Document:

Exhibit 10.2

 

SECURITY AGREEMENT

 

among

 

EACH OF THE GRANTORS PARTY HERETO

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,
 as Agent

 

September 29, 2014

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
Section 1 DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Defined Terms
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.2
    	
Definitions; Interpretation
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2 GRANT OF SECURITY
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Grant of Security
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.2
    	
Certain Limited Exclusions
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3 SECURITY FOR   OBLIGATIONS; GRANTORS REMAIN LIABLE
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
Security for Obligations
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.2
    	
Continuing Liability Under Collateral
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4 CERTAIN PERFECTION   REQUIREMENTS
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Delivery Requirements
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.2
    	
Control Requirements
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.3
    	
Other Actions
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.4
    	
Timing and Notice
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
Section 5 REPRESENTATIONS   AND WARRANTIES
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Grantor Information and Status
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.2
    	
Collateral Identification; Special Collateral
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.3
    	
Ownership of Collateral and Absence of Other Liens
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.4
    	
Status of Security Interest
    	
14
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.5
    	
Goods and Receivables
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.6
    	
Pledged Equity; Investment Related Property
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.7
    	
Intellectual Property
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6 COVENANTS AND   AGREEMENTS
    	
16
    

 

i

 

	
 
    	
6.1
    	
Grantor Information and Status
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.2
    	
Collateral Identification; Special Collateral
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.3
    	
Ownership of Collateral and Absence of Other Liens
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.4
    	
Status of Security Interest
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.5
    	
Goods and Receivables
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.6
    	
Pledged Equity; Investment Related Property
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.7
    	
Intellectual Property
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7 ACCESS; RIGHT OF   INSPECTION; FURTHER ASSURANCES; ADDITIONAL GRANTORS
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Access; Right of Inspection
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.2
    	
Further Assurances
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.3
    	
Additional Grantors
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
Section 8 AGENT APPOINTED   ATTORNEY-IN-FACT
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.1
    	
Power of Attorney
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.2
    	
No Duty on the Part of Agent or Secured Parties
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.3
    	
Appointment Pursuant to Credit Agreement
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
Section 9 REMEDIES
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.1
    	
Generally
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.2
    	
Application of Proceeds
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.3
    	
Sales on Credit
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.4
    	
Investment Related Property
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.5
    	
Grant of Intellectual Property License
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.6
    	
Intellectual Property
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.7
    	
Cash Proceeds; Deposit Accounts
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
Section 10 AGENT
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
Section 11 CONTINUING   SECURITY INTEREST; TRANSFER OF LOANS
    	
29
    

 

ii

 

	
Section 12 STANDARD OF CARE;   AGENT MAY PERFORM
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
Section 13 MISCELLANEOUS
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.1
    	
Generally
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.2
    	
Governing Law; Jurisdiction, Etc.
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.3
    	
LOAN DOCUMENT
    	
32
    

 

SCHEDULE 5.1 – GENERAL INFORMATION

 

SCHEDULE 5.2 – COLLATERAL IDENTIFICATION

 

SCHEDULE 5.4 – FINANCING STATEMENTS

 

EXHIBIT A – SECURITY AGREEMENT SUPPLEMENT

 

iii

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT, dated as of September 29, 2014 (as it may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), is entered into among DTS, INC., a Delaware corporation (“Borrower”), DTS WASHINGTON LLC, a Delaware limited liability company, PHORUS, INC., a Delaware corporation, DTS LLC, a Delaware limited liability company, and each other Guarantor under the Guaranty referred to below, whether as an original signatory hereto or as an Additional Grantor (as defined below) (each of the foregoing entities, a “Grantor”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent under the Credit Agreement referred to below (in such capacity, together with its successors and permitted assigns, “Agent”).

 

Pursuant to the Credit Agreement of even date herewith (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Borrower, the lenders thereunder from time to time (collectively, the “Lenders”), and Agent, the Lenders are agreeing to extend certain financial accommodations to Borrower, subject to certain conditions.  Each capitalized term used but not defined herein has the meaning ascribed to such term in the Credit Agreement.

 

In connection with the Credit Agreement, each Guarantor is entering into the Guaranty of even date herewith (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”), pursuant to which it is guaranteeing the Secured Obligations (as defined below).

 

The Credit Agreement provides that, as a condition to the availability of the financial accommodations referred to above, each Grantor shall enter into this Agreement and grant a security interest in its assets to Agent for the benefit of the Secured Parties (as defined below).

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:

 

Section 1
 DEFINITIONS

 

1.1                               Defined Terms.  This Agreement is the “Security Agreement” referred to in the Credit Agreement and is one of the Loan Documents.  In this Agreement, the following terms have the following meanings:

 

“Account Control Agreement” has the meaning assigned in Section 4.2(a).

 

“Additional Grantor” has the meaning assigned in Section 7.3.

 

“Agent” has the meaning set forth in the preamble.

 

“Agreement” has the meaning set forth in the preamble.

 

“Borrower” has the meaning set forth in the preamble.

 

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“Cash Proceeds” has the meaning assigned in Section 9.7.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” has the meaning assigned in Section 2.1.

 

“Collateral Account” means any account established by Agent.

 

“Collateral Records” means, with respect to each Grantor, all of such Grantor’s books, records, ledger cards, files, correspondence, customer lists, supplier lists, blueprints, technical specifications, manuals, computer software and related documentation, computer printouts, tapes, disks and other electronic storage media and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.

 

“Collateral Support” means, with respect to each Grantor, all of such Grantor’s property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property.

 

“Control” means:  (1) with respect to any Deposit Accounts, control within the meaning of Section 9-104 of the UCC, (2) with respect to any Securities Accounts, Security Entitlements, Commodity Contract or Commodity Account, control within the meaning of Section 9-106 of the UCC, (3) with respect to any Uncertificated Securities, control within the meaning of Section 8-106(c) of the UCC, (4) with respect to any Certificated Security, control within the meaning of Section 8-106(a) or (b) of the UCC, (5) with respect to any Electronic Chattel Paper, control within the meaning of Section 9-105 of the UCC, (6) with respect to Letter of Credit Rights, control within the meaning of Section 9-107 of the UCC and (7) with respect to any “transferable record” (as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), control within the meaning of Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in the jurisdiction relevant to such transferable record.

 

“Controlled Foreign Corporation” means “controlled foreign corporation” as defined in the Code.

 

“Copyright Licenses” means, with respect to each Grantor, all of such Grantor’s agreements, licenses and covenants providing for the granting of any right in or to any Copyright or otherwise providing for a covenant not to sue for infringement or other violation of any Copyright (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement required to be listed in Schedule 5.2(II) under the heading “Copyright Licenses” (as such schedule may be amended or supplemented from time to time).

 

“Copyrights” means, with respect to each Grantor, all of such Grantor’s United States, and foreign copyrights (whether or not the underlying works of authorship have been published), including but not limited to copyrights in software and all rights in and to databases, all designs (including but not limited to industrial designs, Protected Designs within the meaning of 17

 

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U.S.C. 1301 et. Seq. and Community designs), and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, as well as all moral rights, reversionary interests, and termination rights, and, with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, the registrations and applications required to be listed in Schedule 5.2(II) under the heading “Copyrights” (as such schedule may be amended or supplemented from time to time), (ii) all extensions and renewals thereof, (iii) the right to sue or otherwise recover for any past, present and future infringement or other violation thereof, (iv) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and (v) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

 

“Excluded Equity” has the meaning assigned in Section 2.2(d).

 

“Excluded Property” has the meaning assigned in Section 2.2.

 

“Grantor” has the meaning set forth in the preamble.

 

“Guaranty” has the meaning set forth in the recitals.

 

“Insurance” means, with respect to each Grantor, all of such Grantor’s (i) insurance policies covering any or all of the Collateral (regardless of whether Agent is the loss payee thereof) and (ii) key man life insurance policies.

 

“Intellectual Property” means, with respect to each Grantor, the collective reference to all of such Grantor’s rights, priorities and privileges relating to intellectual property, whether arising under the United States, multinational or foreign laws or otherwise, including without limitation, all Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses, and the right to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, including the right to receive all Proceeds therefrom, including without limitation license fees, royalties, income, payments, claims, damages and proceeds of suit, now or hereafter due and/or payable with respect thereto.

 

“Investment Accounts” means the Collateral Account, Securities Accounts, Commodity Accounts and Deposit Accounts.

 

“Investment Related Property” means, with respect to each Grantor:  (i) all of such Grantor’s “investment property” (as such term is defined in Article 9 of the UCC) and (ii) regardless of whether any of the following is classified as investment property under the UCC, all of such Grantor’s Pledged Equity, Pledged Debt, Investment Accounts (and all monies, Securities, Instruments and other investments deposited or required to be deposited in such Investment Accounts) and certificates of deposit.

 

“Lenders” has the meaning set forth in the recitals.

 

“Credit Agreement” has the meaning set forth in the recitals.

 

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“Organizational Documents” means, with respect to any Person, all formation, organizational and governing documents, instruments and agreements, including (i) with respect to any corporation, its certificate or articles of incorporation or organization and its bylaws, (ii) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (iii) with respect to any general partnership, its partnership agreement and (iv) with respect to any limited liability company, its certificate of formation or articles of organization and its operating agreement.

 

“Patent Licenses” means, with respect to each Grantor, all of such Grantor’s agreements, licenses and covenants providing for the granting of any right in or to any Patent or otherwise providing for a covenant not to sue for infringement or other violation of any Patent (whether such Grantor is licensee or licensor thereunder) including, without limitation, each such agreement required to be listed in Schedule 5.2(II) under the heading “Patent Licenses” (as such schedule may be amended or supplemented from time to time).

 

“Patents” means, with respect to each Grantor, all of such Grantor’s United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including, without limitation: (i) each such patent and patent application required to be listed in Schedule 5.2(II) under the heading “Patents” (as such schedule may be amended or supplemented from time to time), (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all patentable inventions and improvements thereto, (iv) the right to sue or otherwise recover for any past, present and future infringement or other violation thereof, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

 

“Pledged Debt” means, with respect to each Grantor, all indebtedness for borrowed money owed to such Grantor, whether or not evidenced by any Instrument, including, without limitation, all such indebtedness described on Schedule 5.2(I) under the heading “Pledged Debt” (as such schedule may be amended or supplemented from time to time), issued by the obligors named therein, the instruments, if any, evidencing any of the foregoing, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing.

 

“Pledged Equity” means, with respect to each Grantor, all of such Grantor’s Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and any other participation or interests in any equity or profits of any business entity including, without limitation, any trust and all management rights relating to any Person whose equity interests are included as Pledged Equity.

 

“Pledged LLC Interests” means, with respect to each Grantor, all interests (other than the Excluded Equity) owned by such Grantor in any limited liability company and each series thereof including, without limitation, all such limited liability company interests listed on Schedule 5.2(I) under the heading “Pledged LLC Interests” (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and records of such limited

 

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liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests and all rights as a member of the related limited liability company.

 

“Pledged Partnership Interests” means, with respect to each Grantor, all interests owned by such Grantor in any general partnership, limited partnership, limited liability partnership or other partnership including, without limitation, all such partnership interests listed on Schedule 5.2(I) under the heading “Pledged Partnership Interests” (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests and all rights as a partner of the related partnership.

 

“Pledged Stock” means, with respect to each Grantor, all shares of capital stock owned by such Grantor, including, without limitation, all such shares of capital stock described on Schedule 5.2(I) under the heading “Pledged Stock” (as such schedule may be amended or supplemented from time to time), and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares.

 

“Receivables” means, with respect to each Grantor, all of such Grantor’s rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including, without limitation, all such rights constituting or evidenced by any Account, Chattel Paper, Instrument, General Intangible or Investment Related Property, together with all of such Grantor’s rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Receivables Records.

 

“Receivables Records” means, with respect to each Grantor, all of such Grantor’s (i)  original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including, without limitation, all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of such Grantor or any computer bureau or agent from time to time acting for such Grantor or otherwise, (iii) evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors, secured parties or agents thereof, and certificates, acknowledgments, or other writings, including, without limitation, lien search

 

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reports, from filing or other registration officers, (iv) credit information, reports and memoranda relating thereto and (v) other written or non-written forms of information related in any way to the foregoing or any Receivable.

 

“Secured Obligations” means any and all present and future Obligations of any type or nature of the Grantors at any time or from time to time owed to the Secured Parties under the Loan Documents (including Interest Rate Protection Agreements and Bank Products Agreements), and any one or more of them, whether due or to become due, matured or unmatured, liquidated or unliquidated, absolute or contingent, direct or indirect, or voluntary or involuntary, whether obligations of performance or obligations of payment, whether for principal, interest, premiums, fees indemnities, damages, costs, expenses or otherwise (including all renewals, extensions, amendments, refinancings and other modifications of such Obligations and all costs, attorneys’ fees and expenses incurred by the Secured Parties in connection with the collection or enforcement of such Obligations), and whether recovery upon such Obligations may be or hereafter becomes unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against any Grantor under any Debtor Relief Laws.

 

“Secured Parties” means, collectively, Agent (for itself and in its capacity as Agent), the Lenders, Swingline Lender, Fronting Bank, each Lender or Affiliate of a Lender party to an Interest Rate Protection Agreement or a Bank Products Agreement, each co-agent or sub-agent appointed by Agent from time to time, and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents.  Subject to the terms of the Credit Agreement, each right, remedy, privilege and power of the Secured Parties under this Agreement shall be exercised solely by Agent, and each notice, document or item to be delivered by any Grantor to the Secured Parties under this Agreement shall be delivered by such Grantor to Agent for the benefit of the Secured Parties.

 

“Securities” means, with respect to each Grantor, all of such Grantor’s stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

 

“Security Agreement Supplement” means any supplement to this Agreement in substantially the form of Exhibit A.

 

“Trademark Licenses” means, with respect to each Grantor, all of such Grantor’s agreements, licenses and covenants providing for the granting of any right in or to any Trademark or otherwise providing for a covenant not to sue for infringement dilution or other violation of any Trademark or permitting co-existence with respect to a Trademark (whether such Grantor is licensee or licensor thereunder) including, without limitation, each such agreement required to be listed in Schedule 5.2(II) under the heading “Trademark Licenses” (as such schedule may be amended or supplemented from time to time).

 

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“Trademarks” means, with respect to each Grantor, all of such Grantor’s United States and foreign trademarks, trade names, trade dress, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, whether or not registered, and with respect to any and all of the foregoing: (i) all registrations and applications therefor including, without limitation, such registrations and applications required to be listed in Schedule 5.2(II) under the heading “Trademarks” (as such schedule may be amended or supplemented from time to time), (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with the use of and symbolized by any of the foregoing, (iv) the right to sue or otherwise recover for any past, present and future infringement, dilution or other violation of any of the foregoing or for any injury to the related goodwill, (v) all Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages, and proceeds of suit now or hereafter due and/or payable with respect thereto, and (vi) all other rights of any kind accruing thereunder or pertaining thereto throughout the world.

