

 

5.10        Required Consents. The Transferor Parties shall use commercially reasonable efforts to obtain all Required Consents for all Transferred Contracts as promptly as practicable after the date hereof and shall cooperate with the Acquiring Parties in connection with the foregoing.  If Schedule 2.1(c) reflects that a contract is still under review, or if a Required Consent is not obtained prior to the Closing and the Acquiring Parties elect to waive the condition that such Required Consent be obtained prior to Closing, (a) Transferor shall continue to use commercially reasonable efforts to obtain such Required Consent as promptly as practicable after the Closing Date, (b) Transferor shall continue to maintain in effect the lease for its Miami office, and shall permit the Members to continue to use their existing office at 1000 Lincoln Road, Suite 200, Miami Beach, FL 33139 on behalf of Acquiror at no charge, until the Required Consent relating thereto is obtained or Acquiror notifies Transferor that it has elected not to accept such Transferred Contract, (c) until such time as Required Consents are obtained

 

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for any other Transferred Contract for which a Required Consent is necessary, Transferor shall, without any cost to Acquiror, provide Acquiror with all benefits of Transferor under such Transferred Contracts, (d) Acquiror may at any time elect not to accept an assignment of a Transferred Contract for which a Required Consent has not been obtained or if Schedule 2.1(c) reflects that a contract is still under review, in which event neither of the Acquiring Parties shall have any obligations thereunder and such Transferred Contract shall instead be part of the Excluded Assets, and (e) at such time as such Required Consents are obtained after the Closing or Acquiror elects to accept a Transferred Contract which was still under review, Transferor shall, within three (3) Business Days of request by Acquiror, deliver to Acquiror an executed assignment and assumption agreement with respect to such Transferred Contract.

 

5.11        Conduct of the Business.

 

(a)           Affirmative Covenants.  Each of the Transferor Parties covenants and agrees that, between the date hereof and the earlier of (A) the Closing or (B) the termination of this Agreement, the Transferor Parties (solely to the extent it relates to the Business) shall:

 

(i)            conduct the Business in the Ordinary Course of Business;

 

(ii)           use reasonable efforts to preserve intact in all material respects the business organization of the Business and the Transferor Parties’ relationships with employees, customers, strategic partners, suppliers, distributors, landlords and others with whom the Transferor Parties deal with in connection with the conduct of the Business and in the Ordinary Course of Business of the Business;

 

(iii)          pay Transferor’s accounts payable and other obligations in connection with the Business when they become due and payable in the Ordinary Course of Business;

 

(iv)          perform all of Transferor’s obligations under all Contracts to which Transferor is a party, by which Transferor or any of the Transferred Assets is bound or affected in connection with the Business or pursuant to which Transferor is an obligor or beneficiary in connection with the Business, and comply in all material respects with all Applicable Law in connection with the Business;

 

(v)           maintain the Transferred Assets in a state of repair and condition that complies in all material respects with Applicable Law and is consistent with the requirements and normal conduct of the Business;

 

(vi)          continue in full force and effect its insurance policies;

 

(vii)         maintain Transferor’s books and records in connection with the Business consistent with the Ordinary Course of Business; and

 

(viii)        confer with Acquiror concerning operational matters of a material nature in connection with the Business and otherwise report periodically to Acquiror concerning the state of Transferor’s Business.

 

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(b)           Negative Covenants.  Each of the Transferor Parties covenants and agrees that, between the date hereof and the earlier of (A) the Closing or (B) the earlier termination of this Agreement, without the prior written consent of Acquiror, the Transferor Parties (solely to the extent it relates to the Business) shall not:

 

(i)            cause Transferor to enter into, assume or become subject to any Contract in connection with the Business;

 

(ii)           amend, waive any right under, cancel or terminate any of the Transferred Contracts;

 

(iii)          grant or announce any increase in the salaries, bonuses or other benefits payable by Transferor to any of the Designated Employees to be offered employment by either of the Acquiring Parties, other than as required by Applicable Law, pursuant to any plans, programs or agreements existing on the date hereof or other ordinary increases consistent with the past practices of Transferor;

 

(iv)          institute, adopt or amend any compensation or benefit plan, policy, program or arrangement or collective bargaining agreement applicable to any of the Designated Employees to be offered employment by either of the Acquiring Parties, other than as required by Applicable Law;

 

(v)           change any method of accounting or accounting practice or policy used by Transferor other than such changes required by GAAP;

 

(vi)          fail to exercise any rights of renewal with respect to any of Transferor’s Leased Real Property that by its terms would otherwise expire;

 

(vii)         settle or compromise any claims of Transferor in connection with the Business (other than Excluded Assets) except in the Ordinary Course of Business;

 

(viii)        permit or allow any of the Transferred Assets to be subjected to any Lien;

 

(ix)          incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities of others;

 

(x)           sell, transfer, lease, sublease, license or otherwise dispose of any properties or assets, real, personal or mixed (including leasehold interests and intangible property) of Transferor used in connection with the Business; or

 

(xi)          agree, whether in writing or otherwise, to take any of the actions specified in this Section 5.11, except as contemplated by this Agreement and the other Transaction Documents.

 

5.12        No Solicitation or Negotiation.  Each of the Transferor Parties agrees that between the date of this Agreement and the earlier of (a) the Closing and (b) the termination of this Agreement, none of the Transferor Parties nor any of their respective Affiliates, officers,

 

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managers, members, representatives or agents will (i) solicit, initiate, consider, encourage or accept any other proposals or offers from any Person (A) relating to any acquisition or purchase of all or any portion of the Transferor Interests or any Transferred Assets or (B) to enter into any merger, consolidation, business combination, recapitalization, reorganization or other extraordinary business transaction involving or otherwise relating to the Business or (ii) participate in any discussions, conversations, negotiations and other communications regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any other Person to seek to do any of the foregoing.  Between the date of this Agreement and the earlier of (a) the Closing and (b) the termination of this Agreement, each of the Transferor Parties immediately shall cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons conducted heretofore with respect to any of the foregoing.  Between the date of this Agreement and the earlier of (a) the Closing and (b) the termination of this Agreement, each of the Transferor Parties shall notify SFX promptly if any such proposal or offer, or any inquiry or other contact with any Person with respect thereto, is made and shall, in any such notice to SFX, indicate in reasonable detail the identity of the Person making such proposal, offer, inquiry or contact and the terms and conditions of such proposal, offer, inquiry or other contact.  Between the date of this Agreement and the earlier of (a) the Closing and (b) the termination of this Agreement, each of the Transferor Parties agrees not to, without the prior written consent of the Acquiring Parties, release any Person from, or waive any provision of, any confidentiality or standstill agreement to which such Transferor Party is a party.

 

5.13        Satisfaction of Obligations to Creditors.  At or prior to the Closing Date, the Transferor Parties will satisfy or cause to be satisfied all obligations of Transferor owed to its creditors or take other action or obtain other consents necessary to permit Acquiror to obtain clear title to the Transferred Assets free of all Liens other than for Assumed Liabilities, and the Transferor Parties will deliver or cause to be delivered to Acquiror termination statements, releases and other appropriate evidence requested by SFX to the effect that no Liens against the Transferred Assets other than Liens for Assumed Liabilities exist as of the completion of the Closing.

 

5.14        Access to Information.  (a)  Except as prohibited by Applicable Law, each of the Transferor Parties shall afford the Acquiring Parties and their respective accountants, counsel, agents, employees, financing sources and representatives reasonable access during normal business hours during the period through the Closing Date to (i) all of their respective properties, books, contracts, commitments and records, and (ii) all other information concerning their respective businesses, properties and personnel, as an Acquiring Party may reasonably request.  Each of the Transferor Parties agrees to provide to the Acquiring Parties and their respective accountants, counsel, agents, employees, financing sources and other representatives copies of internal financial statements and projections promptly upon request.

 

(b)           Subject to compliance with Applicable Law, from the date hereof until the Closing Date, each of the Transferor Parties shall confer with the Acquiring Parties on a regular basis to report matters of materiality relating to the transactions contemplated by this Agreement and with respect to the Business.

 

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(c)           Each of the Transferor Parties shall provide the Acquiring Parties and their accountants, counsel, agents, employees, financing sources and representatives reasonable access, during normal business hours during the period through the Closing Date, to all of their respective Tax Returns and other records and workpapers relating to Taxes, and shall also provide the following information upon an Acquiring Party’s request:  (i) a schedule of the types of Tax Returns being filed in each taxing jurisdiction, (ii) a schedule of the year of the commencement of the filing of each such type of Tax Return, (iii) a schedule of all closed years with respect to each such type of Tax Return filed in each jurisdiction, (iv) a schedule of all material Tax elections filed in each jurisdiction, (v) a schedule of any deferred intercompany gain with respect to transactions to which any of the parties hereto, or any of their respective Subsidiaries, has been a party, and (vi) receipts for any Taxes paid to foreign Tax authorities.

 

5.15        Parent SEC Documents.  (a)  Each of the Transferor Parties shall promptly furnish to Parent in writing all information concerning such Transferor Party that may be required by applicable securities laws or reasonably requested by Parent, including, without limitation, the audited consolidated balance sheets and the related consolidated statements of income and expenses, shareholders’ equity, and cash flows of Transferor for the fiscal year ended as of December 31, 2012, together with all related notes and schedules thereto, accompanied by the reports thereon of the Company’s accountants, and any other financial statements or financial information reasonably requested by Parent, for inclusion in any registration statements, prospectuses, forms, reports, definitive proxy statements, schedules, statements and documents filed or furnished by Parent under the Securities Act or the Exchange Act, as the case may be, together with all certifications required pursuant to the Sarbanes-Oxley Act of 2002, such documents and any other documents to be filed by Parent with the SEC (collectively, the “Parent SEC Documents”).  Each of the Transferor Parties agrees to promptly correct any information provided by it for use in any Parent SEC Document, if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by Applicable Law.  With respect to any Parent SEC Document that references a Transferor Party by name, such Transferor Party and his, her or its counsel, shall be given a reasonable opportunity to review such Parent SEC Document before it is filed with the SEC, and Parent shall give due consideration to the reasonable additions, deletions or changes suggested thereto by such party.  In addition, with respect to any Parent SEC Document that references a Transferor Party by name, Parent shall provide such Transferor Party and his, her or its counsel, with copies of any written comments, and shall inform them of any oral comments, that Parent or its counsel may receive from time to time from the SEC or its staff with respect to any Parent SEC Document promptly after receipt of such comments, and any written or oral responses thereto.  With respect to any Parent SEC Document that references a Transferor Party by name, such Transferor Party and his, her or its counsel, shall be given a reasonable opportunity to review any such written responses and Parent shall give due consideration to the reasonable additions, deletions or changes suggested thereto by such party.

 

(b)           From and after the date hereof, each of the Transferor Parties shall (i) provide Parent and its accountants, counsel, agents and employees with such information concerning the Business, (ii) provide Parent and its accountants, counsel, agents and employees with reasonable access, during normal business hours and in a manner as not to interfere with their respective normal business operations, to their respective accounting personnel and independent auditors (and each of the Transferor Parties shall cause such persons to reasonably assist Parent and its

 

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accountants, counsel, agents and employees with the preparation of any pro forma financial statements or other financial statements required in connection with a Parent SEC Document) and (iii) as may be required by the independent auditors, deliver representation letters, or cause their legal counsel to deliver audit response letters, to such independent auditors, in each case, as Parent may reasonably require in connection with Parent’s preparation and filing with the SEC of any Parent SEC Documents.  In the event that the SEC makes any review or inquiry with respect to information provided by any of the Transferor Parties, including any such inquiry regarding such financial statements, as promptly as practicable after being notified by Parent of such review or inquiry, such Transferor Party will provide such reasonable cooperation and assistance as may be required by Parent in responding to such review or inquiry.

 

(c)           Each of the Transferor Parties agrees to use its best efforts to obtain the required consent of the Transferors’ accountant for inclusion of the Transferor Financial Statements in any other Parent SEC Documents or otherwise as reasonably requested by Parent.

