Document:

Exhibit 10.7

 

 

COMPANY GUARANTY

 

 

Dated as of February 27, 2004

 

From

 

WMG ACQUISITION CORP.

 

as Guarantor

 

in favor of

 

THE SECURED PARTIES REFERRED TO IN

THE CREDIT AGREEMENT REFERRED TO HEREIN

 

 

TABLE OF CONTENTS

 

	
  Section
  1. Guaranty

  	
   

  
	
  Section
  2. Guaranty
  Absolute

  	
   

  
	
  Section
  3. Waivers
  and Acknowledgments

  	
   

  
	
  Section
  4. Subrogation

  	
   

  
	
  Section
  5. Payments
  Free and Clear of Taxes, Etc

  	
   

  
	
  Section
  6. Amendments,
  Etc

  	
   

  
	
  Section
  7. Notices,
  Etc

  	
   

  
	
  Section
  8. No
  Waiver; Remedies

  	
   

  
	
  Section
  9. Right
  of Set-off

  	
   

  
	
  Section
  10. Continuing
  Guaranty; Assignments under the Credit Agreement

  	
   

  
	
  Section
  11. Execution
  in Counterparts

  	
   

  
	
  Section
  12. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc

  	
   

  

 

 

COMPANY GUARANTY

 

COMPANY
GUARANTY dated as of February 27, 2004 (the “Guaranty”) made
by WMG ACQUISITION CORP., a Delaware corporation (the “Guarantor”), in favor of the
Secured Parties (as defined in the Credit Agreement referred to below).

 

PRELIMINARY STATEMENT

 

The Guarantor
and certain of its Foreign Subsidiaries (the “Overseas
Borrowers” and, together with the Guarantor, the “Borrowers”) are parties to a
Credit Agreement dated as of February 27, 2004 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; the capitalized terms
defined therein and not otherwise defined herein being used herein as therein
defined) with WMG Holdings Corp., certain Lenders party thereto, Bank of
America, N.A., as the L/C Issuer, the Swing Line Lender and the Administrative
Agent, and the other Agents named therein. The Guarantor will derive
substantial direct and indirect benefits from the transactions contemplated by
the Loan Documents and the Secured Hedge Agreements (together with all
instruments, agreements or other documents evidencing the Cash Management Obligations,
the “Finance Documents”). It
is a condition precedent to the making of Loans and the issuance of Letters of
Credit by the Lenders under the Credit Agreement and the entry by the Hedge
Banks into Secured Hedge Agreements from time to time that the Guarantor shall
have executed and delivered this Guaranty.

 

NOW,
THEREFORE, in consideration of the premises and in order to induce the Lenders
to make Loans and to issue Letters of Credit under the Credit Agreement and the
Hedge Banks to enter into Secured Hedge Agreements from time to time, the
Guarantor hereby agrees as follows:

 

Section 1.
Guaranty. (a) The Guarantor
hereby absolutely, unconditionally and irrevocably guarantees the punctual
payment, whether at scheduled maturity or by acceleration, demand or otherwise,
of all Obligations of each Loan Party and each other Restricted Subsidiary
which is an obligor with respect to the Cash Management Obligations (each, an “Obligor”) now or hereafter
existing (including, without limitation, any extensions, modifications,
substitutions, amendments or renewals of any or all of the foregoing
Obligations), whether direct or indirect, absolute or contingent, and whether
for principal, interest, premiums, fees, indemnities, contract causes of
action, costs, expenses or otherwise (such Obligations being the “Guaranteed Obligations”), and agrees to pay any and all expenses incurred by the Administrative
Agent or any other Secured Party in enforcing any rights under this Guaranty or
any other Loan Document (including reasonable fees, expenses and disbursements
of any law firm or other external counsel to the Administrative Agent). Without
limiting the

 

 

generality of the foregoing,
the Guarantor’s liability shall extend to all amounts that constitute part of
the Guaranteed Obligations and would be owed by any Obligor to any Secured
Party under or in respect of the Finance Documents but for the fact that they
are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Obligor.

 

(b)           The Guarantor hereby unconditionally
and irrevocably agrees that in the event any payment shall be required to be
made to any Secured Party under this Guaranty or the Parent Guaranty or the
Subsidiary Guaranty or any other guaranty, the Guarantor will contribute, to
the maximum extent permitted by law, such amounts to each other guarantor so as
to maximize the aggregate amount paid to the Secured Parties under or in
respect of the Finance Documents.

 

Section 2.
Guaranty Absolute. The Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Finance
Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party with respect thereto. The Obligations of the Guarantor under or
in respect of this Guaranty are independent of the Guaranteed Obligations or
any other Obligations of any other Obligor under or in respect of the Finance
Documents, and a separate action or actions may be brought and prosecuted
against the Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against any other Obligor or whether any other Obligor is
joined in any such action or actions. The liability of the Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional irrespective of, and
the Guarantor hereby irrevocably waives any defenses it may now have or
hereafter acquire in any way relating to, any or all of the following:

 

(a)           any lack of validity or
enforceability of any Finance Document or any agreement or instrument relating
thereto;

 

(b)           any change in the time, manner or
place of payment of, or in any other term of, all or any of the Guaranteed
Obligations or any other Obligations of any other Obligor under or in respect
of the Finance Documents, or any other amendment or waiver of or any consent to
departure from any Finance Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Obligor or any of its Subsidiaries or otherwise;

 

(c)           any taking, exchange, release or
non-perfection of any Collateral or any other collateral, or any taking,
release or amendment or waiver of, or consent to departure from, any other
guaranty, for all or any of the Guaranteed Obligations;

 

2

 

(d)           any manner of application of
Collateral or any other collateral, or proceeds thereof, to all or any of the
Guaranteed Obligations, or any manner of sale or other disposition of any
Collateral or any other collateral for all or any of the Guaranteed Obligations
or any other Obligations of any Obligor under the Finance Documents or any
other assets of any Obligor or any of its Subsidiaries;

 

(e)           any change, restructuring or
termination of the corporate structure or existence of any Obligor or any of
its Subsidiaries;

 

(f)            any failure of any Secured Party to
disclose to any Obligor any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Obligor now or hereafter known to such Secured Party (the Guarantor
waiving any duty on the part of the Secured Parties to disclose such
information);

 

(g)           the failure of any other Person to
execute or deliver any other guaranty or agreement or the release or reduction
of liability of any other guarantor or surety with respect to the Guaranteed
Obligations; or

 

(h)           any other circumstance or any
existence of or reliance on any representation by any Secured Party that might
otherwise constitute a defense available to, or a discharge of, any Obligor or
any other guarantor or surety.

 

This Guaranty shall continue to
be effective or be reinstated, as the case may be, if at any time any payment
of any of the Guaranteed Obligations is rescinded or must otherwise be returned
by any Secured Party or any other Person upon the insolvency, bankruptcy or
reorganization of any other Obligor or otherwise, all as though such payment
had not been made.

 

Section 3.
Waivers and Acknowledgments. (a)
The Guarantor hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that any Secured Party protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
any Obligor or any other Person or any Collateral.

 

(b)           The Guarantor hereby unconditionally
and irrevocably waives any right to revoke this Guaranty and acknowledges that
this Guaranty is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future.

 

(c)           The Guarantor hereby unconditionally
and irrevocably waives (i) any defense arising by reason of any claim or
defense based upon an election of

 

3

 

remedies by any Secured Party
that in any manner impairs, reduces, releases or otherwise adversely affects
the subrogation, reimbursement, exoneration, contribution or indemnification
rights of the Guarantor or other rights of the Guarantor to proceed against any
of the other Obligors, any other guarantor or any other Person or any
Collateral and (ii) any defense based on any right of set-off or counterclaim
against or in respect of the Obligations of the Guarantor hereunder.

 

(d)           The Guarantor acknowledges that the
Administrative Agent may, in accordance with the Loan Documents, without notice
to or demand upon the Guarantor and without affecting the liability of the
Guarantor under this Guaranty, foreclose under any mortgage by nonjudicial sale,
and the Guarantor hereby waives any defense to the recovery by the
Administrative Agent and the other Secured Parties against the Guarantor of any
deficiency after such nonjudicial sale and any defense or benefits that may be
afforded by applicable law.