 

“United States” and “U.S.” means the United States of America.

 

1.2                               Definitions; Interpretation.

 

(a)                                 In this Agreement, each of the following capitalized terms has the meaning ascribed to it in the UCC (and, if defined in more than one Article of the UCC, has the meaning given in Article 9 thereof): Account, Account Debtor, As-Extracted Collateral, Bank, Certificated Security, Chattel Paper, Consignee, Consignment, Consignor, Commercial Tort Claims, Commodity Account, Commodity Contract, Commodity Intermediary, Deposit Account, Document, Entitlement Order, Equipment, Electronic Chattel Paper, Farm Products, Fixtures, General Intangibles, Goods, Instrument, Inventory, Letter of Credit Right, Manufactured Home, Money, Proceeds, Record, Securities Account, Securities Intermediary, Security Certificate, Security Entitlement, Supporting Obligations, Tangible Chattel Paper and Uncertificated Security.

 

(b)                                 All other capitalized terms used herein (including in the preamble and the recitals hereto) and not otherwise defined herein have the meanings ascribed thereto in the Credit Agreement.  The incorporation by reference of terms defined in the Credit Agreement shall survive any termination of the Credit Agreement until this Agreement is terminated as provided in Section 11.  Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference.  References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided.  The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter.  The terms lease and license shall include sub-lease and sub-license, as applicable.  If any conflict or inconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement

 

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shall govern.  All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC.

 

Section 2
 GRANT OF SECURITY

 

2.1                               Grant of Security.  Each Grantor hereby grants to Agent, for the benefit of the Secured Parties, a security interest in and continuing Lien on all of such Grantor’s right, title and interest in, to and under all personal property of such Grantor including, but not limited to all of the following, in each case whether now or hereafter existing or in which such Grantor now has or hereafter acquires an interest and wherever the same may be located (collectively, the “Collateral”):

 

(a)                                 Accounts;

 

(b)                                 Chattel Paper;

 

(c)                                  Documents;

 

(d)                                 General Intangibles;

 

(e)                                  Goods (including, without limitation, Inventory and Equipment);

 

(f)                                   Instruments;

 

(g)                                  Insurance;

 

(h)                                 Intellectual Property;

 

(i)                                     Investment Related Property (including, without limitation, Deposit Accounts);

 

(j)                                    Letter of Credit Rights;

 

(k)                                 Money;

 

(l)                                     Receivables and Receivable Records;

 

(m)                             Commercial Tort Claims now or hereafter described on Schedule 5.2;

 

(n)                                 Fixtures;

 

(o)                                 to the extent not otherwise included above, all other personal property of any kind and all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; and

 

(p)                                 to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing.

 

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2.2                               Certain Limited Exclusions.  Notwithstanding anything herein to the contrary, in no event shall the Collateral include or the security interest granted under Section 2.1 attach to the following (collectively, “Excluded Property”):

 

(a)                                 any right, title or interest in any permit, license or any contractual obligation entered into by any Grantor (i) that validly prohibits the creation by such Grantor of a security interest thereon or requires the consent of any Person other than Borrower or an Affiliate of Borrower, which consent has not been obtained as a condition to the creation of such security interest, or (ii) to the extent that any Applicable Law prohibits the creation of a security interest thereon, but only, in each case, to the extent, and for so long as, such prohibition is not terminated or rendered unenforceable or otherwise deemed ineffective by the UCC or any other Applicable Law;

 

(b)                                 any of the outstanding capital stock of a Controlled Foreign Corporation in excess of 65% of the voting power of all classes of capital stock of such Controlled Foreign Corporation entitled to vote, to the extent pledging or hypothecating more than 65% thereof would result in adverse tax consequences for the Grantors; provided that immediately upon the amendment of the Code to allow the pledge of a greater percentage of the voting power of capital stock in a Controlled Foreign Corporation without adverse tax consequences, the Collateral shall include, and the security interest granted by each Grantor shall attach to, such greater percentage of capital stock of each Controlled Foreign Corporation;

 

(c)                                  any “intent-to-use” application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely 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 validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law;

 

(d)                                 the limited liability company interests of any Subsidiary agreed to in writing by Agent prior to the Closing Date (such interests, collectively, the “Excluded Equity”); or

 

(e)                                  any property subject to a Lien permitted by Section 7.7.3 of the Credit Agreement, to the extent that the terms of the Indebtedness pursuant to which such Lien is granted prohibit other Liens on such property (but only to the extent and so long as so prohibited);

 

provided, however, that (i) “Excluded Property” shall not include any Proceeds, products, substitutions or replacements of any Excluded Property (unless such Proceeds, products, substitutions or replacements would constitute Excluded Property) and (ii) any such property that at any time ceases to satisfy the criteria for Excluded Property (whether as a result of the applicable Grantor obtaining any necessary consent, any change in any rule of law, statute or regulation, or otherwise) shall no longer be Excluded Property.  In addition, each Grantor shall use commercially reasonable efforts not to enter into any material contract, lease, permit, license, charter or license agreement that contains a prohibition of the nature described in Section 2.2(a).

 

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Section 3
 SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE

 

3.1                               Security for Obligations.  This Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise of all Secured Obligations.

 

3.2                               Continuing Liability Under Collateral.  Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for all obligations under the Collateral and nothing contained herein is intended or shall be a delegation of duties to Agent or any other Secured Party, (ii) each Grantor shall remain liable under each of the agreements included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder all in accordance with and pursuant to the terms and provisions thereof and neither Agent nor any Secured Party shall have any obligation or liability under any of such agreements by reason of or arising out of this Agreement or any other document related thereto nor shall Agent nor any Secured Party have any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and (iii) the exercise by Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral.

 

Section 4
 CERTAIN PERFECTION REQUIREMENTS

 

4.1                               Delivery Requirements.

 

(a)                                 With respect to any Certificated Securities included in the Collateral, each Grantor shall deliver to Agent the Security Certificates evidencing such Certificated Securities duly indorsed by an effective endorsement (within the meaning of Section 8-107 of the UCC), or accompanied by share transfer powers or other instruments of transfer duly endorsed by such an effective endorsement, in each case, to Agent or in blank.  In addition, each Grantor shall cause any certificates evidencing any Pledged Equity, including, without limitation, any Pledged Partnership Interests or Pledged LLC Interests, to be similarly delivered to Agent regardless of whether such Pledged Equity constitute Certificated Securities.

 

(b)                                 With respect to any Instruments or Tangible Chattel Paper included in the Collateral, each Grantor shall deliver to Agent all such Instruments or Tangible Chattel Paper to Agent duly indorsed in blank; provided, however, that such delivery requirement shall not apply to any Instruments or Tangible Chattel Paper having a face amount of less than $100,000 individually or $100,000 in the aggregate.

 

4.2                               Control Requirements.

 

(a)                                 The Grantors shall ensure that Agent has Control of the Deposit Account at Comerica Bank numbered 1891677054 and each successor account thereof (collectively, the

 

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“Primary Operating Account”).  Subject to the last sentence of this paragraph, the Grantors shall cause the Bank maintaining the Primary Operating Account to enter into an agreement in form and substance reasonably satisfactory to Agent (an “Account Control Agreement”), pursuant to which, upon notice of a continuing Event of Default, such Bank shall agree to comply with Agent’s instructions with respect to disposition of funds in the Primary Operating Account without further consent by any Grantor.  The provisions in this Section 4.2(a) requiring an Account Control Agreement shall not apply to any Deposit Account for which Agent is the depository bank.

 

(b)                                 With respect to any Uncertificated Security included in the Collateral (other than any Uncertificated Security credited to a Securities Account and any Uncertificated Security subject to the requirements of Section 4.2(c)), the Grantors shall take commercially reasonable efforts to cause the issuer of such Uncertificated Security to either (i) register Agent as the registered owner thereof on the books and records of the issuer or (ii) execute an agreement in form and substance reasonably satisfactory to Agent, pursuant to which such issuer agrees to comply with Agent’s instructions with respect to such Uncertificated Security without further consent by any Grantor; provided, however, that such requirement shall not apply to any such Uncertificated Securities having a value of $100,000 individually or $100,000 in the aggregate.

 

(c)                                  With respect to any Uncertificated Security included in the Collateral where the issuer is a Subsidiary of any Grantor, the Grantors shall cause the issuer of such Uncertificated Security to either (i) register Agent as the registered owner thereof on the books and records of the issuer or (ii) execute an agreement in form and substance reasonably satisfactory to Agent, pursuant to which such issuer agrees to comply with Agent’s instructions with respect to such Uncertificated Security without further consent by any Grantor; provided, however, that such requirement shall not apply to any such Uncertificated Securities having a value of $100,000 individually or $100,000 in the aggregate

 

(d)                                 With respect to any material Letter of Credit Rights included in the Collateral (other than any Letter of Credit Rights constituting a Supporting Obligation for a Receivable in which Agent has a valid and perfected security interest), the Grantors shall take commercially reasonable efforts to ensure that Agent has Control thereof by obtaining the written consent of each issuer of each related letter of credit to the assignment of the proceeds of such letter of credit to Agent; provided, however, that such Control requirement shall not apply to any such Letter of Credit Rights under letters of credit having a face amount of $100,000 individually or $100,000 in the aggregate.

 

(e)                                  With respect to any Electronic Chattel Paper or “transferable record” (as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction) included in the Collateral, the Grantors shall take commercially reasonable efforts to ensure that Agent has Control thereof; provided, however, that such Control requirement shall not apply to any Electronic Chattel Paper or “transferable” record having a face amount of less than $100,000 individually or $100,000 in the aggregate.

 

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4.3                               Other Actions.

 

(a)                                 If any issuer of any Pledged Equity is organized under a jurisdiction outside of the United States, each Grantor shall take such additional actions (including, without limitation, causing such issuer to register the pledge on its books and records) and make such filings or recordings, in each case to the extent Agent deems, in its sole and reasonable discretion, necessary or advisable under the laws of such issuer’s jurisdiction to insure the validity, perfection and priority of the security interest of Agent.

 

(b)                                 With respect to any Pledged Partnership Interests and Pledged LLC Interests included in the Collateral, if the Grantors own less than 100% of the equity interests in any issuer of such Pledged Partnership Interests or Pledged LLC Interests, the Grantors shall use their commercially reasonable efforts to obtain the consent of each other holder of partnership interest or limited liability company interests in such issuer to the security interest of Agent hereunder and following the occurrence and during the continuation of an Event of Default, the transfer of such Pledged Partnership Interests and Pledged LLC Interests to Agent of its designee, and to the substitution of Agent or its designee as a partner or member with all the rights and powers related thereto.  Each Grantor consents to the grant by each other Grantor of a Lien in all Investment Related Property to Agent and without limiting the generality of the foregoing consents to the transfer of any Pledged Partnership Interest and any Pledged LLC Interest to Agent or its designee following the occurrence and during the continuation of an Event of Default and to the substitution of Agent or its designee as a partner in any partnership or as a member in any limited liability company with all the rights and powers related thereto.

 

4.4                               Timing and Notice.  With respect to any Collateral in existence on the Closing Date, each Grantor shall comply with the requirements of Section 4 on the Closing Date and, with respect to any Collateral hereafter owned or acquired, subject to the following sentence, each Grantor shall comply with such requirements as promptly as possible, but in any event, within twenty (20) days of the end of each Fiscal Quarter.  Each Grantor shall promptly inform Agent of its acquisition of any Collateral for which any action is required by Section 4.

 

Section 5
 REPRESENTATIONS AND WARRANTIES

 

Each Grantor hereby represents and warrants on the Closing Date and on the date of any making of a Loan or any issuance of a Letter of Credit subsequent to the Closing Date, that:

 

5.1                               Grantor Information and Status.

 

(a)                                 As of the Closing Date and as of the date of each Security Agreement Supplement delivered pursuant to this Agreement, Schedule 5.1(A) and (B) (as such schedule may be amended or supplemented from time to time) sets forth under the appropriate headings: (1) the full legal name of such Grantor, (2) all trade names or other names under which such Grantor currently conducts business, (3) the type of organization of such Grantor, (4) the jurisdiction of organization of such Grantor, (5) its organizational identification number, if any, and (6) the jurisdiction where the chief executive office or its sole place of business (or the principal residence if such Grantor is a natural person) is located.

 

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(b)                                 except as provided on Schedule 5.1(C), such Grantor has not changed its name, jurisdiction of organization, chief executive office or sole place of business (or principal residence if such Grantor is a natural person) 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 (5) years;

 

(c)                                  such Grantor has not within the last five (5) years become bound (whether as a result of merger or otherwise) as debtor under a security agreement entered into by another Person, which has not heretofore been terminated other than the agreements identified on Schedule 5.1(D) hereof (as such schedule may be amended or supplemented from time to time);

 

(d)                                 such Grantor (i) has been duly organized and is validly existing as an entity of the type as set forth opposite such Grantor’s name on Schedule 5.1(A) solely under the laws of the jurisdiction as set forth opposite such Grantor’s name on Schedule 5.1(A) and remains duly existing as such and (ii) has not filed any certificates of dissolution or liquidation, any certificates of domestication, transfer or continuance in any other jurisdiction; and

 

(e)                                  no Grantor is a “transmitting utility” (as defined in Section 9-102(a)(80) of the UCC).

 

5.2                               Collateral Identification; Special Collateral.

 

(a)                                 As of the Closing Date and as of the date of each Security Agreement Supplement delivered pursuant to this Agreement, Schedule 5.2 (as such schedule may be amended or supplemented from time to time) sets forth under the appropriate headings all of such Grantor’s: (1) Pledged Equity, (2) Pledged Debt, (3) Securities Accounts, (4) Deposit Accounts, (5) Commodity Contracts and Commodity Accounts, (6) United States and foreign registrations and issuances of and applications for Patents, Trademarks, and Copyrights owned by such Grantor, (7) material Patent Licenses, material Trademark Licenses and material Copyright Licenses (except for any off-the-shelf software), (8) Commercial Tort Claims other than any Commercial Tort Claims having a value of less than $750,000 individually or $1,000,000 in the aggregate, (9) Letter of Credit Rights for letters of credit other than any Letters of Credit Rights worth less than $100,000 individually or $100,000 in the aggregate, and (10) the name and address of any warehouseman, bailee or other third party in possession of any Inventory, Equipment and other tangible personal property other than any Inventory, Equipment or other tangible personal property having a value less than $100,000 individually or $100,000 in the aggregate.  Each Grantor shall supplement such schedules as necessary to ensure that such schedules are accurate on the date of each making of a Loan and each issuance of a Letter of Credit following the Closing Date;

 

(b)                                 none of the Collateral constitutes, or is the Proceeds of, (1) Farm Products, (2) As-Extracted Collateral, (3) Manufactured Homes, (4) timber to be cut, or (5) aircraft, aircraft engines, satellites, ships or railroad rolling stock.  No material portion of the collateral consists of motor vehicles or other goods subject to a certificate of title statute of any jurisdiction;

 

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(c)                                  all information supplied by any Grantor with respect to any of the Collateral (in each case taken as a whole with respect to any particular Collateral) is accurate and complete in all material respects; and

 

(d)                                 no Excluded Property, other than the equity interests described in Section 2.2(b), is material to the business of such Grantor.