 

ARTICLE 6
 CONDITIONS TO THE TRANSFEROR PARTIES’ OBLIGATIONS

 

The obligations of the Acquiring Parties to consummate the transactions provided for hereby are subject to the satisfaction (or, to the extent legally permissible, the waiver by Acquiror in writing), on or prior to the Closing Date, of each of the following conditions:

 

6.1          Representations, Warranties and Covenants.  (a) All representations and warranties of the Transferor Parties, other than the Accredited Investor Representations, shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing Date (except to the extent expressly by its terms made as of an earlier date, in which case at and as of such earlier date), (b) all of the Accredited Investor Representations shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date and (c) each of the Transferor Parties shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed by each such Party prior to or on the Closing Date.  Transferor shall have delivered to Acquiror a certificate in form and substance reasonably satisfactory to Acquiror dated as of the Closing Date and executed by the Members to all such effect.

 

6.2          Governmental Authorizations; Regulatory Compliance.  All Governmental Authorizations, if any, required to consummate the transactions contemplated by this Agreement shall have been obtained or made, without any limitation, restriction or condition not already applicable to the Transferor Parties being imposed on any Acquiring Party or any of their Affiliates or their ownership or use of any of the Transferred Assets or the conduct or operation of the Business.  The Transferor Parties shall have complied with all Regulations applicable to them in connection with the consummation of the transactions contemplated by this Agreement.

 

6.3          Required Consents.  All Required Consents required for the assignment of those Transferred Contracts set forth on Schedule 6.3 shall have been obtained or made, and no limitation, restriction or condition not already applicable to the Transferor Parties shall be imposed in connection with such Required Consents on any Acquiring Party or any of their

 

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Affiliates or their ownership or use of any of the Transferred Assets or the conduct or operation of the Business.

 

6.4          Amendments and/or Waivers to Transferred Contracts.  Each Transferred Contracts set forth on Schedule 6.4 shall have been amended, or certain provisions thereof waived, in the manner set forth on Schedule 6.4.

 

6.5          No Injunction, etc.  Consummation of the transactions contemplated by this Agreement or any of the Transaction Documents shall not have been restrained, enjoined or otherwise prohibited by any order, injunction, decree or judgment of any court or other Governmental Authority.  No court or other Governmental Authority shall have determined that any Applicable Law makes illegal the consummation of the transactions contemplated by this Agreement or the Transaction Documents.

 

6.6          Transaction Documents.  Each Transferor Party shall have executed and delivered to the Acquiring Parties all Transaction Documents to which such Transferor Party is a party.

 

6.7          Employment Agreement.  Each of the Members shall have executed and delivered to an Acquiring Party or one of its Affiliates the Employment Agreement.  Employment would only commence upon Closing.

 

6.8          Designated Employees.  Parent, Acquiror or one of their respective Affiliates, shall have entered into such other employment arrangements or understandings concerning the employment of the Designated Employees as shall be satisfactory to the Acquiring Parties in their sole discretion, which employment arrangements or understandings shall be in full force and effect upon the Closing.

 

6.9          Audited Financial Statements.  Parent shall have received the Transferor Financial Statements set forth in Section 3.15, audited or reviewed, as the case may be, by SFX’s Accountant.

 

6.10        Corporate Authorizations.  Parent shall have received the executed joint written consent of the board of directors and stockholders of each of Grutman Inc. and SEBU, adopting and authorizing the execution of this Agreement and approving the transactions contemplated hereby, in each case, on behalf of Grutman Inc. and SEBU, and in their capacities as members of Nightlife.

 

6.11        No Material Adverse Effect.  No Material Adverse Effect with respect to Transferor shall have occurred.

 

ARTICLE 7
 CONDITIONS TO THE TRANSFEROR PARTIES’ OBLIGATIONS

 

The obligations of the Transferor Parties to consummate the transactions provided for hereby are subject to the satisfaction (or, to the extent legally permissible, the waiver by Transferor in writing), on or prior to the Closing Date, of each of the following conditions:

 

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7.1          Representations, Warranties and Covenants.  (a) All representations and warranties of the Acquiring Parties contained in this Agreement shall be true and correct in all material respects at and as of the date of this Agreement and at and as of the Closing Date (except to the extent expressly by its terms made as of an earlier date, in which case at and as of such earlier date), and (b) each of the Acquiring Parties shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed by each such Party prior to or on the Closing Date.  Each Acquiring Party shall have delivered to Transferor a certificate in form and substance satisfactory to Transferor dated as of the Closing Date and executed by an authorized officer to all such effect.

 

7.2          No Injunction, etc.  Consummation of the transactions contemplated by this Agreement or any of the Transaction Documents shall not have been restrained, enjoined or otherwise prohibited by any order, injunction, decree or judgment of any court or other Governmental Authority.  No court or other Governmental Authority shall have determined or asserted that any Applicable Law makes illegal the consummation of the transactions contemplated by this Agreement or the Transaction Documents.

 

7.3          Transaction Documents.  The Acquiring Parties shall have executed and delivered to the Transferor Parties all Transaction Documents to which any of them is a party.

 

ARTICLE 8
 CLOSING

 

8.1          Closing Date.  The closing (the “Closing”) of the transactions contemplated by this Agreement shall take place on the date that all the conditions set forth in Articles 6 and 7 are satisfied or, if permissible, waived on or prior to such date (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions at the Closing); provided, however, that, in no event shall the Closing occur on or before the date that is 30 days following the date hereof unless Parent, in its sole discretion, provides at least five (5) Business Days notice prior to a desired Closing Date falling within such 30 day period.  The date on which the Closing occurs shall be referred to as the “Closing Date”.

 

8.2          Closing Deliveries.

 

(a)           At Closing, Parent shall pay or deliver, or cause to be paid or delivered, as the case may be, to Nightlife:

 

(i)            an amount equal to the Cash Payment;

 

(ii)           an original stock certificate evidencing the Stock Consideration;

 

(iii)          Transaction Documents duly executed by the Acquiring Parties, as applicable; and

 

(iv)          A certificate, in form and substance reasonably satisfactory to Nightlife, signed by an authorized officer of each of the Acquiring Parties certifying the matters described in Section 7.1.

 

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(b)           At the Closing, the Transferor Parties shall deliver to Acquiror:

 

(i)            The Transferred Assets, including without limitation, copies of all books, records, files, and documents of each Transferor relating to any of the Transferred Assets or otherwise related or necessary to the commercial exploitation of the Transferred Assets or the Business, and without limiting the foregoing, electronic media including complete and accurate copies of all Intellectual Property Embodiments and Documentation, with all electronic media to be delivered fully functioning; provided that if Acquiror waives the closing condition that a Required Consent be obtained for any Transferred Contract, such Transferred Contract shall not be assigned to Acquiror at the Closing, but shall instead be assigned at such time as the Required Consent is obtained;

 

(ii)           Transaction Documents duly executed by the Transferor Parties, as applicable;

 

(iii)          A certificate, in form and substance reasonably satisfactory to Acquiror, signed by each Transferor certifying the matters described in Section 6.1; and

 

(iv)          All Required Consents set forth on Schedule 6.3, all Governmental Authorizations and all amendments to and/or waivers under Transferred Contracts set forth on Schedule 6.4 required to consummate the transactions contemplated by this Agreement.

 

ARTICLE 9
 INDEMNIFICATION

 

9.1          Transferor Parties’ Agreement to Indemnify.  Subject to the limitations set forth below, the Transferor Parties shall, jointly and severally, indemnify and hold harmless the Acquiring Parties and their Affiliates, directors, managers, members, officers, employees, attorneys, agents, representatives, successors and permitted assigns (collectively, the “Acquiring Party Indemnitees”) in respect of any and all Damages reasonably incurred by any Acquiring Party Indemnitee in connection with, or resulting from, any or all of the following

 

(a)           any breach of any representation or warranty made by any of the Transferor Parties in this Agreement or the Transaction Documents;

 

(b)           any breach in the performance of any covenant, agreement or obligation of any of the Transferor Parties contained in this Agreement;

 

(c)           any Liabilities of any of the Transferor Parties or their respective Affiliates (other than the Assumed Liabilities), including, without limitation, all Liabilities related to the matters set forth on Schedule 3.8 of Transferor’s Disclosure Schedule;

 

(d)           any Transfer and Sales Taxes in connection with the transactions contemplated hereunder;

 

(e)           except as otherwise provided in this Agreement or any of the Transaction Documents, any Tax for which any of the Transferor Parties is or becomes liable, including,

 

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without limitation, in connection with the matters set forth on Schedule 3.14 of Transferor’s Disclosure Schedule; and

 

(f)            any fees, expenses or other payments incurred or owed by any of the Transferor Parties to any agent, broker, investment banker or other firm or Person retained or employed by it in connection with the transactions contemplated by this Agreement and the Transaction Documents.

 

9.2          Acquiring Parties’ Agreement to Indemnify.  The Acquiring Parties shall, jointly and severally, indemnify and hold harmless the Transferor Parties and their attorneys, agents, representatives, successors and permitted assigns (collectively, the “Transferor Party Indemnitees”) in respect of any and all Damages reasonably incurred by any Transferor Party Indemnitee to the extent caused by any or all of the following:

 

(a)           any breach of any representation or warranty made by any Acquiring Party in this Agreement or the Transaction Documents;

 

(b)           any breach in the performance of any covenant, agreement or obligation of any Acquiring Party contained in this Agreement;

 

(c)           any Assumed Liabilities;

 

(d)           the operation of the Business after the Closing; and

 

(e)           any fees, expenses or other payments incurred or owed by any of the Acquiring Parties to any agent, broker, investment banker or other firm or Person retained or employed by it in connection with the transactions contemplated by this Agreement or the Transaction Documents.

 

9.3          Limitations on Duties to Indemnify.  Except for (i) their duty to indemnify the other party for claims of fraud, gross negligence, actions taken in bad faith or intentional misrepresentation of material facts, the Parties’ respective indemnification obligations for a breach of a representation or warranty (other than Excluded Representations and Warranties) shall be subject to each of the following limitations:

 

(a)           An Indemnifying Party has no obligation to indemnify any Indemnitee unless the aggregate of all Damages for which the Indemnifying Party would be liable exceeds on a cumulative basis an amount exceeding $200,000 (the “Threshold Amount”), whereupon the amount of Damages (but only above and not below the Threshold Amount), and all subsequent Damages in excess of the Threshold Amount, shall become due and payable.

 

(b)           The maximum amount of liability that the Transferor Parties may have by reason of this Agreement or the Transaction Documents to any Acquiring Party Indemnitees or any other Person, in the aggregate, with respect to claims for indemnification under this Article 9 or under any other theory of recovery shall be $6,750,000, including costs of defense. In no event shall the aggregate liability of any Member for indemnification under this Agreement exceed the portion of the Purchase Price attributable to such Member’s interests in a Transferor Party, as

 

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determined by reference to their percentage ownership interest in a Transferor Party as of the Closing Date.

 

9.4                               Survival of Representations, Warranties and Covenants.

 

(a)                                 All representations, warranties, covenants, agreements and obligations of each Indemnifying Party contained in this Agreement and all claims of any Acquiring Party Indemnitee or Transferor Party Indemnitee in respect of any breach of any representation, warranty, covenant, agreement or obligation of any Indemnifying Party contained in this Agreement, shall survive the execution of this Agreement, and shall expire 18 months following the Closing Date, except that:

 

(i)                                     the covenants, agreements or obligations of any of the Transferor Parties or any of the Acquiring Parties which by their terms are to be performed after the execution of this Agreement shall survive the Closing Date and shall not expire unless otherwise expressly provided in this Agreement, including, without limitation, the covenants, agreements or obligations of any of the Transferor Parties or any of the Acquiring Parties in Sections 5.7, 5.8, 9.1, 9.2 and 9.4; and

 

(ii)                                  the Excluded Representations and Warranties, and all claims of any Transferor Party Indemnitee or Acquiring Party Indemnitee in respect of any breach of any such representation or warranty, shall survive the Closing Date and shall expire 30 days after the expiration of all applicable statutes of limitations, including extensions thereof.

 

(b)                                 Notwithstanding anything herein to the contrary, indemnification for claims for which written notice as provided in Section 9.5 has been given prior to the expiration of the representation, warranty, covenant, agreement or obligation upon which such claim is based shall not expire, and claims for indemnification thereon may be pursued, until the final resolution of such claim.

 

(c)                                  Notwithstanding anything herein to the contrary, indemnification for claims which arise out of the fraud, gross negligence, action taken in bad faith or intentional misrepresentation of the Indemnifying Party shall expire 30 days after the expiration of all applicable statutes of limitations, including extensions thereof.