 

(e)           The Guarantor hereby unconditionally
and irrevocably waives any duty on the part of any Secured Party to disclose to
the Guarantor any matter, fact or thing relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any other Obligor or any of its Subsidiaries now or hereafter known by such
Secured Party.

 

(f)            The Guarantor acknowledges that it
will receive substantial direct and indirect benefits from the financing
arrangements contemplated by the Finance Documents and that the waivers set
forth in Section 2 and this Section 3 are knowingly made in contemplation of
such benefits.

 

Section 4.
Subrogation. The Guarantor hereby
unconditionally and irrevocably agrees not to exercise any rights that it may
now have or hereafter acquire against any other Obligor or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
the Guarantor’s Obligations under or in respect of this Guaranty or any other
Finance Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of any Secured Party against any other
Obligor or any other insider guarantor or any Collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from any other
Obligor or any other insider guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed Obligations and all
other amounts payable under this Guaranty shall have been paid in full in cash, all Letters of Credit shall
have expired or been terminated and the Commitments shall have expired or been
terminated. If any amount shall be paid to the Guarantor in violation of the
immediately preceding sentence at any time prior to the latest of (a) the
payment in full in cash of the
Guaranteed Obligations and all other amounts payable under

 

4

 

this Guaranty,
(b) the Maturity Date and (c) the latest date of expiration or termination of
all Letters of Credit, such amount shall be received and held in trust for the
benefit of the Secured Parties, shall be segregated from other property and
funds of the Guarantor and shall forthwith be paid or delivered to the
Administrative Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Finance Documents, or to be
held as Collateral for any Guaranteed Obligations or other amounts payable
under this Guaranty thereafter arising. If (i) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash, (ii) the Maturity Date shall have occurred and (iii) all
Letters of Credit shall have expired or been terminated, the Secured Parties
will, at the Guarantor’s request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Guarantor of
an interest in the Guaranteed Obligations resulting from such payment made by
the Guarantor pursuant to this Guaranty.

 

Section 5.
Payments Free and Clear of Taxes, Etc. Any
and all payments by the Guarantor under this Guaranty or any other Loan
Document shall be made, in accordance with the terms of the Credit Agreement,
free and clear of and without deduction for any and all present or future
Taxes.

 

Section 6.
Amendments, Etc. No amendment or
waiver of any provision of this Guaranty and no consent to any departure by the
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent and the Guarantor (with the
consent of the requisite number of Lenders specified in the Credit Agreement),
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

Section 7.
Notices, Etc. All notices and
other communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication or facsimile transmission) and
mailed, telegraphed, telecopied, telexed, faxed or delivered to it, if to the
Guarantor, at its address specified in Section 10.02 of the Credit Agreement,
if to any Agent or any Lender, at its address specified in Section 10.02 of the
Credit Agreement, if to any Hedge Bank, at its address specified in the Secured
Hedge Agreement to which it is a party, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall be deemed to be given or
made at such time as shall be set forth in Section 10.02 of the Credit
Agreement. Delivery by telecopier of an executed counterpart of a signature
page to any amendment or waiver of any provision of this Guaranty shall be
effective as delivery of an original executed counterpart thereof.

 

5

 

Section 8.
No Waiver; Remedies. No failure
on the part of any Secured Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.

 

Section 9.
Right of Set-off. Upon (a) the
occurrence and during the continuance of any Event of Default and (b) the
making of the request or the granting of the consent specified by Section 8.02
of the Credit Agreement to authorize the Administrative Agent to declare the
Notes due and payable pursuant to the provisions of said Section 8.02, the
Administrative Agent and, after obtaining the prior written consent of the
Administrative Agent, each other Agent and each Lender and each of their
respective Affiliates is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Agent, such Lender or
such Affiliate to or for the credit or the account of the Guarantor against any
and all of the Obligations of the Guarantor now or hereafter existing under the
Loan Documents, irrespective of whether such Agent or such Lender shall have
made any demand under this Guaranty or any other Loan Document and although
such Obligations may be unmatured. Each Agent and each Lender agrees promptly
to notify the Guarantor after any such set-off and application; provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of each Agent and each Lender and their respective Affiliates under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Agent, such Lender and their respective
Affiliates may have.

 

Section 10.
Continuing Guaranty; Assignments under the
Credit Agreement. This Guaranty is a continuing guaranty and shall
(a) remain in full force and effect until the latest of (i) the payment in full
in cash of the Guaranteed Obligations (other than with respect to Secured Hedge
Agreements and Cash Management Obligations which are not yet due and payable)
and all other amounts payable under this Guaranty, (ii) the Maturity Date and
(iii) the latest date of expiration or termination of all Letters of Credit,
(b) be binding upon the Guarantor, its successors and assigns and (c) inure to
the benefit of and be enforceable by the Secured Parties and their successors,
transferees and assigns. Without limiting the generality of clause (c) of the
immediately preceding sentence, any Secured Party may assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of its
Commitments, the Loans owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in

 

6

 

Section 10.07 of the Credit
Agreement. Except as expressly provided in the Credit Agreement, the Guarantor
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Secured Parties.

 

Section 11.
Execution in Counterparts. This
Guaranty and each amendment, waiver and consent with respect hereto may be
executed in any number of counterparts and by different parties thereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Guaranty by telecopier shall be effective as delivery of an original executed
counterpart of this Guaranty.

 

Section 12.
Governing Law; Jurisdiction; Waiver of Jury
Trial, Etc. (a) This Guaranty shall be governed
by, and construed in accordance with, the laws of the State of New York.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY
OF THIS GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

 

(c)           THE GUARANTOR HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, CLAIM, DEMAND OR CAUSE OF
ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

 

7

 

IN WITNESS
WHEREOF, the Guarantor has caused this Guaranty to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.

 

 

	
   

  	
  WMG
  ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/   Paul
  Robinson

  	
   

  
	
   

  	
   

  	
  Title:    Vice
  PresidentExhibit 10.8

 

 

DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS

AND LEASES AND FIXTURE FILING (TENNESSEE)

 

by and from

 

WARNER BROS. RECORDS, INC., “Trustor”

 

to

 

KAY B. HOUSCH, a resident of Davidson County, “Trustee”

 

in favor of

 

BANK OF
AMERICA, N.A.,

in its capacity as Agent, “Beneficiary”

 

Dated as of February 29, 2004

 

MAXIMUM
PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING TAX PURPOSES IS

$75,077,810.00.

 

	
  Location:

  	
  20,
  24, 26 Music Square East

  
	
  Municipality:

  	
  Nashville

  
	
  County:

  	
  Davidson

  
	
  State:

  	
  Tennessee

  

 

THE
SECURED PARTY (BENEFICIARY) DESIRES THIS FIXTURE FILING

TO BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE

DESCRIBED HEREIN

 

PREPARED
BY, RECORDING REQUESTED BY,

AND WHEN RECORDED MAIL TO:

 

Davis
Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: Susan D. Kennedy, Esq.

 

 

DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS

AND LEASES AND FIXTURE FILING (TENNESSEE)

 

THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS  AND LEASES AND FIXTURE FILING (TENNESSEE) (this “Deed of Trust”) is dated as of February 29, 2004 by and from Warner  Bros. Records,
Inc., a Delaware corporation (“Trustor”), whose
address is 3300 Warner Boulevard, Burbank, California 91510, to Kay B. Housch,
a resident of Davidson County, Tennessee (“Trustee”), with
an address at Suite 310, 222 Second Avenue North, Nashville, Tennessee 37201,
for the benefit of BANK OF AMERICA, N.A., a
national association, as administrative agent (in such capacity, “Agent”) for the Secured Parties as defined in the
Credit Agreement (defined below), having an address at Independence Center, 15th
Floor, NC1-001-15-04, 101 North Tryon Street, Charlotte, North Carolina 28255
(Agent, together with its successors and assigns, “Beneficiary”).

 

This instrument covers property which is or may become
so affixed to real property as to become fixtures and also constitutes a
fixture filing under §
47-9-502(c)
of Tennessee Code Annotated. NOTICE PURSUANT TO § 47-28-104 OF TENNESSEE CODE ANNOTATED: This Deed of Trust secures future
advances which are “obligatory advances” as defined in the aforesaid statute.
This Deed of Trust is for “commercial purposes” as defined in said statute.