 

5.3                               Ownership of Collateral and Absence of Other Liens.

 

(a)                                 such Grantor owns the Collateral purported to be owned by it or otherwise has the rights it purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, developed or created (including by way of lease or license), will continue to own or have such rights in each item of the Collateral (except as otherwise permitted by the Credit Agreement), in each case free and clear of any and all Liens, rights or claims of all other Persons, including, without limitation, liens arising as a result of such Grantor becoming bound (as a result of merger or otherwise) as debtor under a security agreement entered into by another Person (other than any Permitted Liens); and

 

(b)                                 other than any financing statements filed in favor of Agent, no effective financing statement, fixture filing or other instrument similar in effect under any applicable law covering all or any part of the Collateral is on file in any filing or recording office except for (x) financing statements for which duly authorized proper termination statements have been delivered to Agent for filing and (y) financing statements filed in connection with Permitted Liens.  Other than Agent and any automatic control in favor of a Bank, Securities Intermediary or Commodity Intermediary maintaining a Deposit Account, Securities Account or Commodity Contract, no Person is in Control of any Collateral.

 

5.4                               Status of Security Interest.

 

(a)                                 (i) upon the filing of financing statements naming each Grantor as “debtor” and Agent as “secured party” and describing the Collateral in the filing offices set forth opposite such Grantor’s name on Schedule 5.4 hereof (as such schedule may be amended or supplemented from time to time), the security interest of Agent in all Collateral that can be perfected by the filing of a financing statement under the Uniform Commercial Code as in effect in any jurisdiction will constitute a valid, perfected, first-priority Lien subject, in the case of priority only, to any Permitted Liens with respect to the Collateral and (ii) each agreement purporting to give Agent Control over any Collateral is effective to establish Agent’s Control of the Collateral subject thereto;

 

(b)                                 no authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or any other Person is required for either (i) the pledge or grant by any Grantor of the Liens purported to be created in favor of Agent hereunder or (ii) the exercise by Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by Section 5.4(a) above and (B) as may be required, in connection with the disposition of any Investment Related Property, by laws generally affecting the offering and sale of Securities; and

 

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(c)                                  each Grantor is in compliance with its obligations under Section 4.

 

5.5                               Goods and Receivables.

 

(a)                                 each Receivable (i) is and will be the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (ii) is and will be enforceable in accordance with its terms, (iii) is not and will not be subject to any credits, rights of recoupment, setoffs, defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in the ordinary course of business with respect to damaged merchandise) and (iv) is and will be in compliance with all applicable laws, whether federal, state, local or foreign; and

 

(b)                                 none of the Account Debtors in respect of any material Receivable is the government of the United States, any agency or instrumentality thereof, any state or municipality or any foreign sovereign.

 

5.6                               Pledged Equity; Investment Related Property.

 

(a)                                 such Grantor is the record and beneficial owner of the Pledged Equity free of all Liens, rights or claims of other Persons and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity; and

 

(b)                                 no consent of any Person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary in connection with the creation, perfection or first-priority status of the security interest of Agent in any Pledged Equity or the exercise by Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof except such as have been obtained.

 

5.7                               Intellectual Property.

 

(a)                                 such Grantor is the sole and exclusive owner of the entire right, title, and interest in and to all Intellectual Property listed as such Grantor’s on Schedule 5.2(II) (as such schedule may be amended or supplemented from time to time);

 

(b)                                 such Grantor owns or has the valid right to use and, where such Grantor does so, sublicense others to use, all other Intellectual Property used in or necessary to conduct its business, free and clear of all Liens, claims and licenses, except for Permitted Liens and the licenses set forth on Schedule 5.2(II) (as such schedule may be amended or supplemented from time to time); and

 

(c)                                  each work that is protected by a Patent, Trademark or Copyright that is included within the Collateral, and that is embodied in film, microfilm or tape, is maintained in a climate-controlled, secure laboratory, vault or similar location, under the control of a Grantor.

 

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Section 6
 COVENANTS AND AGREEMENTS

 

Each Grantor hereby covenants and agrees that:

 

6.1                               Grantor Information and Status.

 

(a)                                 without limiting any prohibitions or restrictions on mergers or other transactions set forth in the Credit Agreement, such Grantor shall not change its name, identity, corporate structure (e.g., by merger, consolidation, change in corporate form or otherwise), sole place of business (or principal residence if such Grantor is a natural person), chief executive office, type of organization or jurisdiction of organization or establish any trade names unless it shall have (i) notified Agent in writing at least ten (10) Business Days (or such lesser period of time as consented to by Agent) prior to any such change or establishment, identifying such new proposed name, identity, corporate structure, sole place of business (or principal residence if such Grantor is a natural person), chief executive office, jurisdiction of organization or trade name and providing such other information in connection therewith as Agent may reasonably request and (ii) taken all actions, as Agent deems, in its sole and reasonable discretion, necessary or advisable to maintain the continuous validity, perfection and the same or better priority of Agent’s security interest in the Collateral granted or intended to be granted and agreed to hereby, which in the case of any merger or other change in corporate structure shall include, without limitation, executing and delivering to Agent a completed Security Agreement Supplement together with all Supplements to Schedules thereto, promptly following completion of such merger or other change in corporate structure confirming the grant of the security interest hereunder.

 

6.2                               Collateral Identification; Special Collateral.

 

(a)                                 in the event that it hereafter acquires any Collateral of a type described in Section 5.2(b), such Grantor shall promptly notify Agent thereof in writing and take such actions and execute such documents and make such filings all at the Grantors’ expense as Agent may reasonably request in order to ensure that Agent has a valid, perfected, first-priority security interest in such Collateral, subject, in the case of priority only, to any Permitted Liens; and

 

(b)                                 in the event that it hereafter acquires or has any Commercial Tort Claim in excess of $750,000 individually or $1,000,000 in the aggregate, such Grantor shall deliver to Agent a completed Security Agreement Supplement together with all Supplements to Schedules thereto, identifying such new Commercial Tort Claims.

 

6.3                               Ownership of Collateral and Absence of Other Liens.

 

(a)                                 except for the security interest created by this Agreement, such Grantor shall not create or suffer to exist any Lien upon or with respect to any of the Collateral, other than Permitted Liens, and such Grantor shall defend the Collateral against all Persons at any time claiming any interest therein;

 

(b)                                 upon such Grantor or any officer, manager or member of such Grantor obtaining knowledge thereof, such Grantor shall promptly notify Agent in writing of any event

 

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that may have a material adverse effect on the value of the Collateral or any portion thereof, the ability of any Grantor or Agent to dispose of the Collateral or any portion thereof, or the rights and remedies of Agent in relation thereto, including, without limitation, the levy of any legal process against the Collateral or any portion thereof; and

 

(c)                                  such Grantor shall not sell, transfer or assign (by operation of law or otherwise) or exclusively license to another Person any Collateral except as otherwise permitted by the Credit Agreement.

 

6.4                               Status of Security Interest.

 

(a)                                 such Grantor shall maintain the security interest of Agent hereunder in all Collateral as a valid, perfected, first-priority Lien (subject, in the case of priority only, to Permitted Liens); provided that, notwithstanding the foregoing, no Grantor shall be required to (x) record, or cause to be recorded, the security interests granted hereunder in Intellectual Property with the United States Patent and Trademark Office, unless such recordation is necessary to perfect such security interests, or (y) take any action to perfect any Collateral that can only be perfected by (i) foreign filings with respect to Intellectual Property, or (ii) filings with registrars of motor vehicles or similar governmental authorities with respect to goods covered by a certificate of title, in each case except as and to the extent specified in Section 4.

 

6.5                               Goods and Receivables.

 

(a)                                 such Grantor shall not deliver any Document evidencing any Equipment and Inventory to any Person other than the issuer of such Document to claim the Goods evidenced therefor or Agent;

 

(b)                                 if any Equipment or Inventory in excess of $500,000 individually or $1,000,000 in the aggregate is in possession or control of any warehouseman, bailee or other third party (other than a Consignee under a Consignment for which such Grantor is the Consignor), such Grantor shall join with Agent in notifying such third party of Agent’s security interest and using commercially reasonable efforts to obtain an acknowledgment from such third party that it is holding the Equipment and Inventory for the benefit of Agent and will permit Agent to have access to Equipment or Inventory for purposes of inspecting such Collateral or, following an Event of Default, to remove same from such premises if Agent so elects; and with respect to any Goods in excess of $100,000 individually or $100,000 in the aggregate subject to a Consignment for which such Grantor is the Consignor, such Grantor shall file appropriate financing statements against the Consignee and take such other action as may be necessary to ensure that such Grantor has a first-priority perfected security interest in such Goods;

 

(c)                                  such Grantor shall keep and maintain at its own cost and expense satisfactory and complete records of the Receivables, including, but not limited to, the originals and/or copies of all documentation with respect to all Receivables and records of all payments received and all credits granted on the Receivables, and all other dealings therewith;

 

(d)                                 other than in the ordinary course of business (i) such Grantor shall not amend, modify, terminate or waive any material provision of any Receivable in any manner which could reasonably be expected to have a material adverse effect on the value of such

 

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Receivable; (ii) following and during the continuation of an Event of Default, such Grantor shall not (w) grant any extension or renewal of the time of payment of any material Receivable, (x) compromise or settle any dispute, claim or legal proceeding with respect to any material Receivable for less than the total unpaid balance thereof, (y) release, wholly or partially, any Person liable for the payment thereof, or (z) allow any credit or discount thereon; and

 

(e)                                  following the occurrence and during the continuation of an Event of Default, Agent may: (i) direct the Account Debtors under any Receivables to make payment of all amounts due or to become due to such Grantor thereunder directly to Agent; (ii) notify, or require any Grantor to notify, each Person maintaining a lockbox or similar arrangement to which Account Debtors under any Receivables have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to Agent; and (iii) enforce, at the expense of such Grantor, collection of any such Receivables and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done.  If Agent notifies any Grantor that it has elected to collect the Receivables in accordance with the preceding sentence, any payments of Receivables received by such Grantor shall be forthwith (and in any event within five (5) Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to Agent if required, in a Collateral Account maintained under the sole dominion and control of Agent, and until so turned over, all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of the Receivables, any Supporting Obligation or Collateral Support shall be received in trust for the benefit of Agent hereunder and shall be segregated from other funds of such Grantor and such Grantor shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon.

 

6.6                               Pledged Equity; Investment Related Property.

 

(a)                                 except as provided in the next sentence, in the event such Grantor receives any dividends, interest or distributions on any Pledged Equity or other Investment Related Property, upon the merger, consolidation, liquidation or dissolution of any issuer of any Pledged Equity or Investment Related Property, then (i) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (ii) such Grantor shall promptly take all reasonable steps, as Agent deems, in its sole and reasonable discretion, necessary or advisable to ensure the validity, perfection, priority and, if applicable, Control of Agent over such Investment Related Property (including, without limitation, delivery thereof to Agent) and pending any such action, such Grantor shall be deemed to hold such dividends, interest, distributions, securities or other property in trust for the benefit of Agent and shall segregate such dividends, distributions, Securities or other property from all other property of such Grantor.  Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing, Agent authorizes each Grantor to retain and use all ordinary cash dividends and distributions paid in the normal course of the business of the issuer and consistent with the past practice of the issuer and all scheduled payments of interest, to the extent permitted by the Credit Agreement;

 

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(b)                                 Voting.

 

(i)                                     so long as no Event of Default shall have occurred and be continuing, except as otherwise provided under the covenants and agreements relating to Investment Related Property in this Agreement or elsewhere herein or in the Credit Agreement, each Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; provided that no Grantor shall exercise or refrain from exercising any such right if Agent shall have notified such Grantor that, in Agent’s reasonable judgment, such action would have a Material Adverse Effect; and provided further that such Grantor shall give Agent at least five (5) Business Days prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right; it being understood, however, that neither the voting by such Grantor of any Pledged Stock for, or such Grantor’s consent to, the election of directors (or similar governing body) at a regularly scheduled annual or other meeting of stockholders or with respect to incidental matters at any such meeting, nor such Grantor’s consent to or approval of any action otherwise permitted under this Agreement and the Credit Agreement, shall be deemed inconsistent with the terms of this Agreement or the Credit Agreement within the meaning of this Section 6.6(b)(i) and no notice of any such voting or consent need be given to Agent; and

 

(ii)                                  upon the occurrence and during the continuation of an Event of Default and upon written notice from Agent to such Grantor of Agent’s intention to exercise such rights:

 

(1)                                 all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in Agent who shall thereupon have the sole right to exercise such voting and other consensual rights; and

 

(2)                                 in order to permit Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder: (1) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to Agent all proxies, dividend payment orders and other instruments as Agent may from time to time reasonably request and (2) each Grantor acknowledges that Agent may utilize the power of attorney set forth in Section 8.1.

 

(c)                                  except as expressly permitted by the Credit Agreement, without the prior written consent of Agent, such Grantor shall not vote to enable or take any other action to:

 

(i)                                     amend or terminate any Organizational Document in any way that conflicts with this Agreement or the other Loan Documents or adversely affects the validity, perfection or priority of Agent’s security interest;

 

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(ii)                                  permit any issuer of any Pledged Equity to issue any additional stock, partnership interests, limited liability company interests or other equity interests of any nature or to issue securities convertible into or granting the right of purchase or exchange for any stock or other equity interest of any nature of such issuer;

 

(iii)                               other than as permitted under the Credit Agreement, permit any issuer of any Pledged Equity to dispose of all or a material portion of their assets;

 

(iv)                              waive any default under or breach of any terms of any Organizational Document relating to the issuer of any Pledged Equity or the terms of any Pledged Debt; or

 

(v)                                 cause any issuer of any Pledged Partnership Interests or Pledged LLC Interests that are not securities (for purposes of the UCC) on the Closing Date to elect or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC; provided that, notwithstanding the foregoing, if any issuer of any Pledged Partnership Interests or Pledged LLC Interests takes any such action in violation of the foregoing in this clause (v), such Grantor shall promptly notify Agent in writing of any such election or action and, in such event, shall take all steps, as Agent deems, in its sole and reasonable discretion, necessary or advisable to establish Agent’s Control thereof; and

 

(d)                                 except as expressly permitted by the Credit Agreement, without the prior written consent of Agent, such Grantor shall not permit any issuer of any Pledged Equity to merge or consolidate unless (i) such issuer creates a security interest that is perfected by a filed financing statement (that is not effective solely under Section 9-508 of the UCC) in collateral in which such new debtor has or acquires rights, (ii) all the outstanding capital stock or other equity interests (excluding any Excluded Property) of the surviving or resulting corporation, limited liability company, partnership or other entity is, promptly after such merger or consolidation, pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding equity interests of any other constituent Grantor; provided that if the surviving or resulting Grantors upon any such merger or consolidation involving an issuer which is a Controlled Foreign Corporation, then such Grantor shall only be required to pledge equity interests in accordance with Section 2.2 and (iii) such Grantor promptly complies with the delivery and control requirements of Section 4.