 

(d)                                 No Indemnifying Party is required to indemnify any Indemnitee under this Agreement for any loss resulting from an inaccurate representation herein if the Indemnifying Party establishes that the Indemnitee had knowledge of that inaccuracy before the Closing.

 

9.5                               Claims for Indemnification.  If any Indemnitee shall believe that such Indemnitee is entitled to indemnification pursuant to this Article 9 in respect of any Damages, such Indemnitee shall give the appropriate Indemnifying Party prompt written notice thereof.  Any such notice shall set forth in reasonable detail and to the extent then known the basis for such claim for indemnification.  The failure of such Indemnitee to give notice of any claim for indemnification promptly, but within the applicable periods specified by Section 9.4, shall not adversely affect such Indemnitee’s right to indemnity hereunder except to the extent (and only to the extent) that such failure adversely affects the right of the Indemnifying Party to assert all reasonable defenses to such claim.  Each such claim for indemnity shall expressly state that the

 

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Indemnifying Party shall have only the 20 calendar-day period referred to in the next sentence to dispute or deny such claim.  The Indemnifying Party shall have 20 calendar days following its receipt of such notice either (y) to acquiesce in such claim and its respective responsibilities to indemnify the Indemnitee in respect thereof in accordance with the terms of this Article 9 by giving such Indemnitee written notice of such acquiescence or (z) to object to the claim by giving such Indemnitee written notice of the objection.  If the Indemnifying Party does not object thereto within such 20 calendar-day period, such Indemnifying Party shall be deemed to have acquiesced in such claim and its respective responsibilities to indemnify the Indemnitee in respect thereof in accordance with the terms of this Article 9.

 

9.6                               Defense of Claims. Except as otherwise set forth in the last sentence of this Section 9.6, in connection with any claim which may give rise to indemnity under this Article 9 resulting from or arising out of any claim or Action against an Indemnitee by a Person that is not a party hereto, the Indemnifying Party may (unless such Indemnitee elects not to seek indemnity hereunder for such claim), upon written notice sent at any time to the relevant Indemnitee, assume the defense of any such claim or Action, to the extent that the claim or Action relates only to monetary damages and not the Transferred Assets or the ability to exploit the Transferred Assets, and such Indemnifying Party provides assurances, reasonably satisfactory to such Indemnitee, that the Indemnifying Party will be financially able to satisfy such claim in full if such claim or Action is decided adversely.  The Indemnifying Party shall select counsel reasonably acceptable to such Indemnitee to conduct the defense of such claim or Action, shall take all steps reasonably necessary in the defense or settlement thereof and shall at all times diligently and promptly pursue the resolution thereof.  If the Indemnifying Party shall have assumed the defense of any claim or Action in accordance with this Section 9.6, the Indemnifying Party shall be authorized to consent to a settlement of or to the entry of any judgment arising from, any such claim or Action, to the extent that the settlement or judgment requires only the payment of monetary damages, includes no injunctive provisions or performance requirements of Indemnitee and includes no admission of guilt or liability.  Or in the alternative, the Indemnifying Party will seek consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed).  If the Indemnifying Party has so elected to assume the defense, each Indemnitee shall be entitled to participate in (but not control) the defense of any such action, with its own counsel and, except as provided herein, at its own expense.  Each Indemnitee shall, and shall cause each of its Affiliates, officers, employees, consultants and agents to, cooperate fully with the Indemnifying Party in the defense of any claim or Action being defended by the Indemnifying Party pursuant to this Section 9.6.  If the Indemnifying Party does not assume the defense of any claim or Action resulting therefrom in accordance with the terms of this Section 9.6, or the Indemnifying Party does not acknowledge to the Indemnitee the Indemnitee’s right to indemnity pursuant hereto in respect of the entirety of such claim (as such claim may have been modified through written agreement of the Parties) or the Indemnifying Party does not provides assurances, reasonably satisfactory to such Indemnitee, that the Indemnifying Party will be financially able to satisfy such claim in full if such claim or Action is decided adversely, such Indemnitee may defend against such claim or Action in such manner as it may deem reasonably appropriate at the reasonable cost of the Indemnifying Party.

 

9.7                               Nature of Payments.  Except for payments pursuant to the Parties’ obligations under Sections 9.1(c) and 9.2(c), any payment under Article 9 shall be treated for tax purposes as an adjustment to the Cash Payment to the extent such characterization is proper and permissible

 

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under relevant Tax authorities, including court decisions, statutes, regulations and administrative promulgations.

 

9.8                               Exclusive Remedy.  After the Closing, and except for claims of fraud, gross negligence, actions taken in bad faith or intentional misrepresentation and except for the specific performance of covenants, where appropriate under Applicable Law, the obligations to indemnify under this Article 9 shall provide the exclusive remedy against a party for any breach of any representation, warranty, covenant or other claim arising out of or relating to this Agreement or any other Transaction Document.

 

9.9                               Acquiring Parties’ Right of Offset. Anything in this Agreement to the contrary notwithstanding, in the event that any Transferor Party is obligated to indemnify any Parent Indemnitees pursuant to the provisions of this Article 9 (which may be exercised only if the Threshold Amount is reached), the Parent Indemnitees may (but shall not be obligated to), instead of electing to receive cash payments, elect to set-off and deduct all or a portion of the indemnification amount owed to the Parent Indemnitee under this Article 9 by reducing and canceling a number shares of Parent Common Stock comprising the Stock Consideration equal to such indemnification amount divided by the Per Share Price; provided, however, that in lieu of the right of set-off being exercised with respect to the Stock Consideration, the Transferor Parties may make payment to the Parent Indemnitees of all or any portion of such amount owed in cash (by wire transfer of immediately available funds), and such payment shall reduce or eliminate, as the case may be, Parent’s right of set-off against the Stock Consideration on a dollar-for-dollar basis.  Upon a reduction and cancellation of shares of Parent Common Stock comprising the Stock Consideration in connection with the exercise by Parent of the right of set-off under this Section 9.9, each of the Transferor Parties agrees to immediately return to Parent certificates representing the Stock Consideration, and Parent will deliver revised stock certificates in substitution thereof reflecting the reduction to the Stock Consideration.  In all other respects the substituted stock certificates shall be identical to the previously outstanding stock certificates and shall carry the same rights that were carried by the previously outstanding stock certificates.

 

9.10                        [Intentionally omitted].

 

9.11                        Miscellaneous Indemnity Provisions.  The Indemnifying Parties’ indemnification obligations herein are intended solely for the benefit of the Indemnitees, and are in no way intended to, nor shall they, constitute an agreement for the benefit of, or be enforceable by, any other Person.  Nothing herein shall be deemed to prevent an Indemnitee from making a claim under this Article 9 for potential or contingent claims or demands; provided that the notice of such claim delivered pursuant to Section 9.5 sets forth the specific basis for any such contingent claim to the extent then feasible and the Indemnitee has reasonable grounds to believe that such a claim may be made.

 

9.12                        Property Taxes.  All property taxes and similar ad valorem taxes (“Property Taxes”) levied with respect to the Transferred Assets for any period commencing before and ending after the Closing Date (“Straddle Period”) shall be apportioned between Acquiror, on the one hand, and the Transferors, on the other hand, based on the number of days of such Straddle Period included in the portion of the period ending on the Closing Date (“Pre-Closing Tax Period”) and the number of days of such Straddle Period included in the period commencing on

 

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the day after the Closing Date (“Post-Closing Tax Period”).  The Transferors shall be liable for the proportionate amount of such Property Taxes that is attributable to the Pre-Closing Tax Period, and Acquiror shall be liable for the proportionate amount of such Property Taxes that is attributable to the Post-Closing Tax Period.  Upon receipt of any bill for such Property Taxes, Acquiror or the Transferors, as applicable, shall present a statement to the other setting forth the amount of reimbursement to which each is entitled under this Section 9.12 together with such supporting evidence as is reasonably necessary to calculate the proration amount.  The proration amount shall be paid by the party owing it to the other within ten (10) days after delivery of such statement.

 

9.13                        Transfer and Sales Tax Returns.  The Transferors shall timely prepare and file all Transfer and Sales Tax returns and reports relating to the transactions contemplated by this Agreement.  The Transferor Parties shall be jointly and severally liable for any Transfer and Sales Taxes relating to such transactions.  The Transferors shall furnish to Acquiror a copy of each such Tax Return promptly after it is filed, together with proof of payment of the Transfer and Sales Tax shown thereon to be due.

 

ARTICLE 10
 TERMINATION

 

10.1                        Termination Prior to Closing.  Notwithstanding any contrary provisions of this Agreement, the respective obligations of the Parties to consummate the Closing may be terminated and abandoned at any time at or before the Closing only as follows:

 

(a)                                 By and at the option of any of the Acquiring Parties if the Closing shall not have occurred by March 31, 2013; provided that none of the Acquiring Parties shall have breached in any material respect their respective obligations under this Agreement in any manner that shall have been the proximate cause of, or resulted in, the failure to consummate the Closing;

 

(b)                                 By and at the option of either of the Transferor Parties if the Closing shall not have occurred by March 31, 2013, provided that none of the Transferor Parties shall have breached in any material respect their respective obligations under this Agreement in any manner that shall have been the proximate cause of, or resulted in, the failure to consummate the Closing;

 

(c)                                  By and at the option of any of the Acquiring Parties if there shall have occurred a Material Adverse Effect with respect to Transferor;

 

(d)                                 At any time, without liability of any party to the others, upon the mutual written consent of the Acquiring Parties and the Transferor Parties; or

 

(e)                                  By either SFX or Transferor, if any of the Transferor Parties, on the one hand, or any of the Acquiring Parties, on the other hand, has materially breached any representations, warranty, covenant or agreement contained herein (provided that such breach is not the result of any breach of any covenant, representation or warranty by the terminating party), which breach has not been cured within 30 calendar days following written notice of such breach by the terminating party, and such breach renders the conditions to the terminating party’s

 

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obligation to close, set forth in Article 6 or Article 7, as the case may be, incapable of being satisfied.

 

10.2                        Effect of Termination.  In the event of the termination of this Agreement as provided in Section 10.1, written notice thereof shall forthwith be given to the other party specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void (except for the provisions of this Section 10.2 and Article 11 which shall survive such termination) and there shall be no liability on the part of the Acquiring Parties or the Transferor Parties, except for damages resulting from any breach by any of the Acquiring Parties or any of the Transferor Parties of this Agreement.

 

ARTICLE 11
 MISCELLANEOUS

 

11.1                        Notices.  All notices, requests and other communications to either party hereunder shall be in writing (including facsimile, PDF or e-mail) and shall be given,

 

	
If   to an Acquiring Party, to:
    
	
 
    
	
SFX   Holding Corporation
    
	
650   Madison Avenue
    
	
New   York, NY 10022
    
	
Attention:   Mitch Nelson, Esq.
    
	
Fax:   (212) 750-3034
    
	
 
    
	
With   a copy to:
    
	
 
    
	
Greenberg   Traurig, LLP
    
	
MetLife   Building
    
	
200   Park Avenue
    
	
New   York, NY 10166
    
	
Attention:  Dennis J. Block, Esq.
    
	
Fax:  (212)   805-5555
    
	
 
    
	
If   to a Transferor Party, to:
    
	
 
    
	
c/o   Nightlife Holdings LLC
    
	
1000   Lincoln Road, Suite 200
    
	
Miami   Beach, FL 33139
    
	
Fax:   (305) 534-7066
    
	
 
    
	
With   a copy to:
    
	
 
    
	
Littman   Krooks LLP
    
	
655   Third Avenue, 20th fl. 
    

 

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New   York, NY 10017
    
	
Attention:  Mitchell C.   Littman, Esq.
    
	
Fax:  (212)   490-2990
    

 

11.2                        Amendments; No Waivers.  Any provisions of this Agreement may be amended or waived prior to the Closing if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Acquiring Parties and the Transferor Parties or, in the case of a waiver, by the Party against whom the waiver is to be effective.  No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

11.3                        Expenses.  Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such cost or expense.

 

11.4                        Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.

 

11.5                        Governing Law.  This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to the conflicts of law rules of such state.