 

ARTICLE 1

DEFINITIONS

 

Section 1.1   Definitions.  All capitalized terms used herein without definition shall have the
respective meanings ascribed to them in that certain Credit Agreement dated as
of even date herewith, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time (the “Credit Agreement”), among
WMG Acquisition Corp. and the Overseas Borrowers Party thereto, as Borrowers
(collectively, “Borrower”), WMG
Holdings Corp. and the other Secured Parties identified therein. As used
herein, the following terms shall have the following meanings:

 

(a)   “Debtor
Relief Laws”: the
Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

(b)   “Event of Default”: An Event of Default under and as defined in the Credit
Agreement.

 

(c)   “Loan
Parties”: collectively,
each Borrower and each Guarantor.

 

(d)   “Obligations”: means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, Letter of Credit, or Secured Hedge
Agreement whether direct or indirect (including those acquired by assumption),
absolute or contingent, due or to become due, now existing or hereafter arising
and including interest and fees that accrue after the commencement by or
against any Loan Party of any proceeding under any Debtor Relief Laws naming
such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding. Without limiting the
generality of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, Letter of
Credit commissions, charges, expenses, fees, Attorney Costs, indemnities and
other amounts payable by any Loan Party under any Loan Document and (b) the
obligation of any Loan Party to reimburse any amount in respect of any of the
foregoing that any Lender, in its sole discretion, may elect to pay or advance
on behalf of such Loan Party. The Credit Agreement

 

 

contains
a revolving credit facility which permits Borrower to borrow certain principal
amounts, repay all or a portion of such principal amounts, and reborrow the
amounts previously paid to the Secured Parties, all upon satisfaction of
certain conditions stated in the Credit Agreement. This Deed of Trust secures
all advances and re-advances under the Credit Agreement, including, without
limitation, those under the revolving credit facility contained therein.

 

(e)       “Permitted
Liens”: Liens
described in Sections 7.01 of the Credit Agreement.

 

(f)       “Secured
Obligations”: the
payment of all Obligations of Trustor now or hereafter existing under the Loan
Documents and the Secured Hedge Agreements (together, the “Finance Documents”), whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise.

 

(g)      “Secured
Hedge Agreement”: any
Swap Contract required or permitted under Article 6 or Article 7 of the Credit
Agreement that is entered into by and between any Loan Party and any Hedge
Bank.

 

(h)      “Secured
Parties”: Secured
Parties as defined in the Credit Agreement and Trustee.

 

(i)        “Trust
Property”: The
fee interest in the real property described in Exhibit A attached hereto
and incorporated herein by this reference, together with any greater estate in
such real property as hereafter may be acquired by Trustor (the “Land”), and all
of Trustor’s right, title and interest in and to (1) all improvements now owned
or hereafter acquired by Trustor, now or at any time situated, placed or
constructed upon the Land (the “Improvements”; the Land and Improvements are collectively
referred to as the “Premises”), (2) all materials, supplies,
equipment, apparatus and other items of personal property now owned or
hereafter acquired by Trustor and now or hereafter attached to, installed in or
used in connection with any of the Improvements or the Land, and water, gas,
electrical, telephone, storm and sanitary sewer facilities and all other
utilities whether or not situated in easements (the “Fixtures”), (3) all goods, accounts, general
intangibles, instruments, documents, chattel paper and all other personal
property of any kind or character, including such items of personal property as
defined in the UCC (defined below), now owned or hereafter acquired by Trustor
and now or hereafter affixed to, placed upon, used in connection with, arising
from or otherwise related to the Premises (the “Personalty”), (4) all reserves, escrows or impounds required under the
Credit Agreement or any of the other Loan Documents and all deposit accounts
maintained by Trustor with respect to the Trust Property (the “Deposit Accounts”), (5) all leases, licenses,
concessions, occupancy agreements or other agreements (written or oral, now or
at any time in effect) to which Trustor is a party which grant to any Person a
possessory interest in, or the right to use, all or any part of the Trust
Property, together with all related security and other deposits (the “Leases”), (6) all
of the rents, revenues, royalties, income, proceeds, profits, security and
other types of deposits, and other benefits paid or payable by parties to the
Leases for using, leasing, licensing possessing, operating from, residing in,
selling or otherwise enjoying the Trust Property (the “Rents”), (7) all other agreements, such as
construction contracts, architects’ agreements, engineers’ contracts, utility
contracts, maintenance agreements, management agreements, service contracts,
listing agreements, guaranties, warranties, permits, licenses, certificates and
entitlements in any way relating to the construction, use, occupancy,
operation, maintenance, enjoyment or ownership of the Trust Property (the “Property Agreements”), excluding
any agreement to the extent that (but only as long as) the terms thereof
prohibit the assignment of, or granting a security interest in, such agreement
(it being understood and agreed, however, (i) that notwithstanding the
foregoing, all rights to payment for money due or to become due pursuant to any
such excluded agreement shall be subject to the security interests created by
this Deed of Trust and (ii) such excluded agreement shall otherwise be subject
to the security interests created by this Deed of Trust upon receiving any
necessary approvals or waivers permitting the assignment thereof), (8) all
rights, privileges, tenements, hereditaments, rights-of-way, easements,

 

2

 

appendages
and appurtenances appertaining to the foregoing, (9) all property tax refunds
payable to Trustor with respect to the Trust Property (the “Tax Refunds”), (10) all
accessions, replacements and substitutions for any of the foregoing and all
proceeds thereof (the “Proceeds”), (11) subject to the terms of the
Credit Agreement governing insurance proceeds, all insurance policies, unearned
premiums therefor and proceeds from such policies covering any of the above
property now or hereafter acquired by Trustor (the “Insurance”), and (12)
subject to the terms of the Credit Agreement governing condemnation awards, all
awards, damages, remunerations, reimbursements, settlements or compensation
heretofore made or hereafter to be made by any governmental authority
pertaining to any condemnation or other taking (or any purchase in lieu
thereof) of all or any portion of the Land, Improvements, Fixtures or
Personalty (the “Condemnation
Awards”). As used in this Deed of Trust, the term “Trust Property”
shall mean all or, where the context permits or requires, any portion of the
above or any interest therein.

 

(j) “UCC”:
The Uniform Commercial
Code of Tennessee or, if the creation, perfection and enforcement of any
security interest herein granted is governed by the laws of a state other than
Tennessee, then, as to the matter in question, the Uniform Commercial Code in
effect in that state.

 

ARTICLE 2

GRANT[INSERT
ONLY IF DEED OF TRUST IS CAPPED: ; REVOLVING LOAN]

 

Section 2.1            Grant.
To secure the full
and timely payment of the Obligations and the full and timely performance of
the Obligations, Trustor GRANTS, BARGAINS, ASSIGNS, SELLS, CONVEYS and
CONFIRMS, unto the Trustee for the benefit of Beneficiary the Trust Property,
subject, however, only to the matters set forth on Exhibit B attached
hereto (the “Permitted
Encumbrances”) and to Permitted Liens, TO HAVE AND TO HOLD the Trust Property
to Trustee, together with all the hereditaments and appurtenances thereunto
belonging or in anywise appertaining, and Trustor does hereby bind itself, its
successors and assigns to WARRANT AND FOREVER DEFEND the title to the Trust
Property unto Beneficiary.

 

Section 2.2            Treatment of Borrowings and
Repayments. Pursuant to the
Credit Agreement, the amount of the Obligations may increase and decrease from time
to time as the Secured Parties advance, Borrower repays, and the Secured
Parties re-advance sums pursuant to the Credit Agreement. For purposes of this
Deed of Trust, so long as the balance of the Obligations equals or exceeds the
maximum principal amount secured hereby (“Secured Amount”), the amount of the Obligations
secured by this Deed of Trust shall at all times equal only the Secured Amount.
Such Secured Amount represents only a portion of the first sums advanced by the
Secured Parties in respect of the Obligations.