 

6.7                               Intellectual Property.

 

(a)                                 such Grantor shall not do any act or omit to do any act whereby any of the Intellectual Property which is owned by such Grantor and material to the business of any Grantor may lapse, or become abandoned, dedicated to the public, or unenforceable, or which would adversely affect the validity, grant, or enforceability of Agent’s security interest therein;

 

(b)                                 subject to Section 6.7(a), such Grantor shall continue to register or not register, as the case may be, its Patents and Trademarks in accordance with its historical practices as they existed as of the Closing Date, on condition that, if an Event of Default shall have occurred and be continuing, and if requested by Agent, such Grantor shall file applications

 

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and take any and all other actions necessary to register on an expedited basis (if expedited processing is available in accordance with the applicable regulations and procedures of the United States Patent and Trademark Office and any similar office of any other jurisdiction in which Patents or Trademarks, as applicable, are used) each of its Patents and Trademarks and identifying such Grantor as the sole claimant thereof in a manner sufficient to claim in the public record (or as a co-claimant thereof, if such is the case) such Grantor’s ownership or co-ownership thereof;

 

(c)                                  as soon as available, but in any event within forty-five (45) days after the end of every other Fiscal Quarter commencing with the Fiscal Quarter ending December 31, 2014 (or, if an Event of Default shall have occurred and be continuing, more frequently if requested by Agent), such Grantor shall prepare, execute, and deliver to Agent a completed Security Agreement Supplement together with Supplements to Schedules attached thereto identifying each of the following as being subject to the security interests created under this Agreement: all Patents, Trademarks or Copyrights, and all material Patent Licenses, material Trademark Licenses or material Copyright Licenses, that were acquired or registered, or for which applications for registration were filed, by such Grantor during such Fiscal Quarter, excluding any “intent-to-use” application for registration of a Trademark filed pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051 for which, as of the end of such month, no “Statement of Use” has been filed pursuant to Section 1(d) of the Lanham Act and no “Amendment to Allege Use” has been filed during such month pursuant to Section 1(c) of the Lanham Act;

 

(d)                                 such Grantor shall use commercially reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement, misappropriation, dilution or other violation of any of such Grantor’s rights in the Intellectual Property by others and for that purpose shall diligently maintain any action, suit or proceeding that such Grantor chooses to initiate against any Person so infringing, misappropriating, diluting or otherwise violating as will be reasonably necessary to prevent such infringement, misappropriation, dilution or other violation;

 

(e)                                  such Grantor shall use proper statutory notice in connection with its use of any of the Intellectual Property, except where the failure to use such notice would not reasonably be expected to have a Material Adverse Effect; and

 

(f)                                   such Grantor shall cause each work protected by a Patent, Trademark or Copyright that is included within the Collateral, and that is embodied in film, microfilm or tape, to be maintained in a climate-controlled, secure laboratory, vault or similar location, under the control of a Grantor.

 

Section 7
 ACCESS; RIGHT OF INSPECTION; FURTHER ASSURANCES;
 ADDITIONAL GRANTORS

 

7.1                               Access; Right of Inspection.  Subject to the limitations set forth in the Credit Agreement, (a) Agent shall at all times have full and free access, upon reasonable advance notice, during normal business hours to all the books, correspondence and records of each

 

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Grantor, and Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and each Grantor agrees to render to Agent such clerical and other assistance as may be reasonably requested with regard thereto (with all expenses incurred in connection therewith being allocated in accordance with the Credit Agreement) and (b) Agent and its representatives shall at all times, upon reasonable advance notice, during normal business hours, also have the right to enter any premises of each Grantor and inspect any property of each Grantor where any of the Collateral of such Grantor granted pursuant to this Agreement is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein.

 

7.2                               Further Assurances.

 

(a)                                 Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall promptly execute and deliver all further instruments and documents, and take all further action that Agent may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, each Grantor shall:

 

(i)                                     file such financing or continuation statements, or amendments thereto, and execute and deliver such other agreements, instruments, endorsements, powers of attorney or notices, as Agent may reasonably request, in order to effect, reflect, perfect and preserve the security interests granted or purported to be granted hereby;

 

(ii)                                  at Agent’s reasonable request, appear in and defend any action or proceeding that may adversely affect such Grantor’s title to or Agent’s security interest in all or any part of the Collateral; and

 

(iii)                               furnish Agent with such information regarding the Collateral, including, without limitation, the location thereof, as Agent may reasonably request from time to time.

 

(b)                                 Each Grantor hereby authorizes Agent to file a Record or Records, including, without limitation, financing or continuation statements, and amendments and supplements to any of the foregoing, in any jurisdictions and with any filing offices as Agent may determine, in its sole discretion, are necessary or advisable to perfect or otherwise protect the security interest granted to Agent herein.  Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to Agent herein, including, without limitation, describing such property as “all assets, whether now owned or hereafter acquired, developed or created” or words of similar effect.  Each Grantor shall furnish to Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Agent may reasonably request, all in reasonable detail.

 

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(c)                                  Each Grantor hereby authorizes Agent to modify this Agreement after obtaining such Grantor’s approval of or signature to such modification by amending Schedule 5.2 (as such schedule may be amended or supplemented from time to time) to include reference to any right, title or interest in any existing Intellectual Property or any Intellectual Property acquired or developed by any Grantor after the execution hereof or to delete any reference to any right, title or interest in any Intellectual Property in which any Grantor no longer has or claims any right, title or interest.

 

7.3                               Additional Grantors.  From time to time subsequent to the Closing Date, additional Persons may become parties hereto as additional Grantors (each, an “Additional Grantor”) by executing a Security Agreement Supplement, accompanied by such documentation as required by the Credit Agreement and such documentation as Agent may otherwise reasonably require to establish the due organization, valid existence and good standing of each such Person, its qualification to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, its authority to execute, deliver and perform this Agreement, and the identity, authority and capacity of each Authorized Signatory thereof authorized to act on its behalf.  Upon delivery of any such Security Agreement Supplement to Agent, notice of which is hereby waived by each Grantor, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if such Additional Grantor were an original signatory hereto.  Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Agent not to cause any Subsidiary of Borrower to become an Additional Grantor hereunder.  This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder.

 

Section 8
 AGENT APPOINTED ATTORNEY-IN-FACT

 

8.1                               Power of Attorney.  Each Grantor hereby irrevocably appoints Agent (such appointment being coupled with an interest) as such Grantor’s attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, Agent or otherwise, from time to time in Agent’s discretion to take any action and to execute any instrument that Agent may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, the following:

 

(a)                                 upon the occurrence and during the continuance of any Event of Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to Agent pursuant to the Credit Agreement;

 

(b)                                 upon the occurrence and during the continuance of any Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquaintance and receipts for moneys due and to become due under or in respect of any of the Collateral;

 

(c)                                  upon the occurrence and during the continuance of any Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with Section 8.1(b);

 

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(d)                                 upon the occurrence and during the continuance of any Event of Default, to file any claims or take any action or institute any proceedings that Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Agent with respect to any of the Collateral;

 

(e)                                  to prepare and file any UCC financing statements against such Grantor as debtor;

 

(f)                                   upon the occurrence and during the continuance of any Event of Default, to take or cause to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Agreement, including, without limitation, access to pay or discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Agent in its sole discretion, any such payments made by Agent to become obligations of such Grantor to Agent, due and payable immediately without demand; and

 

(g)                                  upon the occurrence and during the continuance of any Event of Default, to sell, transfer, lease, license, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Agent were the absolute owner thereof for all purposes, and to do, at Agent’s option and such Grantor’s expense, at any time or from time to time, all acts and things that Agent deems reasonably necessary to protect, preserve or realize upon the Collateral and Agent’s security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

8.2                               No Duty on the Part of Agent or Secured Parties.  The powers conferred on Agent hereunder are solely to protect the interests of the Secured Parties in the Collateral and shall not impose any duty upon Agent or any other Secured Party to exercise any such powers.  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 or willful misconduct.

 

8.3                               Appointment Pursuant to Credit Agreement.  Agent has been appointed as Agent pursuant to the Credit Agreement.  The rights, duties, privileges, immunities and indemnities of Agent hereunder are subject to the provisions of the Credit Agreement.

 

Section 9
 REMEDIES

 

9.1                               Generally.

 

(a)                                 If any Event of Default shall have occurred and be continuing, Agent may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein, in the Credit Agreement, or otherwise available to it at law or in equity, all the rights and remedies of Agent on default under the UCC (whether or not the UCC applies to the affected Collateral) to collect, enforce or satisfy any Secured Obligations then owing, whether by acceleration or otherwise, and also may pursue any of the following separately, successively or simultaneously:

 

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(i)                                     require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of Agent forthwith, assemble all or part of the Collateral as directed by Agent and make it available to Agent at a place to be designated by Agent that is convenient to both parties;

 

(ii)                                  enter onto the property where any Collateral is located and take possession thereof with or without judicial process;

 

(iii)                               prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent Agent deems appropriate; and

 

(iv)                              without notice except as specified below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of Agent’s offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Agent may deem commercially reasonable.

 

(b)                                 Agent or any other Secured Party may be the purchaser of any or all of the Collateral at any public or private (to the extent the portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations) sale in accordance with the UCC and Agent, as agent for and representative of the Secured Parties, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by Agent at such sale.  Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.  Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each Grantor agrees that it would not be commercially unreasonable for Agent to dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets.  Each Grantor hereby waives any claims against Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if Agent accepts the first offer received and does not offer such Collateral to more than one offeree.  If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, the Grantors shall be liable for the deficiency and the fees of any attorneys employed by Agent to collect such deficiency.  Each Grantor further agrees that a breach of any

 

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of the covenants contained in this Section will cause irreparable injury to Agent, that Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities.  Nothing in this Section shall in any way limit the rights of Agent hereunder.

 

(c)                                  Agent may sell the Collateral without giving any warranties as to the Collateral.  Agent may specifically disclaim or modify any warranties of title or the like.  This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

 

(d)                                 Agent shall have no obligation to marshal any of the Collateral.

 

9.2                               Application of Proceeds.  Except as expressly provided elsewhere in this Agreement, all proceeds received by Agent in respect of any sale of, any collection from, or other realization upon all or any part of the Collateral shall be applied in full or in part by Agent against, the Secured Obligations in accordance with the requirements of the Credit Agreement.

 

9.3                               Sales on Credit.  If Agent sells any of the Collateral upon credit, the Grantors will be credited only with payments actually made by the purchaser and received by Agent and applied to indebtedness of the purchaser.  In the event the purchaser fails to pay for the Collateral, Agent may resell the Collateral and the Grantors shall be credited with proceeds of the sale.

 

9.4                               Investment Related Property.  Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933 and applicable state securities laws, Agent may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act of 1933 and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof.  Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act of 1933) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act of 1933 or under applicable state securities laws, even if such issuer would, or should, agree to so register it.  If Agent determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to Agent all such information as Agent may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by Agent in exempt transactions

 

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under the Securities Act of 1933 and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect.

 

9.5                               Grant of Intellectual Property License.  For the purpose of enabling Agent, during the continuance of an Event of Default, to exercise rights and remedies under Section 9 at such time as Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to Agent, to the extent assignable and to the extent of such Grantor’s rights and effective only during the continuance of an Event of Default, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, assign, license or sublicense any of the Intellectual Property now owned or hereafter acquired, developed or created by such Grantor, wherever the same may be located.  Such license shall include access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout hereof.

 

9.6                               Intellectual Property.

 

(a)                                 Anything contained herein to the contrary notwithstanding, in addition to the other rights and remedies provided herein, upon the occurrence and during the continuation of an Event of Default:

 

(i)                                     Agent shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding in the name of any Grantor, Agent, or the Secured Parties, in Agent’s sole discretion, to enforce any Intellectual Property rights of such Grantor, in which event such Grantor shall, at the request of Agent, do any and all lawful acts and execute any and all documents required by Agent in aid of such enforcement, and such Grantor shall promptly, upon demand, reimburse and indemnify Agent as provided in Section 12 in connection with the exercise of its rights under this Section 9.6, and, to the extent that Agent shall elect not to bring suit to enforce any Intellectual Property rights as permitted by this Section 9.6, each Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement, misappropriation, dilution or other violation of any of such Grantor’s rights in the Intellectual Property by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any Person so infringing, misappropriating, diluting or otherwise violating as shall be necessary to prevent such infringement, misappropriation, dilution or other violation;

 

(ii)                                  upon written demand from Agent, each Grantor shall grant, assign, convey or otherwise transfer to Agent or Agent’s designee all of such Grantor’s right, title and interest in and to any Intellectual Property and shall execute and deliver to Agent such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement;

 

(iii)                               each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that Agent (or any other Secured Party) receives cash proceeds in respect of the sale of, or other realization upon, any such Intellectual Property;

 

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(iv)                              within five (5) Business Days after written notice from Agent, each Grantor shall make available to Agent, to the extent within such Grantor’s power and authority, such personnel in such Grantor’s employ on the date of such Event of Default as Agent may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with any Trademarks or Trademark Licenses, such persons to be available to perform their prior functions on Agent’s behalf and to be compensated by Agent at such Grantor’s expense on a per diem, pro rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default;

 

(v)                                 Agent shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of any Intellectual Property of such Grantor, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to Agent, and, upon such notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done;

 

(vi)                              all amounts and proceeds (including checks and other instruments) received by any Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to Agent in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 9.7; and

 

(vii)                           no Grantor shall adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon.