 

11.6                        Consent to Jurisdiction; Venue; Service of Process.

 

(a)                                 Each Party, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of any New York federal court sitting in the Borough of Manhattan of The City of New York for the purpose of any Action among the parties arising in whole or in part under or in connection with this Agreement; provided, however, that if such federal court does not have jurisdiction over such Action, such Action shall be heard and determined exclusively in any New York state court sitting in the Borough of Manhattan of The City of New York, (ii) hereby waives to the extent not prohibited by Applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such Action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or any of the other Transaction Documents or the subject matter hereof and thereof may not be enforced in or by such court, and (iii) hereby agrees to commence any such Action only before one of the above-named courts.  Notwithstanding the immediately preceding sentence, a party may commence any Action in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.

 

(b)                                 Each Party hereby agrees that service of any process, summons, notice or document by U.S. registered mail, return receipt requested, at its address specified pursuant to

 

61

 

Section 11.1 shall constitute good and valid service of process in any Action among the Parties arising in whole or in part under or in connection with this Agreement or any other Transaction Documents, and each Party hereby waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such Action any claim that service of process made in accordance with this Section 11.6(b) does not constitute good and valid service of process.

 

11.7                        Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY. ANY ACTION WHATSOEVER AMONG THEM RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

11.8                        Counterparts; Effectiveness.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument.  This Agreement shall become effective when each party shall have received a counterpart hereof signed by the other Parties.

 

11.9                        Entire Agreement.  This Agreement, the Transaction Documents and the ancillary agreements related thereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the Parties with respect to the subject matter of this Agreement.

 

11.10                 Titles and Headings; Construction.  The titles and headings to Sections herein and to the Exhibits and Schedules hereto are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this Agreement to be drafted. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and shall be deemed to be followed by the words “without limitation”. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. All references herein to a Section, Article, Exhibit or Schedule are to a Section, Article, Exhibit or Schedule of or to this Agreement, unless otherwise indicated.

 

11.11                 Severability.  If any provision of this Agreement is held invalid, unenforceable or void by a court of competent jurisdiction, the remaining provisions shall not for that reason alone

 

62

 

be unenforceable or invalid. In such case, the Parties agree to negotiate in good faith to create an enforceable contractual provision to achieve the purpose of the invalid provision. Further, if any provision is held to be overbroad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to Applicable Law and shall be enforced as amended.

 

11.12                 No Third Party Beneficiaries.  Except for the provisions of Article 9 relating to Indemnified Parties, this Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, including any union or any employee or former employee of any Transferor, any legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.

 

11.13                 Specific Performance.  The Transferor Parties acknowledge and agree that the Acquiring Parties would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms and that any breach of this Agreement by any of the Transferor Parties could not be adequately compensated in all cases by monetary damages alone.  Accordingly, in addition to any other right or remedy to which the Acquiring Parties may be entitled, at law or in equity, they shall be entitled to enforce and provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement, without posting any bond or other undertaking.

 

[Signature Page Follows.]

 

63

 

 

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

 

 

	
 
    	
SFX HOLDING CORPORATION,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert F.X. Sillerman
    
	
 
    	
Name:
    	
Robert   F.X. Sillerman
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SFX-NIGHTLIFE OPERATING LLC
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:   SFX Holding Corporation, its sole member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert F.X. Sillerman
    
	
 
    	
Name:
    	
Robert   F.X. Sillerman
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NIGHTLIFE HOLDINGS LLC,
    
	
 
    	
a   Florida limited liability company
    
	
 
    	
 
    
	
 
    	
By:   David Grutman, Inc., Member-Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Grutman
    
	
 
    	
Name:
    	
David   Grutman
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   Sebu Corp., Member-Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brian Gordon
    
	
 
    	
Name:
    	
Brian   Gordon
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
[Signatures continue on   following page.]
    
	
 
    	
 
    
	
[Signature   Page to Nightlife Holdings LLC Asset Contribution Agreement]
    

 

 

	
 
    	
MMG NIGHTLIFE LLC,
    
	
 
    	
a   Florida limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
Nightlife   Holdings, LLC, Member-Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   David Grutman, Inc., Member-Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   David Grutman
    
	
 
    	
 
    	
Name:
    	
David   Grutman
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   Sebu Corp., Member-Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Brian Gordon
    
	
 
    	
 
    	
Name:
    	
Brian   Gordon
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
PUNTA CANA VENUE LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Nightlife   Holdings, LLC, Member-Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   David Grutman, Inc., Member-Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   David Grutman
    
	
 
    	
 
    	
Name:
    	
David   Grutman
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   Sebu Corp., Member-Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Brian Gordon
    
	
 
    	
 
    	
Name:
    	
Brian   Gordon
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
[Signatures continue on   following page.]
    
	
 
    	
 
    
	
[Signature   Page to Nightlife Holdings LLC Asset Contribution Agreement]
    

 

 

	
 
    	
US NIGHTLIFE MANAGEMENT LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
Nightlife   Holdings, LLC, Member-Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   David Grutman, Inc., Member-Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   David Grutman
    
	
 
    	
 
    	
Name:
    	
David   Grutman
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   Sebu Corp., Member-Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Brian Gordon
    
	
 
    	
 
    	
Name:
    	
Brian   Gordon
    
	
 
    	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DAVID GRUTMAN, INC.,
    
	
 
    	
a   Florida corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Grutman
    
	
 
    	
Name:
    	
David   Grutman
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SEBU   CORP.,
    
	
 
    	
a   Florida corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brian Gordon
    
	
 
    	
Name:
    	
Brian   Gordon
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
[Signatures continue on following page.]
    
	
 
    	
 
    
	
[Signature   Page to Nightlife Holdings LLC Asset Contribution Agreement]
    
					

 

 

	
 
    	
DAVE GRUTMAN,
    
	
 
    	
an   individual resident of Florida
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   David Grutman
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BRIAN GORDON,
    
	
 
    	
an   individual resident of Florida
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Brian Gordon
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WORLD ON A STRING LLC,
    
	
 
    	
a   New Jersey limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ryan Shinman
    
	
 
    	
Name:
    	
Ryan   Shinman
    
	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    
	
[Signature Page to   Nightlife Holdings LLC Asset Contribution Agreement]Exhibit 10.14

 

EXECUTION VERSION

 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

EACH OF THE GRANTORS PARTY HERETO

 

in favor of

 

BARCLAYS BANK PLC,
 as Collateral Agent

 

Dated as of March 15, 2013

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 1                               DEFINED TERMS
    	
 
    	
1
    
	
1.1                            Definitions
    	
 
    	
1
    
	
1.2                            Other Definitional   Provisions
    	
 
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 2                               GUARANTEE
    	
 
    	
5
    
	
2.1                            Guarantee
    	
 
    	
5
    
	
2.2                            Right of Contribution
    	
 
    	
6
    
	
2.3                            No Subrogation
    	
 
    	
6
    
	
2.4                            Amendments, Etc. with   Respect to the Guaranteed Obligations
    	
 
    	
7
    
	
2.5                            Guarantee Absolute and   Unconditional
    	
 
    	
7
    
	
2.6                            Reinstatement
    	
 
    	
9
    
	
2.7                            Payments
    	
 
    	
9
    
	
2.8                            Information
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 3                               GRANT OF   SECURITY INTEREST
    	
 
    	
10
    
	
3.1                            Grant of Security   Interests
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 4                               REPRESENTATIONS   AND WARRANTIES
    	
 
    	
11
    
	
4.1                            Representations in   Credit Agreement
    	
 
    	
11
    
	
4.2                            Title; No Other Liens
    	
 
    	
12
    
	
4.3                            Names; Jurisdiction of   Organization; Chief Executive Office
    	
 
    	
12
    
	
4.4                            Pledged Securities
    	
 
    	
12
    
	
4.5                            Pledged Notes
    	
 
    	
12
    
	
4.6                            Intellectual Property
    	
 
    	
12
    
	
4.7                            Commercial Tort Claims
    	
 
    	
13
    
	
4.8                            Deposit Accounts;   Securities Accounts and Commodity Accounts
    	
 
    	
13
    
	
4.9                            Specific Collateral
    	
 
    	
13
    
	
4.10                     Perfection and   Priority
    	
 
    	
13
    
	
4.11                     Enforcement
    	
 
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 5                               COVENANTS
    	
 
    	
14
    
	
5.1                            Covenants in Credit   Agreement
    	
 
    	
14
    
	
5.2                            Investment Property
    	
 
    	
14
    
	
5.3                            Commercial Tort Claims
    	
 
    	
14
    
	
5.4                            Maintenance of   Perfected Security Interest; Defense of Claims
    	
 
    	
15
    

 

 

	
5.5                            Delivery of   Instruments and Tangible Chattel Paper and Control of Investment Property,   Letter-of-Credit Rights and Electronic Chattel Paper
    	
 
    	
15
    
	
5.6                            Deposit Accounts,   Securities Accounts and Commodity Accounts
    	
 
    	
16
    
	
5.7                            Intellectual Property
    	
 
    	
16
    
	
5.8                            Maintenance of   Perfected Security Interest; Further Documentation and Consents
    	
 
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 6                               REMEDIAL   PROVISIONS
    	
 
    	
18
    
	
6.1                            Certain Matters   Relating to Receivables
    	
 
    	
18
    
	
6.2                            Communications with   Grantors; Grantors Remain Liable
    	
 
    	
19
    
	
6.3                            Pledged Securities;   Dividends
    	
 
    	
19
    
	
6.4                            Intellectual Property
    	
 
    	
21
    
	
6.5                            Proceeds to be Turned   Over To Collateral Agent
    	
 
    	
21
    
	
6.6                            Application of   Proceeds
    	
 
    	
22
    
	
6.7                            Code and Other   Remedies
    	
 
    	
22
    
	
6.8                            Private Sales
    	
 
    	
25
    
	
6.9                            Deficiency
    	
 
    	
25
    
	
6.10                     Limited Forbearance
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 7                               THE   COLLATERAL AGENT
    	
 
    	
26
    
	
7.1                            Collateral Agent’s   Appointment as Attorney-in-Fact, etc.
    	
 
    	
26
    
	
7.2                            Duty of Collateral   Agent
    	
 
    	
28
    
	
7.3                            Authorization of   Financing Statements
    	
 
    	
28
    
	
7.4                            Authority of Collateral   Agent
    	
 
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 8                               MISCELLANEOUS
    	
 
    	
29
    
	
8.1                            Amendments in Writing
    	
 
    	
29
    
	
8.2                            Notices
    	
 
    	
29
    
	
8.3                            No Waiver by Course of   Conduct; Cumulative Remedies
    	
 
    	
29
    
	
8.4                            Enforcement Expenses;   Indemnification
    	
 
    	
29
    
	
8.5                            Successors and Assigns
    	
 
    	
30
    
	
8.6                            Set-Off
    	
 
    	
30
    
	
8.7                            Counterparts
    	
 
    	
30
    
	
8.8                            Severability
    	
 
    	
30
    
	
8.9                            Section Headings
    	
 
    	
30
    
	
8.10                     Integration
    	
 
    	
31
    
	
8.11                     Governing Law;   Jurisdiction; Etc.
    	
 
    	
31
    
	
8.12                     Acknowledgements
    	
 
    	
32
    
	
8.13                     Additional Grantors
    	
 
    	
32
    

 

ii

 

	
8.14                     Releases
    	
 
    	
32
    
	
8.15                     WAIVER OF JURY TRIAL
    	
 
    	
33
    
	
8.16                     Reinstatement
    	
 
    	
33
    
	
8.17                     Independent   Obligations
    	
 
    	
33
    

 

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
    
	
Annex II
    	
Acknowledgement   and Consent
    

 

iii

 

GUARANTEE AND COLLATERAL AGREEMENT

 

GUARANTEE AND COLLATERAL AGREEMENT, dated as of March 15, 2013, made by SFX Intermediate Holdco II LLC, a Delaware limited liability company (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 Term Loans 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 Term 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 Term Loans under the Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective Term Loans 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 Term 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 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 Agreement 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.

 

2

 

“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.

 

“Excluded Equity Interests”: any Equity Interest in any Excluded Subsidiary, other than (i) 100% of the non-Voting Stock of a First Tier Excluded Subsidiary and (ii) Voting Stock of a First-Tier Excluded Subsidiary representing 34% of the total voting power of all outstanding Voting Stock of such First-Tier 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.

 

“Forbearance Default”: the occurrence of (a) any Event of Default directly attributable to any of the IDT Entities or (b) any event that would give any other creditor of the IDT Entities the ability to exercise its rights and remedies against the IDT Collateral.