 

Section 2.3            Reduction
of Secured Amount. The
Secured Amount shall be reduced only by the last and final sums that Borrower
repays with respect to the Obligations and shall not be reduced by any
intervening repayments of the Obligations. So long as the balance of the
Obligations exceeds the Secured Amount, any payments and repayments of the
Obligations shall not be deemed to be applied against, or to reduce, the
portion of the Obligations secured by this Deed of Trust. Such payments shall
instead be deemed to reduce only such portions of the Obligations as are
secured by other collateral located outside of the State of Tennessee.

 

ARTICLE 3

WARRANTIES, REPRESENTATIONS AND COVENANTS

 

Trustor
warrants, represents and covenants to Beneficiary as follows:

 

Section 3.1             Title
to Trust Property and Lien of this Instrument. Trustor owns the Trust Property free and
clear of any liens, claims or interests, except the Permitted Encumbrances and

 

3

 

Permitted
Liens. This Deed of Trust creates valid, enforceable first priority liens and
security interests against the Trust Property, except for Permitted
Encumbrances and Permitted Liens.

 

Section 3.2            First
Lien Status. Trustor
shall preserve and protect the first lien and security interest status of this
Deed of Trust. If any lien or security interest other than a Permitted
Encumbrance or a Permitted Lien is asserted against the Trust Property, Trustor
shall promptly, and at its expense, (a) give Beneficiary a detailed written
notice of such lien or security interest (including origin, amount and other
terms), and (b) pay the underlying claim in full or take such other action so
as to cause it to be released or contest the same as required by and in compliance
with the Credit Agreement (including, if applicable under the Credit Agreement,
the requirement of providing a bond or other security satisfactory to
Beneficiary). Beneficiary has not consented and will not consent to any
contract or to any work or to the furnishing of any materials which might be
deemed to create a lien or liens superior to the lien of this instrument,
either under § 66-11-108 of Tennessee Code Annotated, or otherwise.

 

Section 3.3            Payment and Performance. Trustor covenants and agrees that, so long as
any part of the Obligations shall remain unpaid, any Letter of Credit shall be
outstanding, any Secured Party shall have any Commitment or any Secured Hedge
Agreement shall be in effect, Trustor shall perform and observe all of the
terms, covenants and agreements set forth in the Loan Documents on its part to
be performed or observed (including without limitation the Subsidiary Guaranty)
or that Borrower has agreed to cause Trustor to perform or observe.

 

Section 3.4            Replacement
of Fixtures. Trustor
shall not, without the prior written consent of Beneficiary, permit any of the
Fixtures owned or leased by Trustor to be removed at any time from the Land or
Improvements, unless the removed item is removed temporarily for maintenance
and repair or is permitted to be removed by the Credit Agreement.

 

Section 3.5            Insurance;
Condemnation Awards and Insurance Proceeds.

 

(a)     Insurance. Trustor shall maintain or
cause to be maintained with financially sound and reputable insurance
companies, insurance with respect to the Trust Property against loss or damage
of the kinds customarily insured against by Persons engaged in the same or
similar business, of such types and in such amounts (after giving effect to any
self-insurance reasonable and customary for similarly situated Persons engaged
in the same or similar businesses as the Trustor) as are customarily carried
under similar circumstances by such Persons. Subject to Trustor’s right to
self-insure set forth in the foregoing sentence, each such policy of insurance
shall name Beneficiary as the loss payee (or, in the case of liability
insurance, an additional insured) thereunder for the ratable benefit of the
Secured Parties, and shall provide for at least 30 days’ prior written notice
of any material modification or cancellation of such policy. In addition to the
foregoing, if any portion of the Trust Property is located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968 (or any amendment or successor act
thereto), then Trustor shall maintain, or cause to be maintained, with a
financially sound and reputable insurer, flood insurance in an amount sufficient
to comply with all applicable rules and regulations promulgated pursuant to
such Act.

 

(b)     Condemnation Awards. All
Condemnation Awards awarded to Trustor shall be reinvested and/or applied in
accordance with the terms of the Credit Agreement, including without limitation
Section 2.05(b) thereof.

 

(c)     Insurance Proceeds. All proceeds of
any insurance policies required under the Loan Documents relating to the Trust
Property shall be reinvested and/or applied in accordance with the terms of the
Credit Agreement, including without limitation Section 2.05(b) thereof.

 

4

 

ARTICLE 4

DEFAULT AND FORECLOSURE

 

Section 4.1            Remedies.
Upon the occurrence
and during the continuance of an Event of Default, Beneficiary and Trustee, or
either of them, may, at their election, exercise any or all of the following
rights, remedies and recourses:

 

(a)     Acceleration. Subject to any
provisions of the Loan Documents providing for the automatic acceleration of
the Obligations upon the occurrence of certain Events of Default, declare the
Obligations to be immediately due and payable, without further notice,
presentment, protest, notice of intent to accelerate, notice of acceleration,
demand or action of any nature whatsoever (each of which hereby is expressly
waived by Trustor), whereupon the same shall become immediately due and
payable.

 

(b)     Entry on Trust Property. Enter the
Trust Property and take exclusive possession thereof and of all books, records
and accounts relating thereto or located thereon. If Trustor remains in
possession of the Trust Property following the occurrence and during the
continuance of an Event of Default, and without Beneficiary’s prior written
consent, Beneficiary or Trustee may invoke any legal remedies to dispossess
Trustor.

 

(c)     Operation of Trust Property. Hold,
lease, develop, manage, operate or otherwise use the Trust Property upon such
terms and conditions as Beneficiary or Trustee may deem reasonable under the
circumstances (making such repairs, alterations, additions and improvements and
taking other actions, from time to time, as Beneficiary or Trustee deems
necessary or desirable), and apply all Rents and other amounts collected by
Beneficiary in connection therewith in accordance with the provisions of Section
4.7.

 

(d)     Sale. Institute proceedings for sale
of the Trust Property, either by judicial action or by power of sale, in which
case the Trust Property may be sold for cash or credit in one or more parcels.
With respect to any notices required or permitted under the UCC, Trustor agrees
that ten (10) days’ prior written notice shall be deemed commercially
reasonable. At any such sale by virtue of any judicial proceedings, power of
sale, or any other legal right, remedy or recourse, the title to and right of
possession of any such property shall pass to the purchaser thereof, and to the
fullest extent permitted by law, Trustor shall be completely and irrevocably
divested of all of its right, title, interest, claim, equity, equity of
redemption, and demand whatsoever, either at law or in equity, in and to the
property sold and such sale shall be a perpetual bar both at law and in equity
against Trustor, and against all other Persons claiming or to claim the
property sold or any part thereof, by, through or under Trustor. Beneficiary or
any of the Secured Parties may be a purchaser at such sale. If Beneficiary or
such other Secured Party is the highest bidder, Beneficiary or such other
Secured Party may credit the portion of the purchase price that would be
distributed to Beneficiary or such other Secured Party against the Obligations
in lieu of paying cash. In the event this Deed of Trust is foreclosed by
judicial action, appraisement of the Trust Property is waived.

 

(e)     Receiver. Make application to a court
of competent jurisdiction for, and obtain from such court as a matter of strict
right and without notice to Trustor or regard to the adequacy of the Trust
Property for the repayment of the Obligations, the appointment of a receiver of
the Trust Property, and Trustor irrevocably consents to such appointment. Any
such receiver shall have all the usual powers and duties of receivers in
similar cases, including the full power to rent, maintain and otherwise operate
the Trust Property upon such terms as may be approved by the court, and shall
apply such Rents in accordance with the provisions of Section 4.7.

 

(f)    Other. Exercise, with respect to the Trust Property only,
all other rights, remedies and recourses granted under the Loan Documents or
otherwise available at law or in equity.

 

5

 

Section 4.2             Separate
Sales. The Trust Property may be sold in one or more parcels and
in such manner and order as Beneficiary in its sole discretion may elect. The
right of sale arising out of any Event of Default shall not be exhausted by any
one or more sales.

 

Section 4.3            Remedies Cumulative,
Concurrent and Nonexclusive. Beneficiary
or Trustee shall have all rights, remedies and recourses granted in the Loan
Documents and available at law or equity (including the UCC), which rights (a)
shall be cumulative and concurrent, (b) may be pursued separately, successively
or concurrently against Trustor or others obligated under the Loan Documents,
or against the Trust Property, or against any one or more of them, at the sole
discretion of Beneficiary, (c) may be exercised as often as occasion therefor
shall arise, and the exercise or failure to exercise any of them shall not be
construed as a waiver or release thereof or of any other right, remedy or
recourse, and (d) are intended to be, and shall be, nonexclusive. No action by
Beneficiary or Trustee in the enforcement of any rights, remedies or recourses
under the Loan Documents or otherwise at law or equity shall be deemed to cure any
Event of Default.