 

(b)                                 If (i) an Event of Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall have occurred and be continuing, (iii) an assignment or other transfer to Agent of any rights, title and interests in and to any Intellectual Property of such Grantor shall have been previously made and shall have become absolute and effective, and (iv) the Secured Obligations shall not have become immediately due and payable, upon the written request of any Grantor, Agent shall promptly execute and deliver to such Grantor, at such Grantor’s sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to Agent as aforesaid, subject to any disposition thereof that may have been made by Agent; provided that, after giving effect to such reassignment, Agent’s security interest granted pursuant hereto, as well as all other rights and remedies of Agent granted hereunder, shall continue to be in full force and effect; and provided further that the rights, title and interests so reassigned shall be free and clear of any other Liens granted by or on behalf of Agent and the Secured Parties.

 

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9.7                               Cash Proceeds; Deposit Accounts.

 

(a)                                 If any Event of Default shall have occurred and be continuing, in addition to the rights of Agent specified in Section 6.5 with respect to payments of Receivables, all proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash items (collectively, “Cash Proceeds”) shall be held by such Grantor in trust for Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to Agent in the exact form received by such Grantor (duly indorsed by such Grantor to Agent, if required) and held by Agent in the Collateral Account.  Any Cash Proceeds received by Agent (whether from a Grantor or otherwise) may, in the sole discretion of Agent, (A) be held by Agent for the ratable benefit of the Secured Parties, as collateral security for the Secured Obligations (whether matured or unmatured) and/or (B) then or at any time thereafter, be applied by Agent against the Secured Obligations then due and owing.

 

(b)                                 If any Event of Default shall have occurred and be continuing, Agent may apply the balance from any Deposit Account included in the Collateral or instruct the bank at which any such Deposit Account is maintained to pay the balance of any such Deposit Account to or for the benefit of Agent.

 

Section 10
 AGENT

 

Agent has been appointed to act as Agent hereunder by the Lenders and, by their acceptance of the benefits hereof, the other Secured Parties. Agent shall be obligated, and 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 Collateral), solely in accordance with this Agreement and the other Loan Documents.  In furtherance of the foregoing provisions of this Section, each Secured Party, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Secured Party that all rights and remedies hereunder may be exercised solely by Agent for the benefit of the Secured Parties in accordance with the terms of this Section.  The provisions of the Credit Agreement relating to Agent including, without limitation, the provisions relating to resignation or removal of Agent and the powers and duties and immunities of Agent are incorporated herein by this reference and shall survive any termination of the Credit Agreement.

 

Section 11
 CONTINUING SECURITY INTEREST; TRANSFER OF LOANS

 

This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the Termination Date, and shall be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of Agent hereunder, to the benefit of Agent and its successors, transferees and assigns.  Without limiting the generality of the foregoing, but subject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise.  On the Termination Date, the security interest granted by this Agreement shall automatically terminate hereunder and of record and all rights to the Collateral shall revert to the Grantors.  Upon any such termination Agent shall, at the Grantors’ expense, execute and deliver

 

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to the Grantors or otherwise authorize the filing of such documents (including financing statement amendments) as the Grantors shall reasonably request to evidence such termination.  Upon any disposition of property permitted by the Credit Agreement, (x) the Liens granted herein shall be deemed to be automatically released and such property shall automatically revert to the applicable Grantor with no further action on the part of any Person and (y) Agent shall, at the applicable Grantor’s expense, execute and deliver or otherwise authorize the filing of such documents (including financing statement amendments) as such Grantor shall reasonably request to evidence such release, in form and substance reasonably satisfactory to Agent.

 

Section 12
 STANDARD OF CARE; AGENT MAY PERFORM

 

The powers conferred on Agent hereunder are solely to protect the interests of the Secured Parties in the Collateral and shall not impose any duty upon Agent or any other Secured Party to exercise any such powers.  Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.  Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Agent accords its own property.  Neither Agent nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part 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 otherwise.  If any Grantor fails to perform any agreement contained herein, Agent may itself perform, or cause performance of, such agreement, and the expenses of Agent incurred in connection therewith shall be payable by each Grantor as provided in the Credit Agreement.

 

Section 13
 MISCELLANEOUS

 

13.1                        Generally.  Any notice required or permitted to be given under this Agreement shall be given in accordance with Section 12.7 of the Credit Agreement.  No failure or delay on the part of Agent in the exercise of any power, right or privilege hereunder or under the Credit Agreement shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege.  All rights and remedies existing under this Agreement and the Credit Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.  In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.  All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.  This Agreement shall be binding upon and inure to the benefit of Agent and the Grantors and

 

30

 

their respective successors and assigns.  No Grantor shall, without the prior written consent of Agent given in accordance with the Credit Agreement, assign any right, duty or obligation hereunder.  This Agreement, the Credit Agreement and the other Loan Documents embody the entire agreement and understanding between the Grantors and Agent and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof.  Accordingly, the Credit Agreement 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.  This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Delivery of an executed counterpart of this Agreement by email with scanned attachment shall be equally as effective as delivery of an original executed counterpart.  Any party delivering an executed counterpart of this Agreement by email with scanned attachment also shall deliver an original executed counterpart, but the failure to deliver such an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

 

13.2                        Governing Law; Jurisdiction, Etc.

 

(a)                                 Governing Law.  This Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) 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)                                 Submission to 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 in tort or otherwise, against Agent, any other Beneficiary or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any 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 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 Agent or any other Beneficiary may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Grantor 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

 

31

 

have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section.  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 consents to service of process in the manner provided for notices in Section 12.7 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.

 

13.3                        LOAN DOCUMENT.  THIS AGREEMENT IS ONE OF THE LOAN DOCUMENTS REFERRED TO IN THE CREDIT AGREEMENT AND ALL PROVISIONS CONTAINED IN THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT THAT APPLY TO LOAN DOCUMENTS GENERALLY (INCLUDING BUT NOT LIMITED TO THE PROVISIONS OF THE CREDIT AGREEMENT UNDER THE HEADING “WAIVER OF JURY TRIAL”) ARE FULLY APPLICABLE TO THIS AGREEMENT AND ARE INCORPORATED HEREIN BY THIS REFERENCE AS IF THEY WERE CONTAINED IN THIS AGREEMENT, MUTATIS MUTANDIS, WITH EACH REFERENCE TO “BORROWER” BEING DEEMED A REFERENCE TO “GRANTORS”, AND SUCH INCORPORATION SHALL SURVIVE ANY TERMINATION OF THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT.

 

[SIGNATURE PAGES FOLLOW]

 

32

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

 

 

	
 
    	
DTS, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Melvin Flanigan
    
	
 
    	
Name: 
    	
Melvin Flanigan
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DTS WASHINGTON LLC,
    
	
 
    	
a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Melvin Flanigan
    
	
 
    	
Name: 
    	
Melvin Flanigan
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PHORUS, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Melvin Flanigan
    
	
 
    	
Name: 
    	
Melvin Flanigan
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
DTS LLC,
    
	
 
    	
a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Melvin Flanigan
    
	
 
    	
Name: 
    	
Melvin Flanigan
    
	
 
    	
Title: 
    	
Chief Financial Officer
    

 

Signature Page to

Security Agreement

 

S-1

 

	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION,
    
	
 
    	
as Agent
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Greg Cohn
    
	
 
    	
Name: 
    	
Greg Cohn
    
	
 
    	
Title: 
    	
Senior Vice President
    

 

Signature Page to

Security Agreement

 

S-2

 

SCHEDULE 5.1
 TO SECURITY AGREEMENT

 

GENERAL INFORMATION

 

(A)                               Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business (or Residence if Grantor is a Natural Person) and Organizational Identification Number of each Grantor:

 

	
Full Legal Name
    	
 
    	
Type of
   Organization
    	
 
    	
Jurisdiction of
   Organization
    	
 
    	
Chief Executive
   Office/Sole Place of
   Business (or Residence
   if Grantor is a Natural
   Person)
    	
 
    	
Organization I.D.#
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(B)                               Other Names (including any Trade Name or Fictitious Business Name) under which each Grantor currently conducts business:

 

	
Full Legal Name
    	
 
    	
Trade Name or Fictitious Business Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

(C)                               Changes in Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of Business (or Principal Residence if Grantor is a Natural Person) and Corporate Structure within past five (5) years:

 

	
Grantor
    	
 
    	
Date of Change
    	
 
    	
Description of Change
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(D)                               Agreements pursuant to which any Grantor is bound as debtor within past five (5) years:

 

	
Grantor
    	
 
    	
Description of Agreement
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

SCHEDULE 5.1-1

 

SCHEDULE 5.2
 TO SECURITY AGREEMENT

 

COLLATERAL IDENTIFICATION

 

I.  INVESTMENT RELATED PROPERTY

 

(A)                               Pledged Stock:

 

	
Grantor
    	
 
    	
Stock
   Issuer
    	
 
    	
Class of
   Stock
    	
 
    	
Certificated
   (Y/N)
    	
 
    	
Stock

Certificate

No.
    	
 
    	
Par Value
    	
 
    	
No. of

Pledged
   Stock
    	
 
    	
Percentage
   of
   Outstanding
   Stock of the
   Stock Issuer
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged LLC Interests:

 

	
Grantor
    	
 
    	
Limited
   Liability
   Company
    	
 
    	
Certificated

(Y/N)
    	
 
    	
Certificate No.
   (if any)
    	
 
    	
No. of Pledged
   Units
    	
 
    	
Percentage of
   Outstanding
   LLC Interests of

the Limited
   Liability
   Company
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged Partnership Interests:

 

	
Grantor
    	
 
    	
Partnership
    	
 
    	
Type of
   Partnership
   Interests (e.g.,
   general or
   limited)
    	
 
    	
Certificated
   (Y/N)
    	
 
    	
Certificate No.
    (if any)
    	
 
    	
Percentage of
   Outstanding
   Partnership
   Interests of the
   Partnership
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Trust Interests or other Equity Interests not listed above:

 

	
Grantor
    	
 
    	
Trust
    	
 
    	
Class of Trust
   Interests
    	
 
    	
Certificated
   (Y/N)
    	
 
    	
Certificate No.
    (if any)
    	
 
    	
Percentage of
   Outstanding
   Trust Interests
   of the Trust
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged Debt:

 

	
Grantor
    	
 
    	
Issuer
    	
 
    	
Original
   Principal
   Amount
    	
 
    	
Outstanding
   Principal
   Balance
    	
 
    	
Issue Date
    	
 
    	
Maturity Date
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

SCHEDULE 5.2-1

 

Securities Account:

 

	
Grantor
    	
 
    	
Share of Securities
   Intermediary
    	
 
    	
Account Number
    	
 
    	
Account Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Deposit Accounts:

 

	
Grantor
    	
 
    	
Name of Depositary Bank
    	
 
    	
Account Number
    	
 
    	
Account Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Commodity Contracts and Commodity Accounts:

 

	
Grantor
    	
 
    	
Name of Commodity
   Intermediary
    	
 
    	
Account Number
    	
 
    	
Account Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

II.  INTELLECTUAL PROPERTY

 

(A)                               Copyrights

 

	
Grantor
    	
 
    	
Jurisdiction
    	
 
    	
Title of Work
    	
 
    	
Registration Number
   (if any)
    	
 
    	
Registration Date (if
   any)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(B)                               Copyright Licenses

 

	
Grantor
    	
 
    	
Description of Copyright
   License
    	
 
    	
Registration Number (if
   any) of underlying
   Copyright
    	
 
    	
Name of Licensor
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(C)                               Patents

 

	
Grantor
    	
 
    	
Jurisdiction
    	
 
    	
Title of Patent
    	
 
    	
Patent
   Number/(Application
   Number)
    	
 
    	
Issue Date/(Filing
   Date)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(D)                               Patent Licenses

 

	
Grantor
    	
 
    	
Description of Patent
   License
    	
 
    	
Patent Number of
   underlying Patent
    	
 
    	
Name of Licensor
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

SCHEDULE 5.2-2

 

(E)                                Trademarks

 

	
Grantor
    	
 
    	
Jurisdiction
    	
 
    	
Trademark
    	
 
    	
Registration
   Number/(Serial
   Number)
    	
 
    	
Registration
   Date/(Filing Date)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(F)                                 Trademark Licenses

 

	
Grantor
    	
 
    	
Description of Trademark
   License
    	
 
    	
Registration Number of
   underlying Trademark
    	
 
    	
Name of Licensor
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

III. COMMERCIAL TORT CLAIMS

 

	
Grantor
    	
 
    	
Commercial Tort Claims
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

IV. LETTER OF CREDIT RIGHTS

 

	
Grantor
    	
 
    	
Description of Letters of Credit
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

V.  WAREHOUSEMAN, BAILEES AND OTHER THIRD PARTIES 
 IN POSSESSION OF COLLATERAL

 

	
Grantor
    	
 
    	
Description of Property
    	
 
    	
Name and Address of Third Party
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

SCHEDULE 5.2-3

 

SCHEDULE 5.4 TO
 SECURITY AGREEMENT

 

FINANCING STATEMENTS:

 

	
Grantor
    	
 
    	
Filing Jurisdiction(s)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

SCHEDULE 5.4-1

 

EXHIBIT A
 TO SECURITY AGREEMENT

 

SECURITY AGREEMENT SUPPLEMENT

 

This SECURITY AGREEMENT SUPPLEMENT, dated as of [                  ], 20[    ] (this “Supplement”), is delivered by [NAME OF ADDITIONAL GRANTOR], a [JURISDICTION AND ENTITY TYPE OF ADDITIONAL GRANTOR] (“Additional Grantor”), pursuant to the Security Agreement, dated as of September 29, 2014 (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), entered into by DTS, Inc., a Delaware corporation (“Borrower”), DTS Washington LLC, a Delaware limited liability company, Phorus, Inc., a Delaware corporation, DTS LLC, a Delaware limited liability company, and each other Grantor from time to time party thereto, and Wells Fargo Bank, National Association, as Agent.  Each capitalized term used but not defined herein has the meaning ascribed to such term in the Security Agreement.

 

Additional Grantor hereby irrevocably, absolutely and unconditionally becomes a party to the Security Agreement as a Grantor and agrees that it is bound by all of the terms, conditions, covenants, obligations, liabilities and undertakings applicable to each Grantor under the Security Agreement, all with the same force and effect as if Additional Grantor were an original signatory to the Security Agreement.

 

Additional Grantor hereby grants to Agent a security interest in all of Additional Grantor’s right, title and interest in, to and under the Collateral to secure the Secured Obligations, in each case whether now or hereafter existing or in which Additional Grantor now has or hereafter acquires an interest and wherever the same may be located.  Additional Grantor hereby represents and warrants that the attached Supplements to Schedules accurately and completely set forth all additional information required to be provided pursuant to the Security Agreement and hereby agrees that such Supplements to Schedules shall constitute part of the Schedules to the Security Agreement.

 

Additional Grantor hereby makes, as of the date hereof, each of the representations, warranties, acknowledgements, waivers and certifications applicable to any Grantor contained in the Security Agreement.