 

“Forbearance Period”: as defined in Section 6.10(b). “Forbearance Termination Event”: as defined in Section 6.10(b).

 

“Foreclosed Loan Party”: as defined in Section 2.3.

 

“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)

 

3

 

and (ii) Holdings or 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 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 and to the Sillerman Guarantee (in each case, other than the Collateral Agent) together with any other entity that may become a party hereto as provided herein.

 

“IDT Collateral”: as defined in Section 6.10(a).

 

“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).

 

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

 

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“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.

 

“Vehicles”: all cars, trucks, trailers, construction and earth moving equipment and other vehicles covered by a certificate of title law of any state.

 

“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 Term Loans made to the Borrower pursuant to the Credit Agreement, (ii) all other amounts payable by the Borrower under the Credit Agreement and the 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. Notwithstanding anything to the contrary contained in this Section 2 or otherwise in this Agreement or any other Loan Document,

 

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the Guarantee provided by the IDT Entities shall be limited to the aggregate principal amount and any accrued but unpaid interest outstanding under the IDT Intercompany Note on the Acceleration Date.

 

(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 or under the Sillerman Guarantee, as applicable.

 

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

 

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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 or under the Sillerman Guarantee, until all amounts owing to the Collateral Agent and the other Secured Parties on account of the Guaranteed 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 

 

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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:

 

(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;

 

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(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 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) 

 

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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;

 

(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

 

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(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 (i) any leasehold interest in real property, (ii) any Vehicles, (iii) any property to the extent that such grant of a security interest is (A) prohibited by any requirements of Law, (B) requires a consent not obtained of any Governmental Authority pursuant to such requirement of Law or (C) prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to or otherwise related to such property or, in the case of any Investment Property, any Pledged Security, any applicable shareholder or similar agreement, except to the extent that such requirement of Law or the term in such contract, license, agreement, instrument or other document or shareholder or any similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law; provided, that the foregoing exclusions of this clause (iii) shall in no way be construed (x) to apply to the extent that any described prohibition is unenforceable under Section 9-406, 9-407, 9-408, or 9-409 of the UCC or other applicable Law, (y) to limit, impair, or otherwise affect the Collateral Agent’s continuing security interests in and liens upon any rights or interests of any Grantor in or to (1) monies due or to become due under any described contract, lease, permit, license, charter or license agreement (including any Accounts) or (2) any proceeds from the sale, license, lease, or other dispositions of any such contract, lease, permit, license, charter, or license agreement, or (z) apply to the extent that any consent or waiver has been obtained that would permit the security interest notwithstanding the prohibition) and (iv) with respect to any United States Intellectual Property, any “intent-to-use” Trademark applications prior to the filing and acceptance of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the ability to obtain a registration from such “intent-to-use” Trademark application, or the validity or enforceability of any registration that issues from such “intent-to-use” Trademark application under applicable federal law. It is hereby understood and agreed that any Property described in the preceding proviso as being expressly excluded from the security interest created hereby, and any Property that is otherwise expressly excluded from clauses (a) through (s) above, 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 to induce the Lenders to make their respective Term Loans 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 

 

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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.

 

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 First-Tier Excluded Subsidiary, 66% of the outstanding Voting Stock and (y) in the case of shares the non-voting Equity Stock of a First-Tier Excluded Subsidiary, 100% of such issued and outstanding shares of each such First-Tier 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.

 

4.6                               Intellectual Property.

 

(a)                                 Schedule 4(a) lists all registered or applied for United States and foreign 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 and the annual fees received or paid under the license are greater than $100,000 per year.

 

(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 

 

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force and effect, subsisting and unexpired and (ii) insofar as it is registered Intellectual Property, enforceable. None of the following shall 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: (i) the consummation of the Related Transactions or any Permitted Acquisition or (ii) any holding, decision, judgment or order that has been rendered by any Governmental Authority. There are no pending (or, to the knowledge of such Grantor, threatened) actions, investigations, suits, proceedings, audits, written claims or demands, orders or disputes challenging the ownership, use, validity, enforceability of, or such Grantor’s rights in, any material Intellectual Property of such Grantor. To such Grantor’s knowledge, no Person has been or is infringing, misappropriating, diluting, violating or otherwise impairing any material Intellectual Property of such Grantor. Such Grantor, and to such Grantor’s knowledge each other party thereto, is not in material breach or default of any material IP License, nor does any defense, offset, deduction or counterclaim exist thereunder in favor of a non-Grantor party to such IP License.

 

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 $750,000 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 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, all actions by each Grantor necessary or desirable 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.

 

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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)                                 In the case of each Group Member which is an Issuer, but not a Grantor, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Securities issued by it and will comply with such terms insofar as such terms are applicable to it and (ii) the terms of Sections 6.3(c) and 6.8 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Sections 6.3(c) or 6.8 with respect to the Pledged Securities issued by it.

 

(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 $750,000 (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 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 

 

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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 identity or 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 $750,000 or less or which, in the aggregate, are in an amount of $1,500,000 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 all such letters of credit which have an individual value of $750,000 or less or which, in the aggregate, are in an amount of $1,500,000 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 

 

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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 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 $750,000 or less or which, in the aggregate, are in an amount of $1,500,000 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 60 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, 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 not, with respect to any Trademarks, cease the use of any of such Trademarks, other than in the ordinary course of business, and each Grantor shall take all steps necessary to ensure that licensees of such Trademarks maintain the level of the quality of products sold and services rendered under any of such Trademark at a level at least substantially consistent with the quality of such products and services as of the date hereof;

 

(c)                                  it shall, within 30 days of the creation or acquisition or exclusive license of any copyrightable work which is material to the business of Grantor, 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;

 

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(d)                                 it shall (i) within 30 days of 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 Patent or Trademark with the United States Patent and Trademark Office or any foreign counterpart or (ii) within 14 days of such Grantor receiving, as owner or exclusive licensee, a Copyright registration with the United States Copyright Office or any foreign counterpart, 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;

 

(e)                                  it shall promptly notify the Collateral Agent if it knows or has reason to know that any item of 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;

 

(f)                                   it shall take all commercially reasonable steps in the United States Patent and Trademark Office, the United States Copyright Office, any state registry or any foreign counterpart of the foregoing, to pursue any application and maintain any registration of each Trademark, Patent, and Copyright owned by any Grantor which is now or shall become included in the Intellectual Property, subject to Grantor’s exercise of reasonable business judgment;

 

(g)                                  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 property included within the definitions of any Intellectual Property acquired under such contracts;

 

(h)                                 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;

 

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

 

(j)                                    it shall use proper statutory notice in connection with its use of any of the Intellectual Property; and

 

(k)                                 it shall continue to collect, at its own expense, all amounts due or to become due to such Grantor in respect of Intellectual Property or any portion thereof. In connection with such collections, each Grantor may take (and, at the Collateral Agent’s reasonable direction, shall take) such action as such Grantor or the Collateral Agent may deem reasonably necessary or advisable to enforce collection of such amounts. Notwithstanding the foregoing, the Collateral

 

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Agent shall have the right at any time, to notify, or require any Grantor to notify, any obligors with respect to any such amounts of the existence of the security interest created hereby.

 

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 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.

 

(e)                                  To ensure that any of the Excluded Assets set forth in clauses (iii)(B) and (C) of the proviso of Section 3.1 becomes part of the Collateral, such Grantor shall use its commercially reasonable efforts to obtain any required consents from any Person (other than the Loan Parties and their Affiliates, whose consent shall be required) with respect to any Permit or any Contractual Obligation with such Person entered into by such Grantor that requires such consent as a condition to the creation by such Grantor of a Lien on any right, title or interest in such permit, license or Contractual Obligation or any Capital Stock related thereto.

 

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

 

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reports showing reconciliations, aging and test verifications of, and trial balances for, the Receivables.

 

(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

 

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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 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.

 

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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 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 6.04 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 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 (or their licensees) shall not 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).

 

(c)                                  If at any time the Trademarks within the Collateral contain any “intent-to-use” applications, the Collateral Agent shall refrain from exercising any of its rights under this Section 6, solely to the extent such exercise would impair the ability to obtain a registration from such “intent-to-use” Trademark application, or the validity or enforceability of any registration that issues from any such applications or cause a Grantor to abandon any such applications.

 

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

 

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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, 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 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

 

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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 and the Lenders hereunder, 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 lawfully do so, each Grantor absolutely and

 

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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

 

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(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 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.

 

6.10                        Limited Forbearance.

 

(a)                                 Notwithstanding anything to the contrary in this Agreement, the Collateral Agent and the other Secured Parties agree that beginning on the Acceleration Date and until the expiration or termination of the Forbearance Period, the Collateral Agent will temporarily forbear from exercising its default-related rights and remedies available hereunder or any other Loan Document, solely with respect to the Collateral pledged hereunder by the IDT Entities (the “IDT Collateral”); provided that such forbearance will not affect any other rights or remedies of the Collateral Agent or other Secured Parties against any other Group Member until the expiration or termination of the Forbearance Period, including against the Equity Interests of the IDT Entities owned by any Grantor (that is not an IDT Entity).

 

(b)                                 Forbearance Period. As used herein, the term “Forbearance Period” shall mean the period beginning on the Acceleration Date and ending on the earlier to occur of any of the following (the occurrence of clause (i), (ii) or (iii) being a “Forbearance Termination Event”): (i)

 

25

 

the occurrence of any Bankruptcy Default, (ii) the date on which the Collateral Agent delivers to the Borrower a notice terminating the Forbearance Period, which notice may be delivered at any time upon or after the occurrence of any Forbearance Default other than a Bankruptcy Default, or (iii) the one year anniversary of the Acceleration Date. Any Forbearance Default shall constitute an immediate Event of Default under the Credit Agreement and other Loan Documents.

 

(c)                                  Occurrence of a Forbearance Termination Event. Upon the occurrence of a Forbearance Termination Event, the agreement of the Collateral Agent and the other Secured Parties hereunder to forbear from exercising their respective default-related rights and remedies with respect to the IDT Collateral shall terminate automatically. The Borrower and the other Loan Parties each agree that the Collateral Agent and any Secured Party may at any time, after the occurrence of a Forbearance Termination Event, proceed to exercise any and all of their respective rights and remedies under any or all of the Credit Agreement, any other Loan Document and/or applicable law.

 

(d)                                 Acknowledgements re Forbearance. The Borrower and the other Loan Parties each acknowledge that the Collateral Agent and the Secured Parties have not made any assurances concerning (i) any possibility of an extension of the Forbearance Period, (ii) the manner in which or whether any existing Event of Default may be resolved or (iii) any additional forbearance, waiver, restructuring or other accommodations. The Loan Parties agree that the running of all statutes of limitation and the doctrine of laches applicable to all claims or causes of action that any Secured Party may be entitled to take or bring in order to enforce its rights and remedies against any Loan Party are, to the fullest extent permitted by law, tolled and suspended during the Forbearance Period. The Loan Parties and the Secured Parties acknowledge that they may undertake discussions regarding possible modifications of one or more of the Loan Documents. Each such party acknowledges that no other party is under any obligation with respect to any such discussions and that each party’s entrance into any such discussions is purely voluntary. Each party agrees that, notwithstanding any conversations or correspondence between them, no obligation shall arise until such time, if any, as formal written documents have been entered into. Without limiting the generality of the foregoing, no party shall be entitled to rely on any statements or promises of any other party other than those set forth in any such formal written document.

 

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:

 

26

 

(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;

 

(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;

 

27

 

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 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.

 

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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.

 

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 Holdings or any Subsidiary Guarantor shall be addressed to Holdings or 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 agrees to pay, 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

 

29

 

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.

 

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 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.

 

30

 

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.

 

(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.

 

31

 

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 Term 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, 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 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

 

32

 

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.