 

Section 4.4            Release of and Resort to
Collateral. Beneficiary may
release, regardless of consideration and without the necessity for any notice
to or consent by the holder of any subordinate lien on the Trust Property, any
part of the Trust Property without, as to the remainder, in any way impairing,
affecting, subordinating or releasing the lien or security interest created in
or evidenced by the Loan Documents or their status as a first and prior lien
and security interest in and to the Trust Property. For payment of the
Obligations, Beneficiary or Trustee may resort to any other security in such
order and manner as Beneficiary may elect.

 

Section 4.5            Waiver
of Redemption, Notice and Marshalling of Assets. To the fullest extent permitted by law,
Trustor hereby irrevocably and unconditionally waives and releases (a) to the
extent not inconsistent with the terms of the Credit Agreement and the
Subsidiary Guaranty, all benefit that might accrue to Trustor by virtue of any
present or future statute of limitations or law or judicial decision exempting
the Trust Property from attachment, levy or sale on execution or providing for
any stay of execution, exemption from civil process, rights of redemption
(whether statutory or at common law) or extension of time for payment, (b) all
notices of any Event of Default other than any notices specifically required to
be given under any Loan Document, (c) all notices of Beneficiary’s or Trustee’s
election to exercise or the actual exercise of any right, remedy or recourse
provided for under any Loan Document, other than any notices specifically
required to be given under any Loan Document, and (d) any right to a
marshalling of assets or a sale in inverse order of alienation.

 

Section 4.6            Discontinuance
of Proceedings. If
Beneficiary or Trustee or any other Secured Party shall have proceeded to
invoke any right, remedy or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon it for any reason, Beneficiary
or Trustee or such other Secured Party, as the case may be, shall have the
unqualified right to do so and, in such an event, Trustor, Trustee, Beneficiary
and the other Secured Parties shall be restored to their former positions with
respect to the Obligations, the Loan Documents, the Trust Property and
otherwise, and the rights, remedies, recourses and powers of Beneficiary and
Trustee and the other Secured Parties shall continue as if the right, remedy or
recourse had never been invoked, but no such discontinuance or abandonment
shall waive any Event of Default which may then exist or the right of
Beneficiary or Trustee or any other Secured Party thereafter to exercise any
right, remedy or recourse under the Loan Documents for such Event of Default.

 

Section 4.7            Application of Proceeds. The proceeds of any sale of, and the Rents
and other amounts generated by the holding, leasing, management, operation or
other use of the Trust Property, shall be applied by Beneficiary (or the
receiver, if one is appointed) in the following order unless otherwise required
by applicable law:

 

6

 

(a)       first, to the payment of the costs and
expenses of taking possession of the Trust Property and of holding, using,
leasing, repairing, improving and selling the same, including, without
limitation (1) receiver’s fees and expenses, including the repayment of the
amounts evidenced by any receiver’s certificates, (2) court costs, (3)
attorneys’ and accountants’ fees and expenses, and (4) costs of advertisement;

 

(b)      second, to the payment of the Obligations
and performance of the Secured Obligations in the manner and order of
preference provided under Section 8.03 of the Credit Agreement, and

 

(c)       thereafter, the balance, if any, after
all of the Obligations have been indefeasibly paid in full, to the Borrower or
as other required under applicable law.

 

Section 4.8            Occupancy
After Foreclosure. Any
sale of the Trust Property or any part thereof in accordance with Section
4.1(d) will divest all right, title and interest of Trustor in and to the
property sold. Subject to applicable law, any purchaser at a foreclosure sale
will receive immediate possession of the property purchased. If Trustor retains
possession of such property or any part thereof subsequent to such sale,
Trustor will be considered a tenant at sufferance of the purchaser, and will,
if Trustor remains in possession after demand to remove, be subject to eviction
and removal, forcible or otherwise, with or without process of law.

 

Section 4.9              Additional
Advances and Disbursements; Costs of Enforcement.

 

(a)     Upon the occurrence and during the
continuance of any Event of Default, Beneficiary and Trustee and each of the
other Secured Parties shall have the right, but not the obligation, to cure such
Event of Default in the name and on behalf of Trustor. All sums advanced and
expenses incurred at any time by Beneficiary or Trustee or any other Secured
Party under this Section 4.9, or otherwise under this Deed of Trust or
any of the other Loan Documents or applicable law, shall, subject to any
limitations thereon contained in any Loan Document, be payable on demand and
shall bear interest from and including the date that such sum is advanced or
expense incurred, to and excluding the date of reimbursement, at the interest
rate applicable to Base Rate Loans pursuant to Section 2.08(a) of the Credit
Agreement (provided that following the occurrence and during the
continuance of any Event of Default, interest shall accrue on such sums at the
Default Rate applicable to Base Rate Loans pursuant to Section 2.08(b) of the
Credit Agreement), and all such sums, together with interest thereon, shall be
secured by this Deed of Trust.

 

(b)     Trustor shall pay all expenses (including
reasonable attorneys’ fees and expenses) of or incidental to the perfection and
enforcement of this Deed of Trust, or the enforcement, compromise or settlement
of the Obligations or any claim under this Deed of Trust, and for the curing
thereof, or for defending or asserting the rights and claims of Beneficiary in
respect thereof, by litigation or otherwise.

 

Section 4.10         No Beneficiary in Possession. Neither the enforcement of any of the
remedies under this Article 4, the assignment of the Rents and Leases
under Article 5, the security interests under Article 6, nor any
other remedies afforded to Beneficiary under the Loan Documents, at law or in
equity shall cause Beneficiary or any other Secured Party to be deemed or
construed to be a “mortgagee in possession” of the Trust Property, to obligate
Beneficiary or any other Secured Party to lease the Trust Property or attempt
to do so, or to take any action, incur any expense, or perform or discharge any
obligation, duty or liability whatsoever under any of the Leases or otherwise.

 

7

 

ARTICLE 5

ASSIGNMENT OF RENTS AND LEASES

 

Section 5.1            Assignment.
In furtherance of and
in addition to the assignment made by Trustor in Section 2.1 of this
Deed of Trust, Trustor hereby absolutely and unconditionally assigns, sells,
transfers and conveys to Beneficiary all of its right, title and interest in
and to all Leases, whether now existing or hereafter entered into, and all of
its right, title and interest in and to all Rents. This assignment is an
absolute assignment and not an assignment for additional security only. So long
as no Event of Default shall have occurred and be continuing, Trustor shall
have a revocable license from Beneficiary to exercise all rights extended to
the landlord under the Leases, including the right to receive and collect all
Rents. The foregoing license is granted subject to the conditional limitation
that no Event of Default shall have occurred and be continuing. Upon the
occurrence and during the continuance of an Event of Default, whether or not
legal proceedings have commenced, and without regard to waste, adequacy of
security for the Obligations or solvency of Trustor, the license herein granted
shall automatically expire and terminate, without notice to Trustor by
Beneficiary (any such notice being hereby expressly waived by Trustor to the
extent permitted by applicable law).

 

Section 5.2            Perfection
Upon Recordation. Trustor
acknowledges that Beneficiary has taken all actions necessary to obtain, and
that upon recordation of this Deed of Trust, Beneficiary shall have, to the
extent permitted under applicable law, a valid and fully perfected, first
priority, present assignment of the Rents arising out of the Leases and all
security for such Leases. Trustor acknowledges and agrees that upon recordation
of this Deed of Trust, Beneficiary’s interest in the Rents shall be deemed to
be present and fully perfected, “choate” and enforced as to Trustor and to the
extent permitted under applicable law, all third parties, including, without
limitation, any subsequently appointed trustee in any case under Title 11 of
the United States Code (the “Bankruptcy Code”), without the necessity of commencing a
foreclosure action with respect to this Deed of Trust, making formal demand for
the Rents, obtaining the appointment of a receiver or taking any other
affirmative action.