 

Additional Grantor hereby irrevocably waives notice of acceptance of this Supplement and acknowledges that the Secured Obligations are incurred, and the credit extensions under the Credit Agreement are made and maintained, in reliance on this Supplement.

 

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

 

THIS SUPPLEMENT IS ONE OF THE LOAN DOCUMENTS REFERRED TO IN THE CREDIT AGREEMENT AND ALL PROVISIONS CONTAINED IN THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT THAT APPLY TO LOAN DOCUMENTS GENERALLY (INCLUDING BUT NOT LIMITED TO THE PROVISIONS OF

 

EXHIBIT A-1

 

THE CREDIT AGREEMENT UNDER THE HEADING “WAIVER OF JURY TRIAL”) ARE FULLY APPLICABLE TO THIS AGREEMENT AND ARE INCORPORATED HEREIN BY THIS REFERENCE AS IF THEY WERE CONTAINED IN THIS SUPPLEMENT, MUTATIS MUTANDIS, WITH EACH REFERENCE TO “BORROWER” BEING DEEMED A REFERENCE TO “ADDITIONAL GRANTOR”, AND SUCH INCORPORATION SHALL SURVIVE ANY TERMINATION OF THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT.

 

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

 

	
 
    	
[NAME   OF ADDITIONAL GRANTOR]
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

EXHIBIT A-2

 

SUPPLEMENT TO SCHEDULE 5.1
 TO SECURITY AGREEMENT

 

Additional Information:

 

GENERAL INFORMATION

 

(A)                               Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business (or Residence if Grantor is a Natural Person) and Organizational Identification Number of each Grantor:

 

	
Full Legal
   Name
    	
 
    	
Type of
   Organization
    	
 
    	
Jurisdiction of
   Organization
    	
 
    	
Chief Executive
   Office/Sole Place of
   Business (or Residence
   if Grantor is a Natural
   Person)
    	
 
    	
Organization I.D.#
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(B)                               Other Names (including any Trade Name or Fictitious Business Name) under which each Grantor currently conducts business:

 

	
Full Legal Name
    	
 
    	
Trade Name or Fictitious Business Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

(C)                               Changes in Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of Business (or Principal Residence if Grantor is a Natural Person) and Corporate Structure within past five (5) years:

 

	
Grantor
    	
 
    	
Date of Change
    	
 
    	
Description of Change
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(D)                               Agreements pursuant to which any Grantor is bound as debtor within past five (5) years:

 

	
Grantor
    	
 
    	
Description of Agreement
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

EXHIBIT F-1

 

SUPPLEMENT TO SCHEDULE 5.2
 TO SECURITY AGREEMENT

 

COLLATERAL IDENTIFICATION

 

I.  INVESTMENT RELATED PROPERTY

 

(A)                               Pledged Stock:

 

	
Grantor
    	
 
    	
Stock
   Issuer
    	
 
    	
Class of
   Stock
    	
 
    	
Certificated
   (Y/N)
    	
 
    	
Stock
   Certificate
   No.
    	
 
    	
Par Value
    	
 
    	
No. of
   Pledged
   Stock
    	
 
    	
Percentage of
   Outstanding
   Stock of the
   Stock Issuer
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged LLC Interests:

 

	
Grantor
    	
 
    	
Limited Liability
   Company
    	
 
    	
Certificated
   (Y/N)
    	
 
    	
Certificate No.
   (if any)
    	
 
    	
No. of Pledged
   Units
    	
 
    	
Percentage of
   Outstanding
   LLC Interests of
   the Limited
   Liability
   Company
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged Partnership Interests:

 

	
Grantor
    	
 
    	
Partnership
    	
 
    	
Type of
   Partnership
   Interests (e.g.,
   general or
   limited)
    	
 
    	
Certificated
   (Y/N)
    	
 
    	
Certificate No.
   (if any)
    	
 
    	
Percentage of
   Outstanding
   Partnership
   Interests of the
   Partnership
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged Trust Interests:

 

	
Grantor
    	
 
    	
Trust
    	
 
    	
Class of Trust
   Interests
    	
 
    	
Certificated
   (Y/N)
    	
 
    	
Certificate No.
   (if any)
    	
 
    	
Percentage of
   Outstanding
   Trust Interests
   of the Trust
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Pledged Debt:

 

	
Grantor
    	
 
    	
Issuer
    	
 
    	
Original
   Principal
   Amount
    	
 
    	
Outstanding
   Principal Balance
    	
 
    	
Issue Date
    	
 
    	
Maturity Date
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

EXHIBIT F-2

 

Securities Account:

 

	
Grantor
    	
 
    	
Share of Securities
   Intermediary
    	
 
    	
Account Number
    	
 
    	
Account Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Deposit Accounts:

 

	
Grantor
    	
 
    	
Name of Depositary Bank
    	
 
    	
Account Number
    	
 
    	
Account Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Commodity Contracts and Commodity Accounts:

 

	
Grantor
    	
 
    	
Name of Commodity
   Intermediary
    	
 
    	
Account Number
    	
 
    	
Account Name
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

II.  INTELLECTUAL PROPERTY

 

(A)                               Copyrights

 

	
Grantor
    	
 
    	
Jurisdiction
    	
 
    	
Title of Work
    	
 
    	
Registration Number
   (if any)
    	
 
    	
Registration Date (if
   any)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(B)                               Copyright Licenses

 

	
Grantor
    	
 
    	
Description of Copyright
   License
    	
 
    	
Registration Number (if
   any) of underlying
   Copyright
    	
 
    	
Name of Licensor
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(C)                               Patents

 

	
Grantor
    	
 
    	
Jurisdiction
    	
 
    	
Title of Patent
    	
 
    	
Patent
   Number/(Application
   Number)
    	
 
    	
Issue Date/(Filing
   Date)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(D)                               Patent Licenses

 

	
Grantor
    	
 
    	
Description of Patent
   License
    	
 
    	
Patent Number of
   underlying Patent
    	
 
    	
Name of Licensor
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

EXHIBIT F-3

 

(E)                                Trademarks

 

	
Grantor
    	
 
    	
Jurisdiction
    	
 
    	
Trademark
    	
 
    	
Registration
   Number/(Serial
   Number)
    	
 
    	
Registration
   Date/(Filing Date)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(F)                                 Trademark Licenses

 

	
Grantor
    	
 
    	
Description of Trademark
   License
    	
 
    	
Registration Number of
   underlying Trademark
    	
 
    	
Name of Licensor
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

III. COMMERCIAL TORT CLAIMS

 

	
Grantor
    	
 
    	
Commercial Tort Claims
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

IV. LETTER OF CREDIT RIGHTS

 

	
Grantor
    	
 
    	
Description of Letters of Credit
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

V.  WAREHOUSEMAN, BAILEES AND OTHER THIRD PARTIES 
 IN POSSESSION OF COLLATERAL

 

	
Grantor
    	
 
    	
Description of Property
    	
 
    	
Name and Address of Third Party
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

EXHIBIT F-4

 

SUPPLEMENT TO SCHEDULE 5.4
 TO SECURITY AGREEMENT

 

Financing Statements:

 

	
Grantor
    	
 
    	
Filing Jurisdiction(s)
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

EXHIBIT F-5Exhibit 10.6(a)

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of February 8, 2013, is made and entered into by and among Nevro Corp., a Delaware corporation (the “Company”), and each of the stockholders of the Company listed on Exhibit A hereto, as such Exhibit A may be amended from time to time (the “Stockholders”).  For the purposes of this Agreement, the term “Company” shall be deemed to include and refer to any successor in interest to the Company, whether by means of statutory conversion, merger, consolidation, recapitalization, reorganization or otherwise.

 

RECITALS

 

WHEREAS, certain of the Stockholders (the “Existing Investors”) hold shares of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) and/or shares of Common Stock issued upon conversion thereof and/or  shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) and/or shares of Common Stock issued upon conversion thereof and possess certain registration rights under the Securities Act and applicable state securities laws and other rights and are subject to certain obligations pursuant to an Amended and Restated Registration Rights Agreement dated as of July 15, 2011 by and among the Company and such Existing Investors (the “Prior Agreement”);

 

WHEREAS, pursuant to Section 14.3 of the Prior Agreement, the Prior Agreement may be amended, and any provision therein waived, with the written consent of the Company and the holders of at least 55% of the Registrable Securities;

 

WHEREAS, any amendment or waiver effected in accordance with Section 14.3 shall be binding upon each holder of Registrable Securities and the Company;

 

WHEREAS, the Company and the undersigned Existing Investors constituting not less than 55% of the Registrable Securities desire to amend and restate the Prior Agreement and to accept the rights created pursuant hereto in lieu of the rights granted to them under the Prior Agreement;

 

WHEREAS, pursuant to a Series C Convertible Preferred Stock Purchase Agreement, dated of even date herewith, among the Company and certain of the Stockholders (the “Stock Purchase Agreement”), the Company has agreed to issue and sell to certain of the Stockholders, and certain of the Stockholders have agreed to purchase from the Company, shares of the Company’s Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”); and

 

WHEREAS, in connection with the issuance of the Series C Preferred Stock pursuant to the Stock Purchase Agreement, the Company and the Stockholders deem it desirable to enter into this Agreement.

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the recitals and the mutual premises, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                      Definitions.  In addition to capitalized terms defined elsewhere in this Agreement, the following capitalized terms shall have the following meanings when used in this Agreement:

 

“Business Day” means each day other than a Saturday, a Sunday or any other day on which banking institutions in the city of San Francisco, California are authorized or obligated by law or executive order to be closed.

 

“Commission” means the Securities and Exchange Commission and any successor agency performing comparable functions.

 

“Common Stock” means the common stock, par value $0.001 per share, of the Company.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rule and regulations of the Commission thereunder, as the same shall be in effect from time to time.

 

“Immediate Family Member” means with respect to any holder of Registrable Securities, the parents, siblings, spouse and issue, spouses of issue and any trust for the benefit of, or the legal representative of, any of the preceding Persons, or any partnership substantially all of the partners of which are one or more of such Persons or the holder of Registrable Securities or any limited liability company substantially all of the members of which are one or more of such Persons or the holder of Registrable Securities.

 

“Person” means an individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or other entity, or a governmental entity or any department, agency or political subdivision thereof.

 

“Preferred Stock” means the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.

 

“Preferred Stock Registrable Securities” means at any time, any of the following owned by any equity holder of the Company party to this Agreement: (i) any common equity securities of the Company issuable upon conversion or exchange of the Preferred Stock, or issuable or issued upon conversion or exchange of other equity securities of the Company into which the Preferred Stock shall be reclassified or changed, including by reason of a merger, consolidation, reorganization, recapitalization or statutory conversion then outstanding which are then owned by any Stockholder, including any other Person who is a permitted transferee or assignee of such holder pursuant to Section 12 hereof; and (ii) any common equity securities of

 

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the Company then outstanding which were issued as, or were issued directly or indirectly upon the conversion, exchange or exercise of other equity securities issued or issuable as a dividend, stock split or other distribution with respect or in replacement of any equity securities referred to in (i) of this definition.

 

“Public Offering” means any offering by the Company of its equity securities to the public pursuant to an effective registration statement under the Securities Act or any comparable statement under any comparable federal statute then in effect (other than any registration statement on Form S-8 or Form S-4 or any successor forms thereto).

 

“Qualified IPO” means a firm commitment underwritten public offering of Common Stock of the Company that yields net proceeds to the Company of not less than $50,000,000 (before deduction of underwriters commissions and expenses) at an equivalent price per share of Common Stock of not less than 2.5 times the Series C Original Issue Price (as adjusted for any equity split, equity combination, in-kind equity distribution, recapitalization or similar transaction).

 

“Registrable Securities” means at any time, any of the following owned by any equity holder of the Company party to this Agreement: (i) Common Stock or other equity securities of the Company into which the Common Stock then outstanding shall be reclassified or changed, including by reason of a merger, consolidation, reorganization, recapitalization or statutory conversion which are then owned by any Stockholder, including any other Person who is a permitted transferee or assignee of such holder pursuant to Section 12 hereof; (ii) the Preferred Stock Registrable Securities; and (iii) any common equity securities of the Company then outstanding which were issued as, or were issued directly or indirectly upon the conversion, exchange or exercise of other equity securities issued or issuable as a dividend, stock split or other distribution with respect or in replacement of any equity securities referred to in (i) or (ii) of this definition; provided, however, that Registrable Securities shall not include any equity securities which have been registered pursuant to the Securities Act or which have been sold to the public pursuant to Rule 144 of the Commission under the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, as the same shall be in effect from time to time.

 

“Series C Original Issue Price” means $0.463 per share for each share of Series C Preferred Stock.

 

“Series B-C Preferred Stock Registrable Securities” means at any time, any of the following owned by any equity holder of the Company party to this Agreement: (i) any common equity securities of the Company issuable upon conversion or exchange of the Series B Preferred Stock or Series C Preferred Stock, or issuable or issued upon conversion or exchange of other equity securities of the Company into which the Series B Preferred Stock or Series C Preferred Stock shall be reclassified or changed, including by reason of a merger, consolidation, reorganization, recapitalization or statutory conversion then outstanding which are then owned by any Stockholder, including any other Person who is a permitted transferee or assignee of such holder pursuant to Section 12 hereof; and (ii) any common equity securities of the Company then

 

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outstanding which were issued as, or were issued directly or indirectly upon the conversion, exchange or exercise of other equity securities issued or issuable as a dividend, stock split or other distribution with respect or in replacement of any equity securities referred to in (i) of this definition.

 

“Stockholders’ Agreement” means that certain Amended and Restated Stockholders’ Agreement, dated of even date herewith, among the Company and each of the holders of shares of the Company’s capital stock signatory thereto, as amended from time to time.

 

2.                                      Demand Registration.

 

2.1                               Long-Form Registrations.

 

(a)                                 Subject to the terms of this Agreement, at any time after 180 days following the effective date of an initial public offering of the Company’s securities (an “IPO”), the holders of at least a majority of the Preferred Stock Registrable Securities may request registration under the Securities Act of all or part of their then outstanding Registrable Securities represented by such Preferred Stock Registrable Securities on Form S-1 or any similar long-form registration; provided, that with respect to any demands under this clause (a) the anticipated aggregate offering price of the Registrable Securities covered by such registration exceeds $20,000,000 (net of underwriting discounts and commissions).