 

(Signature Pages Follow)

 

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

 

	
 
    	
 
    	
SFX   INTERMEDIATE HOLDCO I LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SFX   INTERMEDIATE HOLDCO II LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
PITA   I LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SFX-LIC   OPERATING LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SFX-NIGHTLIFE   OPERATING LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
SFX-IDT   N.A. HOLDING LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Sheldon Finkel
    
	
 
    	
 
    	
 
    	
Name:
    	
Sheldon   Finkel
    
	
 
    	
 
    	
 
    	
Title:
    	
President
    

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

 

	
 
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
BEATPORT   JAPAN, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Sheldon Finkel
    
	
 
    	
 
    	
 
    	
Name:
    	
Sheldon   Finkel
    
	
 
    	
 
    	
 
    	
Title:
    	
President
    

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

 

	
 
    	
 
    	
ID&T/SFX   NORTH AMERICA LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ID&T/SFX   Q-DANCE LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ID&T/SFX   SENSATION LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ID&T/SFX   MYSTERYLAND LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ID&T/SFX   TOMORROWWORLD LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Sheldon Finkel
    
	
 
    	
 
    	
 
    	
Name:
    	
Sheldon   Finkel
    
	
 
    	
 
    	
 
    	
Title:
    	
CO-Chief   Executive Officer
    

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

 

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

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

 

Schedule 1

 

NOTICE ADDRESSES

 

	
Grantors:
    	
 
    
	
Contact:
    	
Howard J. Tytel
    
	
Street Address:
    	
430 Park Avenue, 6th Floor
    
	
City, State, Zip Code:
    	
New York, NY 10022
    
	
Phone Number:
    	
(646) 561-6400
    
	
 
    	
 
    
	
With a copy to:
    	
 
    
	
 
    	
 
    
	
Contact:
    	
Lee Ann Dillon
    
	
Street Address:
    	
599 Lexington Avenue, 29th Floor
    
	
City, State, Zip Code:
    	
New York, NY 10022
    
	
Phone Number:
    	
(212) 521-5400
    
	
Fax Number:
    	
(212) 521-5450
    
	
Email Address:
    	
ldillon@reedsmith.com
    

 

 

Schedule 2

 

DESCRIPTION OF INVESTMENT PROPERTY

Pledged Stock:

 

	
Loan Party
    	
 
    	
Issuer
    	
 
    	
Percentage of
   Ownership
    	
 
    	
Percentage of
   Interest
   Pledged
    	
 
    
	
SFX   INTERMEDIATE HOLDCO I LLC
    	
 
    	
SFX INTERMEDIATE HOLDCO II LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SFX   INTERMEDIATE HOLDCO II LLC
    	
 
    	
SFX-LIC Operating LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
Pita I LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
SFX-IDT N.A. HOLDING LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
SFX-Nightlife Operating LLC
    	
 
    	
80
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Pita   I LLC
    	
 
    	
BEATPORT, LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT,   LLC
    	
 
    	
Beatport Japan, LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
Beatport S.a.r.l.
    	
 
    	
100
    	
 
    	
65
    	
 
    
	
 
    	
 
    	
Sounds to Sample Ltd.
    	
 
    	
100
    	
 
    	
65
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SFX-IDT   N.A. HOLDING LLC
    	
 
    	
ID&T/SFX North America LLC
    	
 
    	
51
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ID&T/SFX   North America LLC
    	
 
    	
ID&T/SFX Mysteryland LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
ID&T/SFX TomorrowWorld LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
ID&T/SFX Q-Dance LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    
	
 
    	
 
    	
ID&T/SFX Sensation LLC
    	
 
    	
100
    	
 
    	
100
    	
 
    

 

Pledged Notes:

 

1.        IDT Intercompany Note

 

 

Schedule 3

 

LEGAL NAME, LOCATION OF JURISDICTION OF ORGANIZATION, ORGANIZATIONAL IDENTIFICATION NUMBER AND LOCATIONS WHERE BOOKS OR RECORDS CONCERNING THE COLLATERAL ARE KEPT

 

	
Legal Name
    	
 
    	
Jurisdiction
   of
   Organization
    	
 
    	
Organizational
   Identification
   Number
    	
 
    	
Locations
   where
   Books or
   Records
   Concerning
   the
   Collateral
   are Kept
    	
 
    	
Former
   Legal
   Names
   (including
   date of
   change)
    	
 
    	
Changes to
   Identity or
   Corporate
   Structure
    
	
SFX   INTERMEDIATE HOLDCO I LLC
    	
 
    	
Delaware
    	
 
    	
5296490
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SFX   INTERMEDIATE HOLDCO II LLC
    	
 
    	
Delaware
    	
 
    	
5296493
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
N/A
    

 

 

	
Legal Name
    	
 
    	
Jurisdiction
   of
   Organization
    	
 
    	
Organizational
   Identification
   Number
    	
 
    	
Locations
   where
   Books or
   Records
   Concerning
   the
   Collateral
   are Kept
    	
 
    	
Former
   Legal
   Names
   (including
   date of
   change)
    	
 
    	
Changes to
   Identity or
   Corporate
   Structure
    
	
SFX-LIC   Operating LLC
    	
 
    	
Delaware
    	
 
    	
5177008
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
Previously   wholly owned by SFX Entertainment, Inc.; ownership transferred to SFX   INTERMEDIATE HOLDCO II LLC per the Equity Distribution Agreement by and   between SFX Entertainment, Inc. and SFX INTERMEDIATE HOLDCO II LLC dated as   of March 11, 2013
    

 

 

	
Legal Name
    	
 
    	
Jurisdiction
   of
   Organization
    	
 
    	
Organizational
   Identification
   Number
    	
 
    	
Locations
   where
   Books or
   Records
   Concerning
   the
   Collateral
   are Kept
    	
 
    	
Former
   Legal
   Names
   (including
   date of
   change)
    	
 
    	
Changes to
   Identity or
   Corporate
   Structure
    
	
Pita   I LLC
    	
 
    	
Delaware
    	
 
    	
5264537
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
SFX-BEATPORT HOLDING, LLC (1/22/13)
    	
 
    	
Previously   wholly owned by SFX Entertainment, Inc.; ownership transferred to SFX   INTERMEDIATE HOLDCO II LLC per the Equity Distribution Agreement by and   between SFX Entertainment, Inc. and SFX INTERMEDIATE HOLDCO II LLC dated as   of March 11, 2013
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT,   LLC
    	
 
    	
Colorado
    	
 
    	
20031239050
    	
 
    	
2399   Blake Street, Denver, CO 80205 (Denver County)
    	
 
    	
N/A
    	
 
    	
Merged   with Pita II LLC per the Beatport Merger Agreement with BEATPORT, LLC as the   surviving entity; Pita I LLC became the sole member
    

 

 

	
Legal Name
    	
 
    	
Jurisdiction
   of
   Organization
    	
 
    	
Organizational
   Identification
   Number
    	
 
    	
Locations
   where
   Books or
   Records
   Concerning
   the
   Collateral
   are Kept
    	
 
    	
Former
   Legal
   Names
   (including
   date of
   change)
    	
 
    	
Changes to
   Identity or
   Corporate
   Structure
    
	
Beatport   Japan, LLC
    	
 
    	
Colorado
    	
 
    	
20101050627
    	
 
    	
2399   Blake Street, Denver, CO 80205 (Denver County)
    	
 
    	
N/A
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SFX-IDT   N.A. HOLDING LLC
    	
 
    	
Delaware
    	
 
    	
5263013
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
Previously   wholly owned by SFX Entertainment, Inc.; ownership transferred to SFX   INTERMEDIATE HOLDCO II LLC per the Equity Distribution Agreement by and   between SFX Entertainment, Inc. and SFX INTERMEDIATE HOLDCO II LLC dated as   of March 11, 2013
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ID&T/SFX   North America LLC
    	
 
    	
Delaware
    	
 
    	
5264737
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
ID&T North America, LLC (3/1/13)
    	
 
    	
N/A
    

 

 

	
Legal Name
    	
 
    	
Jurisdiction
   of
   Organization
    	
 
    	
Organizational
   Identification
   Number
    	
 
    	
Locations
   where
   Books or
   Records
   Concerning
   the
   Collateral
   are Kept
    	
 
    	
Former
   Legal
   Names
   (including
   date of
   change)
    	
 
    	
Changes to
   Identity or
   Corporate
   Structure
    
	
ID&T/SFX   Mysteryland LLC
    	
 
    	
Delaware
    	
 
    	
5296224
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ID&T/SFX   TomorrowWorld LLC
    	
 
    	
Delaware
    	
 
    	
5296222
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ID&T/SFX   Q-Dance LLC
    	
 
    	
Delaware
    	
 
    	
5296216
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
N/A
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ID&T/SFX   Sensation LLC
    	
 
    	
Delaware
    	
 
    	
5296221
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
N/A
    

 

 

	
Legal Name
    	
 
    	
Jurisdiction
   of
   Organization
    	
 
    	
Organizational
   Identification
   Number
    	
 
    	
Locations
   where
   Books or
   Records
   Concerning
   the
   Collateral
   are Kept
    	
 
    	
Former
   Legal
   Names
   (including
   date of
   change)
    	
 
    	
Changes to
   Identity or
   Corporate
   Structure
    
	
SFX-Nightlife   Operating LLC
    	
 
    	
Delaware
    	
 
    	
5234092
    	
 
    	
430   Park Ave, 6th Floor

NY,   NY 10022 (New York County)
    	
 
    	
N/A
    	
 
    	
Previously   80% owned by SFX Entertainment, Inc.; 80% ownership transferred to SFX   INTERMEDIATE HOLDCO II LLC per the Equity Distribution Agreement by and   between SFX Entertainment, Inc. and SFX INTERMEDIATE HOLDCO II LLC dated as   of March 11, 2013
    

 

 

Schedule 4(a)

 

INTELLECTUAL PROPERTY

United States Trademark Registrations and Trademark Applications:

 

	
TRADEMARK
    	
 
    	
APPLICATION
   NO. AND
   DATE
    	
 
    	
REGISTRATION
   NO. AND
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
WORLD’S   LARGEST PAINT PARTY
    	
 
    	
85/240,789

 

2/11/2011
    	
 
    	
4,051,072

 

11/1/2011
    	
 
    	
Registered
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
STATE   OF EMERGENCY
    	
 
    	
85/601,379

 

4/18/2012
    	
 
    	
4,253,706

 

12/4/2012
    	
 
    	
Registered
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CAN’T   STOP THE STATE
    	
 
    	
85/601,397

 

4/18/2012
    	
 
    	
4,253,707

 

12/4/2012
    	
 
    	
Registered
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
RMF
    	
 
    	
85/601,420

 

4/18/2012
    	
 
    	
4,253,709

 

12/4/2012
    	
 
    	
Registered
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
DANCEGIVING   SAVE ROOM FOR THE MUSIC
    	
 
    	
85/479,845

 

11/23/2011
    	
 
    	
 N/A
    	
 
    	
Published
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
I   AM THANKFUL FOR MUSIC
    	
 
    	
85/479,913

 

11/23/2011
    	
 
    	
 N/A
    	
 
    	
Allowed
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
RIVALRY   MUSIC FESTIVAL
    	
 
    	
85/601,439

 

4/18/2012
    	
 
    	
 N/A
    	
 
    	
Final   OA Issued
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEYONDGLOW
    	
 
    	
85/613,814

 

5/1/2012
    	
 
    	
 N/A
    	
 
    	
Approved   for Publication
    	
 
    	
SFX-LIC   Operating LLC
    

 

 

	
TRADEMARK
    	
 
    	
APPLICATION
   NO. AND
   DATE
    	
 
    	
REGISTRATION
   NO. AND
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
LIFE   IN COLOR
    	
 
    	
85/638,822

 

5/30/2012
    	
 
    	
 N/A
    	
 
    	
Approved   for Publication
    	
 
    	
SFX-LIC   Operating LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BASEWARE
    	
 
    	
78/753,029

 

11/14/2005
    	
 
    	
3,158,076

 

10/17/2006
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATBOT
    	
 
    	
85/485860

 

12/2/2011
    	
 
    	
4,185,671

 

8/7/2012
    	
 
    	
Registered   
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT
    	
 
    	
76/518,151

 

5/30/2003
    	
 
    	
2,985,842

 

8/16/2005
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT
    	
 
    	
85/711,666

 

8/23/2012
    	
 
    	
N/A

 
    	
 
    	
Approved   for Publication
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT   MIX
    	
 
    	
85/152,799

 

10/14/2010
    	
 
    	
4,040,816

 

10/18/2011
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT   MIX & 

 

 

Design
    	
 
    	
85/153,116

 

10/14/2010
    	
 
    	
4,040,817

 

10/18/2011
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT   SOUNDS
    	
 
    	
85/396,844

 

8/12/2011
    	
 
    	
4,293,035

2/19/2013
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    

 

 

	
TRADEMARK
    	
 
    	
APPLICATION
   NO. AND
   DATE
    	
 
    	
REGISTRATION
   NO. AND
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
BEATPORTAL   & Design

 

    	
 
    	
77/198,205

 

6/5/2007
    	
 
    	
3,425,679

 

5/13/2008
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATSOURCE
    	
 
    	
77/20118,769

 

2/28/2007
    	
 
    	
3,524,861

 

10/28/2008
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GET   DOWN Logo

 

    	
 
    	
78/755,864

 

11/17/2005

 
    	
 
    	
3,210,719

 

2/20/2007
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
LOG   ON. GET DOWN.