 

Section 5.3            Bankruptcy Provisions. Without limitation of the absolute nature of
the assignment of the Rents hereunder, Trustor and Beneficiary agree that (a)
this Deed of Trust shall constitute a “security agreement” for purposes of
Section 552(b) of the Bankruptcy Code, (b) the security interest created by
this Deed of Trust extends to property of Trustor that comprises the Trust
Property and was acquired before the commencement of a case in bankruptcy and
to all amounts paid as Rents and (c) such security interest shall extend to all
Rents acquired by the estate after the commencement of any case in bankruptcy.

 

Section 5.4            No
Merger of Estates. So
long as part of the Secured Obligations remain unpaid and undischarged, the fee
and leasehold estates to the Trust Property shall not merge, but shall remain
separate and distinct, notwithstanding the union of such estates either in
Trustor, Beneficiary, any tenant or any third party by purchase or otherwise.

 

ARTICLE 6

SECURITY AGREEMENT

 

Section 6.1            Security
Interest. This
Deed of Trust constitutes a “security agreement” within the meaning of the UCC
and other applicable law and with respect to the Personalty, Fixtures, Leases,
Rents, Deposit Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance
and Condemnation Awards. To this end, Trustor grants to Beneficiary a first and
prior security interest in the Personalty, Fixtures, Leases, Rents, Deposit
Accounts, Property Agreements, Tax Refunds, Proceeds, Insurance, Condemnation
Awards and all other Trust Property which is collateral, a security interest in
which may be perfected by the filing of a financing statement, to secure the
payment of the Obligations and performance of the Secured Obligations, and
agrees that Beneficiary shall have all the rights and

 

8

 

remedies
of a secured party under the UCC with respect to such collateral. Any notice of
sale, disposition or other intended action by Beneficiary with respect to the
Personalty, Fixtures, Leases, Rents, Deposit Accounts, Property Agreements, Tax
Refunds, Proceeds, Insurance and Condemnation Awards sent to Trustor at least
ten (10) days prior to any action under the UCC shall constitute reasonable
notice to Trustor. In the event of any inconsistency between the terms of this
Deed of Trust and the terms of the Security Agreement with respect to the
collateral covered both therein and herein, the Security Agreement shall control
and govern to the extent of any such inconsistency.

 

Section 6.2            Financing
Statements. Trustor
shall prepare and deliver to Beneficiary such financing statements, and shall
execute and deliver to Beneficiary such documents, instruments and further
assurances, in each case in form and substance satisfactory to Beneficiary, as
Beneficiary may, from time to time, reasonably consider necessary to create,
perfect and preserve Beneficiary’s security interest hereunder. Trustor hereby
irrevocably authorizes Beneficiary to cause financing statements (and
amendments thereto and continuations thereof) and any such documents,
instruments and assurances to be recorded and filed, at such times and places
as may be required or permitted by law to so create, perfect and preserve
Beneficiary’s security interest in the Trust Property hereunder. Trustor
represents and warrants to Beneficiary that Trustor’s jurisdiction of
organization is the State of Delaware. After the date of this Deed of Trust,
Trustor shall not change its name, type of organization, organizational
identification number (if any), jurisdiction of organization or location
(within the meaning of the UCC) without complying in full with the terms of the
Loan Documents with respect to any such changes.

 

Section 6.3            Fixture
Filing. This Deed
of Trust shall also constitute a “fixture filing” for the purposes of the UCC
against all of the Trust Property which is or is to become fixtures. The
information provided in this Section 6.3 is provided so that this Deed
of Trust shall comply with the requirements of the UCC for a deed of trust
instrument to be filed as a financing statement. Trustor is the “Debtor” and
its name and mailing address are set forth in the preamble of this Deed of
Trust immediately preceding Article 1. Beneficiary is the “Secured Party”
and its name and mailing address from which information concerning the security
interest granted herein may be obtained are also set forth in the preamble of
this Deed of Trust immediately preceding Article 1. A statement
describing the portion of the Trust Property comprising the fixtures hereby
secured is set forth in Section 1.1(i) of this Deed of Trust. Trustor
represents and warrants to Beneficiary that Trustor is the record owner of the
Trust Property, the employer identification number of Trustor is 95-1976532 and
the organizational identification number of Trustor is 0042563.

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.1            Notices.
Any notice required
or permitted to be given under this Deed of Trust shall be given in accordance
with Section 10.02 of the Credit Agreement.

 

Section 7.2            Covenants Running with the
Land.
All obligations contained in
this Deed of Trust are intended by Trustor and Beneficiary to be, and shall be
construed as, covenants running with the Trust Property. As used herein, “Trustor”
shall refer to the party named in the first paragraph of this Deed of Trust and
to any subsequent owner of all or any portion of the Trust Property. All
Persons who may have or acquire an interest in the Trust Property shall be
deemed to have notice of, and be bound by, the terms of the Credit Agreement
and the other Loan Documents; provided,
however, that no
such party shall be entitled to any rights thereunder without the prior written
consent of Beneficiary.

 

Section 7.3            Attorney-in-Fact. Trustor hereby irrevocably appoints
Beneficiary as its attorney-in-fact, which agency is coupled with an interest
and with full power of substitution, with full authority in the place and stead
of Trustor and in the name of Trustor or otherwise (a) to execute and/or record
any notices of completion, cessation of labor or any other notices that
Beneficiary deems necessary

 

9

 

and
appropriate to protect Beneficiary’s interest, if Trustor shall fail to do so
promptly after written request by Beneficiary, (b) upon the issuance of a deed
pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in
lieu of foreclosure, to execute all instruments of assignment, conveyance or
further assurance with respect to the Leases, Rents, Deposit Accounts, Property
Agreements, Tax Refunds, Proceeds, Insurance and Condemnation Awards in favor
of the grantee of any such deed and as may be necessary or desirable for such
purpose, (c) to prepare and file or record financing statements and
continuation statements, and to prepare, execute and file or record
applications for registration and like papers necessary to create, perfect or
preserve Beneficiary’s security interests and rights in or to any of the Trust
Property, and (d) after the occurrence and during the continuance of any Event
of Default, to perform any obligation of Trustor hereunder; provided, however, that (1) Beneficiary
shall not under any circumstances be obligated to perform any obligation of
Trustor; (2) any sums advanced by Beneficiary in such performance shall be
added to and included in the Obligations and shall bear interest at the highest
rate at which interest is then computed on any portion of the Obligations; (3)
Beneficiary as such attorney-in-fact shall only be accountable for such funds
as are actually received by Beneficiary; and (4) Beneficiary shall not be
liable to Trustor or any other person or entity for any failure to take any
action which it is empowered to take under this Section 7.3.

 

Section 7.4            Successors and Assigns. This Deed of Trust shall be binding upon and
inure to the benefit of Beneficiary, the other Secured Parties and Trustor and
their respective successors and assigns. Trustor shall not, without the prior
written consent of Beneficiary, assign any rights, duties or obligations
hereunder.

 

Section 7.5            No
Waiver. Any
failure by Beneficiary or the other Secured Parties to insist upon strict
performance of any of the terms, provisions or conditions of this Deed of Trust
shall not be deemed to be a waiver of same, and Beneficiary and the other
Secured Parties shall have the right at any time to insist upon strict
performance of all of such terms, provisions and conditions.

 

Section 7.6            Credit
Agreement. If any
conflict or inconsistency exists between this Deed of Trust and the Credit
Agreement, the Credit Agreement shall govern.

 

Section 7.7            Release or Reconveyance. Upon payment in full of the Obligations and
performance in full of the Secured Obligations or upon a sale or other
disposition of the Trust Property permitted by the Credit Agreement,
Beneficiary, at Trustor’s request and expense, shall promptly release the liens
and security interests created by this Deed of Trust or reconvey the Trust
Property to Trustor.

 

Section 7.8            Waiver
of Stay, Moratorium and Similar Rights. Trustor agrees, to the full extent that it
may lawfully do so, that it will not at any time insist upon or plead or in any
way take advantage of any stay, marshalling of assets, extension, statutory or
equitable or common law rights of redemption or moratorium law now or hereafter
in force and effect so as to prevent or hinder the enforcement (consistent with
the terms of the Credit Agreement) of the provisions of this Deed of Trust or the
Secured Obligations, or any rights or remedies provided hereunder in favor of
Beneficiary or any other Secured Party.