 

(b)                                 Within ten (10) days after receipt of a written request pursuant to this Section 2.1, the Company will give written notice of such request to all other holders of Registrable Securities and will use its reasonable best efforts to include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion within 20 days after delivery of the Company’s notice, and, thereupon the Company will use its reasonable best efforts to file as soon as practicable, and in any event within 90 days of the receipt of such request, a registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration.  All registrations requested pursuant to this Section 2.1 are referred to herein as “Long-Form Demand Registration.”  The Company shall not be obligated to effect, or to take any action to effect, more than two (2) Long-Form Demand Registrations pursuant to this Section 2.1.  In addition, the Company shall not be obligated to effect, or to take any action to effect, a Long-Form Demand Registration during the period starting with the date 90 days prior to the Company’s good faith estimate of the date of filing of, and ending on a date 90 days after the effective date of, a registration subject to Section 3 hereof, unless such offering is the Company’s Qualified IPO, in which case, ending on a date 180 days after the effective date of such registration subject to Section 3 hereof; provided, that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective.

 

2.2                               Short-Form Registrations.  In addition to the Long-Form Demand Registration provided pursuant to Section 2.1 above, commencing the date on which the Company becomes eligible to register securities issued by it on a Form S-3 or any similar short-form registration, the holders of at least twenty-five percent (25%) of the Registrable Securities then outstanding will be entitled to request registrations under the Securities Act of all or part of

 

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their Registrable Securities on Form S-3, if available to the Company, or any similar short-form registration (“Short-Form Demand Registrations” and, together with the Long-Form Demand Registration, “Demand Registrations”); provided, however, that the anticipated aggregate offering amount of the Registrable Securities included in any such Short-Form Registration exceeds $2,000,000.  Promptly after receipt of any request pursuant to this Section 2.2, the Company will give written notice of such request to all other holders of Registrable Securities and will use reasonable best efforts to include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion within 15 days after delivery of the Company’s notice.  Once the Company has become subject to the reporting requirements of the Exchange Act, the Company will use its reasonable best efforts to make Short-Form Demand Registrations available for the sale of Registrable Securities.  Demand Registrations will be Short-Form Demand Registrations whenever the Company is permitted to use any applicable short form.  If a Short-Form Demand Registration is to be an underwritten Public Offering, and if the underwriters for marketing or other reasons request the inclusion in the registration statement of information which is not required under the Securities Act to be included in a registration statement on the applicable form for the Short-Form Demand Registration, the Company will provide such information as may be reasonably requested for inclusion by the underwriters in the Short-Form Demand Registration.  The Company shall be obligated to effect an unlimited number of, but shall not be obligated to pay for more than two (2), Short-Form Demand Registrations in any twelve month period pursuant to this Section 2.2.

 

2.3                               Payment of Expenses for Demand Registrations.  The Company will pay all Registration Expenses (as defined in Section 6 below) for the Demand Registrations permitted under Sections 2.1 and 2.2 (other than underwriting discounts and commissions incurred by each holder of the Company’s securities participating in the registration and subject to the limitation in Section 2.2).  A registration will not count as a Demand Registration (i) unless a registration statement with respect thereto has become effective and remained effective in compliance with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement until the earlier of (x) such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement and (y) 120 days after the effective date of such registration statement, (ii) if after it has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the selling holders and has not thereafter become effective, or (iii) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied or waived, other than by reason of a failure on the part of the holders of the Registrable Securities to be registered thereunder.

 

2.4                               Priority.  If a Demand Registration is an underwritten Public Offering and the managing underwriters advise the Company in writing that in their opinion the inclusion of the number of Registrable Securities and other securities requested to be included exceeds the number of securities which can be sold in the offering without adversely affecting the marketability of such offering, then the managing underwriter may exclude securities (including Registrable Securities) from the registration and the underwriting and the number of securities that may be included in such registration and underwriting shall include first, the Series B-C Preferred Stock Registrable Securities requested to be included in such registration, pro rata

 

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among the holders of such Series B-C Preferred Stock Registrable Securities on the basis of the total number of Series B-C Preferred Stock Registrable Securities owned by each such holder, second, the Preferred Stock Registrable Securities (other than the Series B-C Preferred Stock Registrable Securities) requested to be included in such registration, pro rata among the holders of such Preferred Stock Registrable Securities (other than the Series B-C Preferred Stock Registrable Securities) on the basis of the total number of Preferred Stock Registrable Securities (other than the Series B-C Preferred Stock Registrable Securities) owned by each such holder, third, the Registrable Securities (other than the Preferred Stock Registrable Securities) requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the total number of Registrable Securities owned by each such holder, and fourth, other equity securities requested to be included in such registration to be allocated pro rata among the holders of thereof on the basis of the number of such equity securities owned by each such holder.  In no event will a Demand Registration pursuant to Section 2.1 count as a Long-Form Demand Registration for purposes of Section 2.1 unless at least thirty percent (30%) of all Registrable Securities requested to be registered in such Demand Registration by the initiating holders are, in fact, registered and sold in such registration.

 

2.5                               Restrictions.  Except as contemplated by Section 2.2 hereof, the Company will not be obligated to effect any Demand Registration within 180 days after the effective date of a previous Demand Registration.  With respect to any Demand Registration, if (a) the Board of Directors of the Company reasonably and in good faith determines that such filing would be seriously detrimental to the Company or its stockholders, or require a disclosure of a material fact that might reasonably be expected to have a material adverse effect on the Company or any plan or proposal by the Company or any of its subsidiaries to engage in any acquisition or disposition of assets or equity securities (other than in the ordinary course of business) or any merger, consolidation, tender offer, material financing or other significant transaction and (b) the Company shall furnish the holders of Registrable Securities who have requested a Demand Registration a certificate signed by an executive officer of the Company to such effect, the Company may postpone for up to 120 days the filing or the effectiveness of a registration statement for a Demand Registration; provided, that the Company may not postpone the filing or effectiveness of a registration statement for a Demand Registration more than once in any 12-month period; and provided, further, that the Company may not register any securities for the account of itself or any other stockholder during such 120-day period (other than in a Qualified IPO or a registration statement on Form S-8 or Form S-4 or any successor forms thereto).

 

2.6                               Selection of Underwriters. The holders of at least a majority of the Registrable Securities initiating the Demand Registration shall have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the Company’s approval which will not be unreasonably withheld or delayed.

 

3.                                      Piggyback Registration.

 

3.1                               Right to Piggyback.  At any time following a Qualified IPO, whenever the Company proposes to register any of its equity securities (or securities that are convertible into equity securities) under the Securities Act for its own account, and the registration form to be used may be used for the registration of any Registrable Securities (a “Piggyback Registration”) (except for the registrations on Form S-8 or Form S-4 or any successor form

 

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thereto), the Company will promptly give written notice to all holders of the Registrable Securities of its intention to effect such a registration and will use reasonable best efforts to include in such registration all Registrable Securities (in accordance with the priorities set forth in Sections 3.2 and 3.3 below) with respect to which the Company has received written requests for inclusion specifying the number of equity securities desired to be registered, which request shall be delivered within 20 days after the delivery of the Company’s notice.

 

3.2                               Priority on Primary Registrations.  If a Piggyback Registration is an underwritten primary registration on behalf of the Company and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in the registration exceeds the number which can be sold in such offering without adversely affecting the marketability of such offering, then the managing underwriter may exclude securities (including Registrable Securities) from the registration and the underwriting, and the number of securities that may be included in such registration and underwriting shall include first, any securities that the Company proposes to sell, second, the Series B-C Preferred Stock Registrable Securities requested to be included in such registration, pro rata among the holders of such Series B-C Preferred Stock Registrable Securities on the basis of the total number of Series B-C Preferred Stock Registrable Securities owned by each such holder, third, the Preferred Stock Registrable Securities (other than the Series B-C Preferred Stock Registrable Securities) requested to be included in such registration, pro rata among the holders of such Preferred Stock Registrable Securities (other than the Series B-C Preferred Stock Registrable Securities) on the basis of the total number of Preferred Stock Registrable Securities owned by each such holder, fourth, the Registrable Securities (other than the Preferred Stock Registrable Securities) requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the total number of Registrable Securities owned by each such holder, and fifth, other equity securities requested to be included in such registration to be allocated pro rata among the holders thereof on the basis of the number of such equity securities owned by each such holder.

 

3.3                               Selection of Underwriters.  In connection with any Piggyback Registration, the Company will have such right to select the managing underwriters (subject to the approval of the holders of at least a majority of the Registrable Securities requested to be included in such registration, which approval shall not be unreasonably withheld or delayed).

 

4.                                      Lock-Up Agreements.

 

4.1                               Holders’ Agreements.  To the extent not inconsistent with applicable law, in connection with an IPO, each holder of Registrable Securities agrees that upon request of the Company or the underwriters managing such offering, it will (a) not sell, make any short sale of, loan, grant any option for the purchase of, otherwise dispose of, hedge or transfer any of the economic interest in (or agree or commit to do any of the foregoing) any Registrable Securities (other than those included in the registration, if any) without the prior written consent of the Company or such underwriters, as the case may be, during the 180-day period following the effective date of such registration, and (b) enter into and be bound by such form of agreement with respect to the foregoing as the Company or such managing underwriter may reasonably request; provided that each officer and director and each third party who holds 1.0% or more of the outstanding equity securities of the Company also agrees to such restrictions.

 

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Notwithstanding anything to the contrary contained in this Section 4.1, the 180-day lock-up period described above may be extended by the managing underwriters in their sole discretion for such period of time as is required in order to permit such managing underwriters or co-managers of the offering to publish or otherwise distribute research reports or make public appearances concerning the Company while complying with FINRA Rule 2711.  Nothing herein shall prevent a holder of Registrable Securities from transferring Registrable Securities to a permitted transferee as provided for in Section 7 of the Stockholders’ Agreement; provided, that any transferees of such Registrable Securities agrees to be bound by the provisions of this Agreement to the extent the transferor would be so bound.

 

4.2                               Company’s Agreements.  The Company agrees not to effect, and, to the extent not inconsistent with applicable laws, to cause each holder of its equity securities purchased from the Company at any time after the date of this Agreement (except in a registered public offering) not to effect, in connection with an IPO, any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the 180-day period following the effective date of such registration.

 

5.                                      Registration Procedures.  Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its reasonable best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company will as expeditiously as possible:

 

(a)                                 prepare and, as soon as practicable after the end of the period within which requests for registration may be given to the Company, file with the Commission a registration statement with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will furnish copies of all such documents proposed to be filed to one counsel designated by holders of at least a majority of the Registrable Securities covered by such registration statement);

 

(b)                                 prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus(es) used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 120 days, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

 

(c)                                  furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus(es) included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

 

(d)                                 use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as

 

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Investor reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) consent to general service of process in any such jurisdiction, or (iii) subject it to taxation in any such jurisdiction);

 

(e)                                  promptly notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

 

(f)                                   cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or if no such securities are then listed, such securities exchange as the holders of at least a majority of the Registrable Securities included in such registration may request;

 

(g)                                  provide a transfer agent, registrar and CUSIP number for all such Registrable Securities not later than the effective date of such registration statement;

 

(h)                                 enter into such customary agreements (including underwriting agreements in customary form) and take all such other customary actions as the holders of at least a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

 

(i)                                     make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; provided, however, that any records, information or documents that are furnished by the Company and that are non-public shall be used only in connection with such registration and shall be kept strictly confidential by any seller of Registrable Securities except to the extent disclosure of such records, information or documents is required by written order of a court or other governmental authority having jurisdiction;

 

(j)                                    advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or

 

9

 

threatening of any proceeding for such purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

 

(k)                                 at least 48 hours prior to the filing of any registration statement or prospectus, or any amendment or supplement to such registration statement or prospectus, furnish a copy thereof to each seller of such Registrable Securities and refrain from filing any such registration statement, prospectus, amendment or supplement to which counsel selected by the holders of at least a majority of the Registrable Securities being registered shall have reasonably objected on the grounds that such document does not comply in all material respects with the requirements of the Securities Act or the rules and regulations thereunder, unless, in the case of an amendment or supplement, in the opinion of counsel for the Company the filing of such amendment or supplement is reasonably necessary to protect the Company from any liabilities under any applicable federal or state law and such filing will not violate applicable laws;

 

(l)                                     at the request of any seller of such Registrable Securities in connection with an underwritten offering, furnish on the date or dates provided for in the underwriting agreement:  (i) an opinion of counsel, addressed to the underwriters and the sellers of Registrable Securities, covering such matters as such counsel, underwriters and the sellers may reasonably agree upon, including such matters as are customarily furnished in connection with an underwritten offering, and (ii) a letter or letters from the independent certified public accountants of the Company addressed to the underwriters and the sellers of Registrable Securities, covering such matters as such accountants, underwriters and sellers may reasonably agree upon, in which letter(s) such accountants shall state, without limiting the generality of the foregoing, that they are independent certified public accountants within the meaning of the Securities Act and that in their opinion the financial statements and other financial data of the Company included in the registration statement, the prospectus(es), or any amendment or supplement thereto, comply in all material respects with the applicable accounting requirements of the Securities Act;

 

(m)                             make senior executives of the Company reasonably available to assist the underwriters with respect to, and accompany the underwriters on, the so-called “road show” in connection with the marketing efforts for, and the distribution and sale of Registrable Securities pursuant to a registration statement; and

 

(n)                                 make generally available to its security holders an earnings statement of the Company that satisfies the provisions of Section 11(a) of the Securities Act covering a period of 12 months beginning after the effective date of such registration statement as soon as reasonably practicable after the termination of such 12-month period.

 

6.                                      Registration Expenses.

 

6.1                               Company’s Expenses.  Subject to the limitation in Section 2.2, all expenses incident to the Company’s performance of or compliance with this Agreement, including, but not limited to, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and expenses incurred in connection with any “road show,” and fees and disbursements of counsel

 

10

 

for the Company, reasonable fees and disbursements of one counsel chosen by the holders of at least a majority of the Registrable Securities included in such registration to represent all holders of Registrable Securities included in any registration and all independent certified public accountants, underwriters (excluding underwriting discounts and selling commissions) and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), will be borne by the Company.  In addition, the Company will pay its internal expenses (including, but not limited to, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance obtained by the Company and the expenses and fees for listing the securities to be registered on each securities exchange; provided, however, that if a request for Demand Registration is subsequently withdrawn at the request of at least a majority of the holders of Registrable Securities requested to be registered, the holders of Registrable Securities who have withdrawn such request for Demand Registration shall forfeit such Demand Registration unless the holders of Registrable Securities to be registered pay (or reimburse the Company) for all of the Registration Expenses with respect to such withdrawn registration; provided, further, that if at the time of such withdrawal, the holders (A) have learned of a material adverse change in the condition, business or prospects of the Company that was not known to the holders at the time of their request and (B) have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the holders shall not be required to pay any of such Registration Expenses and shall not forfeit their Demand Registration.