 
    	
 
    	
76/627,972

 

1/13/2005
    	
 
    	
3,058,549

 

2/14/2006
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MASHBOX
    	
 
    	
85/343,701

6/10/2011
    	
 
    	
4,211,125

9/18/2012
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MY   BEATPORT

 
    	
 
    	
85/332,533

 

5/27/2011
    	
 
    	
4,163,489

 

6/26/2012
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PLAY   WITH MUSIC

 
    	
 
    	
85/204,693

 

12/23/2010
    	
 
    	
4,119,425

 

3/27/2012
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    

 

 

	
TRADEMARK
    	
 
    	
APPLICATION
   NO. AND
   DATE
    	
 
    	
REGISTRATION
   NO. AND
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
PROMOONE

 

    	
 
    	
78/737,889

 

10/21/2005
    	
 
    	
3,145,372

 

9/19/2006
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SOUNDMAIL   & Design

 

    	
 
    	
77/157,863

 

4/16/2007
    	
 
    	
3,380,595

 

2/12/2008
    	
 
    	
Registered
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BASEWARE   DISTRIBUTION
    	
 
    	
85/422/724

 

9/14/2011
    	
 
    	
N/A
    	
 
    	
Notice   of Publication Issued
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BEATPORT   PRO
    	
 
    	
85/455,915

 

10/25/2011
    	
 
    	
N/A
    	
 
    	
Published;   Opposed
    	
 
    	
BEATPORT,   LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PLAY   WITH MUSIC
    	
 
    	
85/605,758

 

4/23/2012
    	
 
    	
N/A
    	
 
    	
Allowed
    	
 
    	
BEATPORT,   LLC
    

 

United States Copyrights and Copyright Applications:

 

None.

 

 

United States Patents and Patent Applications:

 

	
TITLE
    	
 
    	
APP. NO.
   AND DATE
    	
 
    	
STATUS
    	
 
    	
INVENTOR(S)
    	
 
    	
OWNER
    
	
Systems And Methods For Selling Sounds
    	
 
    	
61/613,730

 

3/21/2012
    	
 
    	
Pending
    	
 
    	
Matthew Thomas
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Systems And Methods For Selling Sounds
    	
 
    	
13802585

 

3/14/2013
    	
 
    	
Pending
    	
 
    	
Matthew Thomas
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
DJ Stem Systems and Methods
    	
 
    	
13802548

 

3/14/2013
    	
 
    	
Pending
    	
 
    	
Michael Peter Siciliano
    	
 
    	
BEATPORT, LLC
    

 

Foreign Trademark Registrations and Trademark Applications:

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BASEWARE
    	
 
    	
1,462,439
    	
 
    	
10/17/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BASEWARE DISTRIBUTION
    	
 
    	
1,479,783
    	
 
    	
3/13/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BEATDIS
    	
 
    	
1,449,788
    	
 
    	
7/25/2011
    	
 
    	
1,449,788
    	
 
    	
2/20/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BEATPORT
    	
 
    	
1,093,968
    	
 
    	
10/10/2005 
    	
 
    	
1,093,968
    	
 
    	
6/13/2006
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BEATPORT MIX
    	
 
    	
1,458,379
    	
 
    	
4/13/2011
    	
 
    	
1,458,379
    	
 
    	
3/5/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
 
    	
 
    	

    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BEATPORT MIX
    	
 
    	
1,458,380
    	
 
    	
4/13/2011
    	
 
    	
1,458,379
    	
 
    	
3/5/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BEATPORT PRO
    	
 
    	
1,465,176
    	
 
    	
11/3/2011 
    	
 
    	
1,465,176
    	
 
    	
5/24/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BEATPORT SOUNDS
    	
 
    	
1,455,819
    	
 
    	
9/12/2011
    	
 
    	
1,455,819
    	
 
    	
3/9/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
BEATPORTAL

 

    	
 
    	
1,465,155
    	
 
    	
10/31/2011
    	
 
    	
1,465,155
    	
 
    	
7/27/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
GET DOWN Logo

 

    	
 
    	
1,408,684
    	
 
    	
2/14/2011
    	
 
    	
1,408,684
    	
 
    	
3/5/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
AU
    	
 
    	
MASHBOX
    	
 
    	
1,455,830
    	
 
    	
9/22/2011
    	
 
    	
1,455,830
    	
 
    	
5/10/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
MY BEATPORT
    	
 
    	
1,434,559
    	
 
    	
6/6/2011 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ACCEPTED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
PLAY WITH MUSIC
    	
 
    	
1433736
    	
 
    	
5/6/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING 
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BX
    	
 
    	
BEATPORT
    	
 
    	
1079262
    	
 
    	
6/10/2005
    	
 
    	
778,335
    	
 
    	
11/10/2005
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
BASEWARE
    	
 
    	
1,548,233
    	
 
    	
10/18/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
BASEWARE DISTRIBUTION
    	
 
    	
1,546,835
    	
 
    	
10/6/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ALLOWED  
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
BEATPORT
    	
 
    	
1280206
    	
 
    	
11/10/2005
    	
 
    	
TMA684,553
    	
 
    	
3/23/2007
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
BEATPORT MIX
    	
 
    	
1523658
    	
 
    	
4/14/2011
    	
 
    	
TMA831,929
    	
 
    	
9/13/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
BEATPORT MIX
    	
 
    	
1523659
    	
 
    	
4/14/2011
    	
 
    	
TMA833,546
    	
 
    	
10/3/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
 
    	
 
    	

    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
BEATPORT PRO
    	
 
    	
1,591,187
    	
 
    	
8/22/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
BEATPORT SOUNDS
    	
 
    	
1,543,466
    	
 
    	
9/14/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ADVERTISED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
GET DOWN Logo

 

    	
 
    	
1515165
    	
 
    	
2/14/2011
    	
 
    	
TMA830,771
    	
 
    	
8/28/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
MASHBOX
    	
 
    	
1545123
    	
 
    	
9/26/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ALLOWED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
MY BEATPORT
    	
 
    	
1,529,674
    	
 
    	
5/30/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ALLOWED
    	
 
    	
BEATPORT, LLC
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
CA
    	
 
    	
PLAY WITH MUSIC
    	
 
    	
1,527,100
    	
 
    	
5/10/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
ALLOWED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CA
    	
 
    	
PLAY WITH MUSIC
    	
 
    	
1,599,343
    	
 
    	
10/23/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BASEWARE
    	
 
    	
1,096,955
    	
 
    	
10/17/2011
    	
 
    	
1,096,955
    	
 
    	
12/21/2012
    	
 
    	
IR ACCEPTED; OPPOSED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BASEWARE DISTRIBUTION
    	
 
    	
1,094,444
    	
 
    	
10/6/2011
    	
 
    	
1,094,444
    	
 
    	
9/4/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BEATDIS
    	
 
    	
1,089,606
    	
 
    	
7/25/2011
    	
 
    	
1,089,606
    	
 
    	
7/23/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BEATPORT
    	
 
    	
9,271,636
    	
 
    	
7/26/2010
    	
 
    	
9,271,636
    	
 
    	
1/7/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BEATPORT MIX
    	
 
    	
1,094,655
    	
 
    	
4/13/2011
    	
 
    	
1,094,655
    	
 
    	
9/11/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BEATPORT MIX

 

    	
 
    	
1,094,654
    	
 
    	
4/13/2011
    	
 
    	
1,094,654
    	
 
    	
9/11/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
EU
    	
 
    	
BEATPORT PRO
    	
 
    	
1,098,900
    	
 
    	
11/3/2011
    	
 
    	
1,098,900
    	
 
    	
10/16/2012
    	
 
    	
IR ACCEPTED; DECLARATION   OF INVALIDITY FILED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BEATPORT SOUNDS
    	
 
    	
1,093,743
    	
 
    	
9/12/2011
    	
 
    	
1,093,743
    	
 
    	
8/28/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
BEATPORTAL

 

    	
 
    	
1,098,812
    	
 
    	
10/31/2011
    	
 
    	
1,098,812
    	
 
    	
10/16/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
GET DOWN Logo

 

    	
 
    	
9,732,066
    	
 
    	
2/11/2011
    	
 
    	
9,732,066
    	
 
    	
7/15/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
MASHBOX
    	
 
    	
1,093,771
    	
 
    	
9/22/2011
    	
 
    	
1,093,771
    	
 
    	
8/28/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
MY BEATPORT
    	
 
    	
1,081,409
    	
 
    	
6/6/2011
    	
 
    	
1,081,409
    	
 
    	
5/14/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
EU
    	
 
    	
PLAY WITH MUSIC
    	
 
    	
1,079,367
    	
 
    	
5/6/2011
    	
 
    	
1,079,367
    	
 
    	
5/1/2012
    	
 
    	
IR ACCEPTED
    	
 
    	
BEATPORT, LLC
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
EU
    	
 
    	
SOUNDS TO SAMPLE
    	
 
    	
9,487,571
    	
 
    	
11/1/2010
    	
 
    	
9,487,571
    	
 
    	
2/28/2011
    	
 
    	
REGISTERED
    	
 
    	
SOUNDS TO SAMPLE, LTD
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
BASEWARE
    	
 
    	
A0026740
    	
 
    	
10/17/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING REFUSAL
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
BASEWARE DISTRIBUTION
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,094,444
    	
 
    	
10/26/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
BEATDIS
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,089,606
    	
 
    	
 
    	
 
    	
REFUSED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
BEATPORT (Stylized)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
871,967
    	
 
    	
1/15/2010
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
BEATPORT MIX

 

    	
 
    	
1,094,655
    	
 
    	
4/13/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
APPROVED FOR   REGISTRATION
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
BEATPORT MIX
    	
 
    	
1,094,654
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
APPROVED FOR   REGISTRATION
    	
 
    	
BEATPORT, LLC
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
JP
    	
 
    	
BEATPORT PRO
    	
 
    	
1,098,900
    	
 
    	
11/3/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
APPROVED FOR   REGISTRATION
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
BEATPORT SOUNDS
    	
 
    	
1,093,743
    	
 
    	
9/12/2011
    	
 
    	
1,093,743
    	
 
    	
10/26/2012
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
GET DOWN Logo

 

    	
 
    	
2011-011162
    	
 
    	
2/18/2011
    	
 
    	
5,446,837
    	
 
    	
10/28/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
MASHBOX
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,093,771
    	
 
    	
9/22/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
MY BEATPORT
    	
 
    	
1,081,409
    	
 
    	
6/6/2011
    	
 
    	
 
    	
 
    	
 
    	
 
    	
APPROVED FOR   REGISTRATION
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
JP
    	
 
    	
PLAY WITH MUSIC
    	
 
    	
 
    	
 
    	
5/6/2011
    	
 
    	
1,079,367
    	
 
    	
 
    	
 
    	
PENDING REGISTRATION
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
NO
    	
 
    	
BEATPORT (Stylized)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
871,967
    	
 
    	
12/15/2006
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TR
    	
 
    	
BEATPORT (Stylized)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
871,967
    	
 
    	
8/10/2007
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
BASEWARE
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,096,955
    	
 
    	
10/17/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
IR
    	
 
    	
BASEWARE DISTRIBUTION
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,094,444
    	
 
    	
10/6/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
BEATDIS
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1089606
    	
 
    	
7/25/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
BEATPORT (Stylized)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
871,967
    	
 
    	
10/10/2005
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
BEATPORT MIX

 

    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,094,655
    	
 
    	
4/13/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
BEATPORT MIX
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,094,654
    	
 
    	
4/13/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
BEATPORT PRO
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1098900
    	
 
    	
11/3/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
BEATPORT SOUNDS
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1093743
    	
 
    	
9/12/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
IR
    	
 
    	
BEATPORTAL

 

    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,098,812
    	
 
    	
10/31/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
MASHBOX
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,093,771
    	
 
    	
9/22/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
MY BEATPORT
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,081,409
    	
 
    	
6/6/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
PLAY WITH MUSIC
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,079,367
    	
 
    	
5/6/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IR
    	
 
    	
SOUNDS TO SAMPLE
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1092256
    	
 
    	
9/12/2011
    	
 
    	
REGISTERED
    	
 
    	
BEATPORT, LLC 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AU
    	
 
    	
LIFE IN COLOR
    	
 
    	
1517837
    	
 
    	
10/3/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
SFX-LIC OPERATING LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BR
    	
 
    	
LIFE IN COLOR
    	
 
    	
905607970
    	
 
    	
11/29/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
SFX-LIC OPERATING LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
BR
    	
 
    	
LIFE IN COLOR
    	
 
    	
905608003
    	
 
    	
11/29/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
SFX-LIC OPERATING LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PA
    	
 
    	
LIFE IN COLOR
    	
 
    	
217990
    	
 
    	
10/29/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
SFX-LIC OPERATING LLC
    

 

 

	
COUNTRY
    	
 
    	
TRADEMARK
    	
 
    	
APP. NO.
    	