 

Section 7.9            Applicable
Law. The provisions of this Deed of Trust
regarding the creation, perfection and enforcement of the liens and security
interests herein granted shall be governed by and construed under the laws of
the state in which the Trust Property is located. All other provisions of this
Deed of Trust shall be governed by the laws of the State of New York
(including, without limitation, Section 5-1401 of the General Obligations Law
of the State of New York).

 

Section 7.10         Headings.
The Article, Section
and Subsection titles hereof are inserted for convenience of reference only and
shall in no way alter, modify or define, or be used in construing, the text of
such Articles, Sections or Subsections.

 

10

 

Section 7.11         Severability.
If any provision of
this Deed of Trust shall be held by any court of competent jurisdiction to be
unlawful, void or unenforceable for any reason, such provision shall be deemed
severable from and shall in no way affect the enforceability and validity of
the remaining provisions of this Deed of Trust.

 

Section 7.12         Entire Agreement. This Deed of Trust and the other Loan
Documents embody the entire agreement and understanding between Beneficiary and
Trustor relating to the subject matter hereof and thereof and supersede all
prior agreements and understandings between such parties relating to the
subject matter hereof and thereof. Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties. There are no unwritten oral agreements between the
parties.

 

Section 7.13         Beneficiary
as Agent; Successor Agents.

 

(a)       Agent has been appointed to act as Agent
hereunder by the other Secured Parties. Agent shall have the right hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of the Trust Property) in accordance
with the terms of the Credit Agreement, any related agency agreement among
Agent and the other Secured Parties (collectively, as amended, amended and
restated, supplemented or otherwise modified or replaced from time to time, the
“Agency Documents”) and this
Deed of Trust. Trustor and all other Persons shall be entitled to rely on
releases, waivers, consents, approvals, notifications and other acts of Agent,
without inquiry into the existence of required consents or approvals of the
Secured Parties therefor.

 

(b)      Beneficiary shall at all times be the same
Person that is Agent under the Agency Documents. Written notice of resignation
by Agent pursuant to the Agency Documents shall also constitute notice of
resignation as Agent under this Deed of Trust. Removal of Agent pursuant to any
provision of the Agency Documents shall also constitute removal as Agent under
this Deed of Trust. Appointment of a successor Agent pursuant to the Agency
Documents shall also constitute appointment of a successor Agent under this
Deed of Trust. Upon the acceptance of any appointment as Agent by a successor
Agent under the Agency Documents, that successor Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring or removed Agent as the Beneficiary under this Deed of Trust, and the
retiring or removed Agent shall promptly (i) assign and transfer to such
successor Agent all of its right, title and interest in and to this Deed of
Trust and the Trust Property, and (ii) execute and deliver to such successor
Agent such assignments and amendments and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Agent of the liens and security interests created hereunder, whereupon such
retiring or removed Agent shall be discharged from its duties and obligations
under this Deed of Trust. After any retiring or removed Agent’s resignation or
removal hereunder as Agent, the provisions of this Deed of Trust and the Agency
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Deed of Trust while it was Agent hereunder.

 

ARTICLE 8

LOCAL LAW PROVISIONS

 

Section 8.1            Power
of Sale. Beneficiary
may require the Trustee, and the Trustee is hereby authorized and empowered, to
enter and take possession of the Trust Property and to sell all or part of the
Trust Property, at public auction, to the highest bidder for cash, free from
equity of redemption, any statutory or common law right of redemption,
homestead, dower, marital share, and all other exemptions, after giving notice
of the time, place and terms of such sale and of the Trust Property to be sold,
by advertising the terms of such sale and of the Trust Property to be sold, by
advertising the sale of the property for twenty-one (21) days by three (3)
weekly notices in some newspaper published in the

 

11

 

county
and state where the Trust Property is situated, which notice may be given
before or after entry by the Trustee. The Trustee shall execute a conveyance to
the purchaser in fee simple and deliver possession to the purchaser, which the
Trustor warrants shall be given without obstruction, hindrance or delay. The
Trustee may sell all or any portion of the Trust Property, together or in lots
or parcels, and may execute and deliver to the purchaser or purchasers of such
property a conveyance in fee simple. The sale or sales by Trustee of less than
the whole of the Trust Property shall not exhaust the power of sale herein
granted, and Trustee is specifically empowered to make successive sale or sales
under such power until the whole of the Trust Property shall be sold; and if
the proceeds of such sale or sales of less than the whole of the Trust Property
shall be less than the aggregate of the Secured Obligations and the expenses
thereof, this Deed of Trust and the lien, security interest and assignment
hereof shall remain in full force and effect as to the unsold portion of the
Trust Property; provided, however, that Trustor shall never have any right to
require the sale or sales of less than the whole of the Trust Property, but
Beneficiary shall have the right at its sole election, to request the Trustee
to sell less than the whole of the Trust Property. Beneficiary may bid and
become the purchaser of all or any part of the Trust Property at any such sale,
and the amount of Beneficiary’s successful bid may be credited on the Secured
Obligations.

 

Section 8.2            Trustees.
The necessity of the
Trustee herein named, or any successor in trust, making oath or giving bond, is
expressly waived.

 

The
Trustee, or any one acting in his or her stead, shall have, in their
discretion, authority to employ all proper agents and attorneys in the
execution of this trust and/or in the conducting of any sale made pursuant to
the terms hereof, and to pay for such services rendered out of the proceeds of
the sale of the Trust Property, should any be realized; and if no sale be made
or if the proceeds of sale be insufficient to pay the same, then Trustor hereby
undertakes and agrees to pay the cost of such services rendered to said
Trustee. Trustee may rely on any document believed by him or her in good faith
to be genuine. All money received by Trustee shall, until used or applied as
herein provided, be held in trust, but need not be segregated (except to the
extent required by law), and Trustee shall not be liable for interest thereon.

 

If
the Trustee shall be made a party to or shall intervene in any action or
proceeding affecting the Trust Property or the title thereto, or the interest
of the Trustee or Beneficiary under this Deed of Trust, the Trustee and
Beneficiary shall be reimbursed by Trustor, immediately and without demand, for
all reasonable costs, charges, and attorney’s fees incurred by them or either
of them in any such case, and the same shall be secured hereby as a further
charge and lien upon the Trust Property.

 

In
the event of the death, refusal, or of inability for any cause, on the part of
the Trustee named herein, or of any successor trustee, to act at any time when
action under the foregoing powers and trust may be required, or for any other
reason satisfactory to the Beneficiary, the Beneficiary is authorized, either
in its own name or through an attorney or attorneys in fact appointed for that
purpose, by written instrument duly registered, to name and appoint a successor
or successors to execute this trust, such appointment to be evidenced by
writing, duly acknowledged; and when such writing shall have been registered,
the substituted trustee named therein shall thereupon be vested with all the
right and title, and clothed with all the power of the Trustee named herein and
such like power of substitution shall continue so long as any part of the debt
secured hereby remains unpaid.

 

[The remainder of this page has been
intentionally left blank]

 

12

 

IN WITNESS WHEREOF, Trustor has on the date set forth in the
acknowledgement hereto, effective as of the date first above written, caused
this instrument to be duly EXECUTED AND DELIVERED by authority duly given.

 

	
   

  	
  TRUSTOR:

  
	
   

  	
   

  
	
   

  	
  WARNER BROS. RECORDS, INC., a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Paul Robinson

  	
   

  
	
   

  	
   

  	
  Name: Paul Robinson

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

STATE OF New York

 

COUNTY OF New York

 

Before me, Carroll Smith, a Notary
Public in and for said State and County aforesaid, personally appeared Paul
Robinson, with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath, acknowledged himself to be the Vice President of Warner
Bros. Records, Inc., the within named bargainor, a corporation, and that  he, as such Vice President, being duly
authorized so to do, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself as such Vice
President.

 

WITNESS my hand and seal at office on this 26 day of February, 2004.