 
    	
APP.
   DATE
    	
 
    	
REG. NO.
    	
 
    	
REG.
   DATE
    	
 
    	
STATUS
    	
 
    	
OWNER
    
	
PA
    	
 
    	
LIFE IN COLOR
    	
 
    	
217991
    	
 
    	
10/29/2012
    	
 
    	
 
    	
 
    	
 
    	
 
    	
PENDING
    	
 
    	
SFX-LIC OPERATING LLC
    

 

 

Challenges to Validity of Grantor’s Rights in any Material Intellectual Property:

 

1.             Notice of Opposition to the registration by BEATPORT, LLC of the mark BEATPORT PRO (application serial no. 85/455,915) filed by Koss Corporation with the United States Patent and Trademark Office on January 9, 2013; Answer filed on behalf of BEATPORT, LLC on February 13, 2013.

 

2.             Application for Declaration of Invalidity of a Community Trade Mark filed by Koss Corporation against the international registration by BEATPORT, LLC of the mark BEATPORT PRO (International Registration No. 1098900) on January 14, 2013.

 

 

Schedule 4(b)

 

IP LICENSES

1.              Pursuant to the IDT JV Agreement, ID&T Holding B.V. granted ID&T/SFX North America LLC an exclusive license to use in North America all brands that ID&T Holding B.V. has the right to use in North America and the trademarks, trade names and similar intellectual property relating to those brands.

 

2.              Digital Music Download Sales Agreement dated April 1, 2012 between Believe SAS, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated April 1, 2012, between Believe SAS, BEATPORT, LLC and Beatport S.a.r.l.

 

3.              Digital Music Download Sales Agreement dated April 1, 2009, between Music Mail Tontraeger GmbH, BEATPORT, LLC and Beatport S.a.r.l, as amended by Digital Music Download Sales Agreement Amendment dated April 1, 2009, between Music Mail Tontraeger GmbH, BEATPORT, LLC and Beatport S.a.r.l.

 

4.              Digital Music Download Sales Agreement dated July 1, 2007, between Isolation Network, Inc. d/b/a INgrooves and BEATPORT, LLC, as amended by Digital Music Download Sales Agreement Amendment dated July 1, 2007, between Isolation Network, Inc. d/b/a INgrooves and BEATPORT, LLC.

 

5.              Digital Music Download Sales Agreement dated April 1, 2009, between Armada Music, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated April 1, 2009, between Armada Music, BEATPORT, LLC and Beatport S.a.r.l.

 

6.              Digital Music Download Sales Agreement dated March 12, 2009, between Symphonic Distribution, LLC, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated March 12, 2009, between Symphonic Distribution, LLC, BEATPORT, LLC and Beatport S.a.r.l.

 

7.              Digital Music Download Sales Agreement dated April 1, 2009, between Toolroom Productions Ltd., BEATPORT, LLC and Beatport S.a.r.l, as amended by Digital Music Download Sales Agreement Amendment dated April 1, 2009, between Toolroom Productions Ltd., BEATPORT, LLC and Beatport S.a.r.l.

 

 

8.              Digital Music Download Sales Agreement dated April 1, 2009, between Get Physical Music GmbH, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated April 1, 2009, between Get Physical Music GmbH, BEATPORT, LLC and Beatport S.a.r.l.

 

9.              Digital Music Download Sales Agreement dated March 12, 2009, between Proton LLC, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated March 12, 2009, between Proton LLC, BEATPORT, LLC and Beatport S.a.r.l.

 

10.       Digital Music Download Sales Agreement Amendment dated April 1, 2009, between Triple Vision Record Distribution, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated January 1, 2011, between Triple Vision Record Distribution, BEATPORT, LLC and Beatport S.a.r.l.

 

11.       Digital Music Download Sales Agreement dated April 1, 2009, between Houseplanet Distribution, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated July 1, 2011, between Houseplanet Distribution, BEATPORT, LLC and Beatport S.a.r.l.

 

12.       Digital Music Download Sales Agreement dated January 10, 2011, between CR2 Records, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated March 1, 2012, between CR2 Records, BEATPORT, LLC and Beatport S.a.r.l.

 

13.       Digital Music Download Sales Agreement dated April 1, 2012, between Be Yourself Catalogue B.V., BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated April 1, 2012, between Be Yourself Catalogue B.V., BEATPORT, LLC and Beatport S.a.r.l.

 

14.       Digital Music Download Sales Agreement dated April 1, 2009, between Be Yourself Catalogue B.V., BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated June 1, 2011, between Be Yourself Catalogue B.V., BEATPORT, LLC and Beatport S.a.r.l.

 

15.       Digital Music Download Sales Agreement dated April 7, 2011, between Noir Music Label Group, BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated April 7, 2011, between Noir Music Label Group, BEATPORT, LLC and Beatport S.a.r.l.

 

 

16.       Digital Music Download Sales Agreement dated April 1, 2009, between Black Hole Recordings B.V., BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated January 1, 2011, between Black Hole Recordings B.V., BEATPORT, LLC and Beatport S.a.r.l.

 

17.       Digital Music Download Sales Agreement dated April 1, 2009, between Black Hole Recordings B.V., BEATPORT, LLC and Beatport S.a.r.l., as amended by Digital Music Download Sales Agreement Amendment dated April 1, 2011, between Black Hole Recordings B.V., BEATPORT, LLC and Beatport S.a.r.l.

 

18.       Digital Music Download Sales Agreement dated April 1, 2009, between between BEATPORT, LLC and Isolation Network, Inc. d/b/a INgrooves, as amended by Beatport Remix Application Amendment dated April 16, 2012, by and between BEATPORT, LLC and Isolation Network, Inc. d/b/a INgrooves.

 

19.       Digital Music Download Sales Agreement dated January 23, 2012 between Strictly Rhythm Records, Inc. and BEATPORT, LLC, as amended by Beatport Remix Application Amendment dated January 23, 2012, between Strictly Rhythm Records, Inc. and BEATPORT, LLC.

 

 

Schedule 5

 

COMMERCIAL TORT CLAIMS

None.

 

 

Schedule 6

 

DEPOSIT ACCOUNTS; SECURITIES ACCOUNTS; COMMODITY ACCOUNTS

Deposit Accounts

 

	
Loan Party
    	
 
    	
Financial Institution (and 
   address)
    	
 
    	
Account Number
    	
 
    	
Account Type
    
	
SFX-LIC   Operating LLC
    	
 
    	
JPMorgan Chase, N.A., 100 E. Broad Street, Columbus, OH 43215
    	
 
    	
###
    	
 
    	
Checking
    
	
SFX-LIC   Operating LLC
    	
 
    	
JPMorgan Chase, N.A., 100 E. Broad Street, Columbus, OH 43215
    	
 
    	
###
    	
 
    	
Checking (Payroll)
    
	
SFX-Nightlife   Operating LLC
    	
 
    	
JPMorgan Chase, N.A., 100 E. Broad Street, Columbus, OH 43215
    	
 
    	
###
    	
 
    	
Checking
    
	
SFX-Nightlife   Operating LLC
    	
 
    	
JPMorgan Chase, N.A., 100 E. Broad Street, Columbus, OH 43215
    	
 
    	
###
    	
 
    	
Checking (Payroll)
    
	
BEATPORT,   LLC
    	
 
    	
US Bank PO Box 1800, Saint Paul, Minnesota 55101-0800
    	
 
    	
###
    	
 
    	
Checking
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
Checking
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
Payroll (zero balance account)
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
Operating Account
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
Disbursement Account
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank N.A. 125 London Wall, London, EC2Y 5AJ
    	
 
    	
###
    	
 
    	
Operating Account
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank N.A. 125 London Wall, London, EC2Y 5AJ
    	
 
    	
###
    	
 
    	
Operating Account
    

 

 

	
Loan Party
    	
 
    	
Financial Institution (and 
   address)
    	
 
    	
Account Number
    	
 
    	
Account Type
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
401(k)
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank N.A. 125 London Wall, London, EC2Y 5AJ
    	
 
    	
###
    	
 
    	
Used for accounting purposes only
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. - London Branch 25 Bank Street, London E14   5JP
    	
 
    	
###
    	
 
    	
Operating Account
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank N.A. 125 London Wall, London, EC2Y 5AJ
    	
 
    	
###
    	
 
    	
Escrow Account
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan AG Junghofstrasse   14, 60311 Frankfurt am Main, Germany
    	
 
    	
###
    	
 
    	
Sweep Account
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
Used to receive funds (zero balance account)
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
Cash Account
    
	
BEATPORT,   LLC
    	
 
    	
Paypal*Sounds2Samp and Paypal*Beatport www.paypal.com;   http://www.soundstosample.com
    	
 
    	
N/A
    	
 
    	
Sweep Account
    
	
BEATPORT,   LLC
    	
 
    	
Paypal*Sounds2Samp and Paypal*Beatport www.paypal.com;   http://www.soundstosample.com
    	
 
    	
N/A
    	
 
    	
Sweep Account
    
	
BEATPORT,   LLC
    	
 
    	
Paypal*Sounds2Samp and Paypal*Beatport www.paypal.com;   http://www.soundstosample.com
    	
 
    	
N/A
    	
 
    	
Operating Account
    
	
BEATPORT,   LLC
    	
 
    	
US Bank PO Box 1800, Saint Paul, Minnesota 55101-0800
    	
 
    	
###
    	
 
    	
Certificate of Deposit
    
	
BEATPORT,   LLC
    	
 
    	
JPMorgan Chase Bank, N.A. Colorado Market PO Box 659754, San Antonio,   Texas 78265-9754
    	
 
    	
###
    	
 
    	
Money Market Account
    

 

 

Securities Accounts

 

None.

 

Commodity Accounts

None.

 

 

Schedule 7

 

PERFECTION AND PRIORITY

None.

 

 

Annex I to
  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 Intermediate Holdco II LLC, 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 March 15, 2013 (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 Guarantee and Collateral Agreement, dated as of March 15, 2013 (as amended, restated, supplemented, waived and/or otherwise modified from time to time, the “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 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 Guarantee and Collateral Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.             Guarantee and Collateral Agreement. By executing and delivering this Assumption Agreement, the Additional Grantor, as provided in Section 8.13 of the Guarantee and Collateral Agreement, hereby becomes a party to the 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 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 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]

 

 

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

 

 

Annex II to
  Guarantee and Collateral Agreement

 

ACKNOWLEDGMENT AND CONSENT

 

The undersigned hereby acknowledges receipt of a copy of the Guarantee and Collateral Agreement dated as of March 15, 2013 (the “Agreement”), made by the Grantors parties thereto for the benefit of Barclays Bank PLC, as Collateral Agent for the Secured Parties. The undersigned agrees for the benefit of the Collateral Agent and the other Secured Parties as follows:

 

1.                                      The undersigned will be bound by the terms of the Agreement and will comply with such terms insofar as such terms are applicable to the undersigned.

 

2.                                      The terms of Sections 6.3(c) and 6.8 of the Agreement shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.8 of the Agreement.

 

	
 
    	
[NAME   OF ISSUER]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notices:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Email:

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