 

 

	
  /s/
  Carroll E. Smith

  	
   

  
	
  Notary
  Public

  
	
   

  
	
   

  
	
  [SEAL]

  
	
   

  
	
  My
  commission expires:

  
	
   

  
	
   

  	
   

  
	
  CARROLL E. SMITH

  	
   

  
	
  NOTARY PUBLIC, State of New York

  	
   

  
	
  No. 01SM6079992

  	
   

  
	
  Qualified in New York County

  	
   

  
	
  Commission Expires September 3, 2006

  	
   

  
			

 

 

EXHIBIT A

 

Legal Description

 

Certain real estate
in Davidson County, Tennessee, as follows:

 

Parcel 1:

Tract I: Being the southerly 34 feet of Lot No. 30
and the northerly 15 feet of Lot No. 31 in John Sigler’s Addition to Nashville,
as of record in Plan Book 1, page 4, Chancery Court at Nashville.

 

Said parts of Lots Nos. 30 and 31 adjoin and
front together 49 feet on the easterly side of 16th Avenue South,
formerly Belmont Avenue, and back between parallel lines 168 feet to an alley.

 

Tract II: Being the southerly 57 feet of the northerly
72 feet of Lot No. 31 in Sigler’s Addition to Nashville, a plan of which is of
record in Plan Book 1, page 4, Chancery Court at Nashville, described as
follows: Beginning on the easterly margin of 16th Avenue South,
formerly Belmont Avenue, 100 feet northerly from the northerly margin of
Hawkins Street; thence with the easterly margin of said Avenue northerly 57
feet; thence at right angles to said Avenue, easterly 168 feet to the westerly
margin of an alley; thence with said alley southerly 57 feet to a point 100
feet northerly from the northerly margin of Hawkins Street; thence parallel
with said street, westerly 168 feet to the beginning.

 

Parcel 2:

Tract I: Land in Davidson County, Tennessee, being
part of Lot No. 29 in John Sigler’s Addition to Nashville, a plan of which is
of record in Plan Book 1, page 4 of the Chancery Court at Nashville, described
as follows:

 

Beginning on the easterly margin of 16th
Avenue South, as widened, formerly Belmont Avenue at a point 113 feet south of
Sigler Street, thence south with the east line of 16th Avenue South,
54 feet to a point, and thence eastwardly at right angles to said 16th
Avenue South, 163 feet, more or less, to an alley; thence northwardly with said
alley 54 feet; thence westwardly 163 feet, more or less to the beginning.

 

Tract II: Land in Davidson County, Tennessee, being
the southerly 5 feet of the easterly part of Lot No. 29, and the northerly 52
feet of the easterly part of Lot No. 30 on the Plan of Sigler’s Addition, as of
record in Plan Book 1, page 4, Chancery Court at Nashville.

 

Said
parts of Lots Nos. 29 and 30 front together 57 feet on the easterly side of 16th
Avenue South, formerly Belmont Avenue, as widened, and run back eastwardly
between parallel lines 163 feet to an alley.

 

 

More particularly, the said parts of Lots
Nos. 29 and 30 are described as follows: Beginning in the easterly margin of 16th
Avenue South, as widened at a point 206 feet north of the northerly margin of
Hawkins Street, and running thence northwardly along the easterly margin of 16th
Avenue South, as widened, 57 feet to a point, being the southwest corner of
property conveyed to J. H. Smith, by the Fourth and First National Bank; thence
eastwardly along Smith’s southerly line 163 feet more or less to the westerly
margin of an alley; thence southwardly along the westerly margin of said alley,
57 feet to a point; thence westwardly 163 feet, more or less, to the beginning.

 

Parcel 3:

Tract 1: Land in Davidson County, Tennessee, being
parts of Lots Nos. 28 and 29 of Sigler’s Plan of Lots as of record in Plan Book
1, page 4, of the Chancery Court at Nashville, Tennessee, described as follows:

 

Beginning at a point in the eastern margin of
16th Avenue South, as widened, 58 feet south of the intersection of
the same with Sigler Street; thence south along the margin of said 16th
Avenue, south 55 feet to a point; thence easterly at right angles to said
Avenue, 163 feet, more or less, to an alley; thence northerly along said alley,
55 feet to Matthews southeast corner; thence at right angles, westerly along
said Matthews south line, 163 feet, more or less, to the beginning.

 

Tract 2: Land in Davidson County, Tennessee, being
the northerly 55 feet of Lot No. 28 on the plan of Sigler’s Addition, as of
record in Plat Book 1, page 4, Chancery Court at Nashville.

 

Said northerly part of Lot No. 28 fronts 55
feet on the easterly side of 16th Avenue South, as widened, and runs
back between parallel lines with the southerly margin of Sigler Street, 163
feet, more or less, to an alley.

 

Being the same property conveyed to Warner
Bros. Records, a Delaware corporation, by deed of record in Book 7854, page
366, Register’s Office, Davidson County, Tennessee.

 

Address:

18 Music Square East, Nashville, TN

20 Music Square East, Nashville, TN

22 Music Square East, Nashville, TN

24 Music Square East, Nashville, TN

26 Music Square East, Nashville, TN

 

Tax Map:

No. 93-13, Parcel 162

No. 93-13, Parcel 163

No. 93-13, Parcel 166

 

2

 

EXHIBIT B

 

PERMITTED ENCUMBRANCES

 

Those exceptions set forth in Schedule B of
that certain policy of title insurance issued to Beneficiary by Stewart Title
Guaranty Company on or about the date hereof pursuant to commitment number
2003191 dated December 22, 2003 (as updated and “marked” as of the date
hereof).

 

 

AFFIDAVIT IN COMPLIANCE WITH TENN.
CODE ANN.
§  67-4-409(b)

 

STATE
OF NEW YORK

 

COUNTY
OF NEW YORK

 

The undersigned, Paul Robinson being first duly sworn, states as
follows:

 

1.                                       That he is the Vice President of Warner Bros.
Records, Inc., and makes this Affidavit in compliance with the above indicated
tax statute of the State of Tennessee.

 

2.                                       That the annexed instrument is one of several
deeds of trust and mortgages which are being recorded and filed in the State of
Tennessee and/or other states to secure certain indebtedness from WMG
Acquisition Corp. and certain other borrowers to Bank of America, N.A. and
certain other lenders in the maximum amount of $1,300,000,000 (“Total
Indebtedness”).

 

3.                                       That the property standing as security for
the payment of such debt is located part within and part without the State of
Tennessee. The estimated values are as follows:

 

(a)                        Property located in the State of Tennessee
(Personal and Real):

 

$15,030,000.

 

(b)                       All of the collateral (Personal and Real,
both within and without Tennessee): $235,030,000

 

4.                                       Pursuant to §
67-4-409(b), of the Tennessee Code Annotated, the following allocation is made:

 

	
  VALUE OF COLLATERAL

  IN TENNESSEE

  	
   

  	
  X

  	
  TOTAL INDEBTEDNESS

  
	
  VALUE OF COLLATERAL

  EVERYWHERE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $15,030,000

  	
   

  	
  X

  	
   

  	
  $

  	
    1,300,000,000

  
	
   

  	
   

  	
   

  	
   

  
	
  $260,250,000

  	
   

  	
   

  	
   

  	
   

  
							

 

 

	
   

  	
  (a)

  	
  MAXIMUM PRINCIPAL INDEBTEDNESS FOR TENNESSEE RECORDING TAX PURPOSES
  IS:

  	
  $

  	
   

  	
  75,077,810

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Taxable
  secured indebtedness (above minus $2,000):

  	
  $

  	
   

  	
  75,075,810

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Tax
  at $.l l1/2 per $100:

  	
  $

  	
   

  	
  86,337

  

 

 

	
   

  	
  By:

  	
  /s/ Paul Robinson

  	
   

  
	
   

  	
  Name:
  Paul Robinson

  
	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
  Date:   February   ,
  2004

  
	
   

  	
   

  
	
   

  	
   

  
	
  SWORN
  TO AND SUBSCRIBED before me this 25th day of February, 2004.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Carroll E. Smith

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  	
  CARROLL E. SMITH

  	
   

  
	
   

  	
   

  	
  NOTARY PUBLIC, STATE of New York

  	
   

  
	
   

  	
   

  	
  No. O15M6079992

  	
   

  
	
   

  	
   

  	
  Qualified in New York County

  	
   

  
	
   

  	
   

  	
  Commission Expires September 3, 2006

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [SEAL]

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