 

6.2                               Holder’s Expenses. To the extent that any expenses incident to any registration are not required to be paid by the Company, each holder of Registrable Securities included in a registration will pay all such expenses which are clearly and solely attributable to the registration of such holder’s Registrable Securities so included in such registration, and any other expenses not so attributable to one holder will be borne and paid by all sellers of securities included in such registration in proportion to the number of securities so included by each such seller.

 

7.                                      Indemnification.

 

7.1                               By the Company.  The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its members, managers, officers, employees and directors and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including, but not limited to, attorneys’ fees and expenses) caused by any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same.  In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of

 

11

 

Registrable Securities.  The payments required by this Section 7.1 will be made periodically during the course of the investigation or defense, as and when bills are received or expenses incurred.  Notwithstanding anything to the contrary contained herein, the indemnity agreement contained in this Section 7.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any holder of Registrable Securities, underwriter or controlling Person for any such loss, claim, damage, liability, expenses or action to the extent that it arises out of or is based upon an untrue statement or omission that is contained in or omitted from any information so furnished in writing by such holder, underwriter or controlling Person for the acknowledged purpose of inclusion in such registration statement, prospectus or preliminary prospectus.

 

7.2                               By Each Holder of Registrable Securities.  In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information as is reasonably necessary for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify the Company, its members, managers, directors, employees and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in or omitted from any information so furnished in writing by such holder for the acknowledged purpose of inclusion in such registration statement, prospectus or preliminary prospectus; provided, that the obligation to indemnify will be several, not joint and several, among such holders of Registrable Securities and the liability of each such holder of Registrable Securities will be in proportion to and limited in all events to the gross proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement, except in the case of willful fraud.  Notwithstanding anything to the contrary contained herein, the indemnity agreement contained in this Section 7.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the relevant holder of Registrable Securities (which consent shall not be unreasonably withheld).

 

7.3                               Procedure.  Each party entitled to indemnification under this Section 7 (the “Indemnified Party”) shall give written notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has received written notice of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided such counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld or delayed).  The Indemnified Party may participate in such defense at such Indemnified Party’s expense; provided, however, that the Indemnifying Party shall bear the expense of such defense of the Indemnified Party if (i) the Indemnifying Party has agreed in writing to pay such expenses, (ii) the Indemnifying Party shall have failed to assume the defense of such claim or employ counsel reasonably satisfactory to the Indemnified Party, or (iii) in the reasonable judgment of the Indemnified Party, based upon the written advice of such Indemnified Party’s counsel,

 

12

 

representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest; provided, however, that in no event shall the Indemnifying Party be liable for the fees and expenses of more than one counsel (excluding one local counsel per jurisdiction as necessary) for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same event, allegations or circumstances.  The Indemnified Party shall not make any settlement without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.  The failure of any Indemnified Party to give notice as provided herein shall relieve the Indemnifying Party of its obligations under this Section 7 only to the extent that such failure to give notice shall materially adversely prejudice the Indemnifying Party in the defense of any such claim or any such litigation.  No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the prior written consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement (A) which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation in form and substance reasonably satisfactory to such Indemnified Party or (B) which includes an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Party.

 

7.4                               Survival.  The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party or any officer, director or controlling Person of such Indemnified Party and will survive the transfer of securities.

 

8.                                      Contribution.

 

8.1                               Contribution.  If the indemnification provided for in Section 7 from the Indemnifying Party is unavailable to or unenforceable by the Indemnified Party in respect to any costs, fines, penalties, losses, claims, damages, liabilities or expenses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such costs, fines, penalties, losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.  The amount paid or payable by a party as a result of the costs, fines, penalties, losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding.  For the avoidance of doubt and notwithstanding anything to the contrary contained herein, in no event shall any contribution by a holder of Registrable Securities under this Section 8.1 exceed the gross proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement, except in the case of willful fraud.

 

13

 

8.2                               Equitable Considerations; Etc.  The Company and the holders of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

9.                                      Compliance with Rule 144 and Rule 144A.  In the event that the Company (a) registers a class of securities under Section 12 of the Exchange Act, (b) issues an offering circular meeting the requirements of Regulation A under the Securities Act or (c) commences to file reports under Section 13 or 15(d) of the Exchange Act, then at the request of any holder of Registrable Securities who proposes to sell securities in compliance with Rule 144 of the Securities Act, the Company will (i) forthwith furnish to such holder a written statement of compliance with the filing requirements of the Commission as set forth in Rule 144, as such rule may be amended from time to time and (ii) make available to the public and such holders such information, and take such action as is reasonably necessary, to enable the holders of Registrable Securities to make sales pursuant to Rule 144.  Unless the Company is subject to Section 13 or 15(d) of the Exchange Act, the Company will provide to the holder of Registrable Securities and to any prospective purchaser of Registrable Securities under Rule 144A of the Commission, the information described in Rule 144A(d)(4) of the Commission.

 

10.                               Participation in Underwritten Registrations.  No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell its securities on the basis provided in any underwriting arrangements approved by such Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

11.                               Delay of Registration.  No holder of Registrable Securities shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration as a result of any controversy that might arise with respect to the interpretation or implementation of this Agreement.

 

12.                               Assignment of Registration Rights.  The rights to cause the Company to register Registrable Securities pursuant to this Agreement may be assigned (but only with all related obligations) by a holder of Registrable Securities to a transferee or assignee (a) that is a subsidiary, parent, partner, limited partner, retired partner, member, retired member or stockholder of a holder of Registrable Securities, (b) that is an affiliated fund or entity of the holder of Registrable Securities, which means with respect to a limited liability company or a limited liability partnership, a fund or entity managed by the same manager or managing member or general partner or management company or by an entity controlling, controlled by, or under common control with such manager or managing member or general partner or management company (such a fund or entity, an “Affiliated Fund”), (c) who is an Immediate Family Member of a holder of Registrable Securities, or (d) that is a trust for the benefit of an individual holder of Registrable Securities or such holder’s Immediate Family Member; provided, that the Company is, within a reasonable time after such transfer, furnished with a written notice of the name and

 

14

 

address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and provided, further, that such assignment shall be effective only if the transferee agrees to be bound by this Agreement and immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act.

 

13.                               Termination of Registration Rights.  No holder of Registrable Securities shall be entitled to exercise any registration rights provided in this Agreement after the earlier of (a) three (3) years following the consummation of a Qualified IPO, or (b) such time as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such holder’s shares of the Company’s equity securities during a three-month period without registration.

 

14.                               Miscellaneous.

 

14.1                        Limitations on Subsequent Registration Rights.  The Company has not entered, and will not hereafter enter, into any agreement with respect to its securities which is inconsistent with the rights granted to and associated obligations of the holders of Registrable Securities in this Agreement.

 

14.2                        Adjustments Affecting Registrable Securities.  The Company will not take any action, or permit any change to occur, with respect to its Certificate of Incorporation, Bylaws, or other governing documents, as appropriate, which could reasonably be expected to adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would reasonably be expected to adversely affect the marketability of such Registrable Securities in any such registration.

 

14.3                        Amendments and Waivers.  Except as otherwise expressly provided herein, the provisions of this Agreement may be amended or waived at any time only by the written agreement of the Company and Stockholders holding at least 70% of the Registrable Securities; provided, however, that the provisions of this Agreement may not be amended or waived without the consent of Stockholders holding all the Registrable Securities adversely affected by such amendment or waiver if such amendment or waiver adversely affects a portion of the Registrable Securities but does not so adversely affect all of the Registrable Securities.  Any waiver, permit, consent or approval of any kind or character on the part of any such holders of any provision or condition of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in writing.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of Registrable Securities and the Company.  Notwithstanding the foregoing, the written consent of Novo A/S shall be required to amend or waive observance of (either generally or in a particular instance and either retroactively or prospectively) Section 7.2.

 

14.4                        Successors and Assigns.  Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors and assigns of the parties hereto, whether so expressed or not.  In addition, and whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of holders of Registrable

 

15

 

Securities are also for the benefit of, and enforceable by, any permitted transferee or assignee of such Registrable Securities as provided for in Section 12 hereof and Section 7 of the Stockholders’ Agreement.

 

14.5                        Descriptive Headings.  The descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute a part of and shall not be utilized in interpreting this Agreement.

 

14.6                        Notices.  Any notices required or permitted to be sent hereunder shall be delivered personally, via facsimile transmission (with confirmation), or mailed, via certified mail (return receipt requested), or delivered by overnight courier service to the following addresses, or such other address as any party hereto designates by written notice to the Company, and shall be deemed to have been given upon delivery, if delivered personally or via facsimile, three (3) Business Days after mailing, if mailed, or one (1) Business Day after delivery to the courier, if delivered by overnight courier service:

 

if to the Company to:

 

Nevro Corp.
  4040 Campbell Avenue, Suite 210

Menlo Park, California 94025

Attention: Chief Executive Officer
 Telecopy:    (650) 251-0005

 

with copies sent concurrently to:

 

Latham & Watkins LLP
 140 Scott Drive
 Menlo Park, California 94025
 Attention: Michael W. Hall, Esq.
 Telecopy: (650) 463-2600

 

if to any holder of Registrable Securities:

 

to the address of such holder as the same appears on Exhibit A hereto (with copies to any parties identified thereon) or, otherwise on the books and records of the Company.

 

14.7                        GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).

 

14.8                        Disputed Matters.  Except as otherwise provided in this Agreement, any controversy or dispute arising out of this Agreement, interpretation of any of the provisions hereof, or the action of any Stockholder hereunder shall be submitted to arbitration in San Francisco, California before the American Arbitration Association under the commercial

 

16

 

arbitration rules then obtaining of said Association.  Any award or decision obtained from any such arbitration proceeding shall be final and binding on the parties, and judgment upon any award thus obtained may be entered in any court having jurisdiction thereof.  No action at law or in equity based upon any claim arising out of or related to this Agreement shall be instituted in any court by any Stockholder except (i) an action to compel arbitration pursuant to this Section 14.8 or (ii) an action to enforce an award obtained in an arbitration proceeding in accordance with this Section 14.8, in which case, the provisions of Sections 14.9 and 14.10 shall apply.  For the avoidance of doubt, the provisions of Sections 14.9 and 14.10 shall be subordinate to and shall only apply in connection with an action at law or in equity based upon clauses (i) and/or (ii) of the immediately preceding sentence of this Section 14.8.

 

14.9                        CONSENT TO JURISDICTION.  EACH PARTY HERETO HEREBY IRREVOCABLY AGREES THAT ANY SUIT, ACTION, PROCEEDING OR CLAIM AGAINST IT ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS, OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT THEREOF, MAY BE BROUGHT OR ENFORCED IN THE STATE OR FEDERAL COURTS LOCATED IN SAN FRANCISCO, CALIFORNIA, AND EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY PROCEEDING BROUGHT IN SAN FRANCISCO, CALIFORNIA AND FURTHER IRREVOCABLY WAIVES ANY CLAIMS THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

14.10                 WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT, POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR UNDER OR IN CONNECTION WITH ANY AMENDMENT, INSTRUMENT, DOCUMENT, OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, AND AGREE THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  THE TERMS AND PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

 

14.11                 Reproduction of Documents.  This Agreement and all documents relating hereto, including, but not limited to, (i) consents, waivers, amendments and modifications which may hereafter be executed, and (ii) certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, optical disk, micro-card, miniature photographic or other similar process.  The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

 

17

 

14.12                 Remedies.  Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in its favor.  The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party shall be entitled to immediate injunctive relief or specific performance without bond or the necessity of showing actual monetary damages in order to enforce or prevent any violations of the provisions of this Agreement.

 

14.13                 Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

 

14.14                 Entire Agreement.  This Agreement, together with all other agreements entered into by the parties hereto in connection therewith, constitutes the complete and final agreement of the parties concerning the matters referred to herein, and supersedes all prior agreements and understandings.

 

14.15                 Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

 

18

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
NEVRO   CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael DeMane
    
	
 
    	
 
    	
Name:   
    	
Michael   DeMane
    
	
 
    	
 
    	
Title:   
    	
Chief   Executive Officer
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
NOVO   A/S
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kim Dueholm
    
	
 
    	
 
    	
Name:   
    	
Kim   Dueholm
    
	
 
    	
 
    	
Title:   
    	
Partner
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
Tuborg   Havnevej 19
    
	
 
    	
 
    	
DK   2900 Hellerup
    
	
 
    	
 
    	
Denmark
    
					

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
JOHNSON &   JOHNSON DEVELOPMENT
    
	
 
    	
CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brad Vale
    
	
 
    	
 
    	
Name:   
    	
Brad   Vale
    
	
 
    	
 
    	
Title:   
    	
Vice   President
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
BAY   CITY CAPITAL FUND IV, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
Bay   City Capital Management IV LLC
    
	
 
    	
Its:   
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
Bay   City Capital LLC
    
	
 
    	
Its:   
    	
Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Carl Goldfisher
    
	
 
    	
 
    	
 
    	
Name:   Carl Goldfisher
    
	
 
    	
 
    	
 
    	
Title:   Manager and Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BAY   CITY CAPITAL FUND IV
    
	
 
    	
CO-INVESTMENT   FUND, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
Bay   City Capital Management IV LLC
    
	
 
    	
Its:   
    	
General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
Bay   City Capital LLC
    
	
 
    	
Its:   
    	
Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Carl Goldfisher
    
	
 
    	
 
    	
 
    	
Name:   Carl Goldfisher
    
	
 
    	
 
    	
 
    	
Title:   Manager and Managing Director
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
ABERDARE   VENTURES III, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
Aberdare GP III, LLC
    
	
 
    	
Its: 
    	
General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By: 
    	
/s/ John H. Odden
    
	
 
    	
 
    	
 
    	
Name: John H. Odden
    
	
 
    	
 
    	
 
    	
Title: Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ABERDARE   PARTNERS III, LP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
Aberdare GP III, LLC
    
	
 
    	
Its: 
    	
General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By: 
    	
/s/ John H. Odden
    
	
 
    	
 
    	
 
    	
Name: John H. Odden
    
	
 
    	
 
    	
 
    	
Title: Manager
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
THREE   ARCH PARTNERS IV, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Three Arch Management IV, L.L.C.
    
	
 
    	
Its:   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Wilfred Jaeger
    
	
 
    	
 
    	
 
    	
Name:
    	
Wilfred   Jaeger
    
	
 
    	
 
    	
 
    	
Title:   Managing Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THREE   ARCH ASSOCIATES IV, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Three Arch Management IV, L.L.C.
    
	
 
    	
Its:   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Wilfred Jaeger
    
	
 
    	
 
    	
 
    	
Name:
    	
Wilfred   Jaeger
    
	
 
    	
 
    	
 
    	
Title:   Managing Member
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
MPM BIOVENTURES IV-QP, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
MPM   BioVentures IV GP LLC
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
MPM   BioVentures IV LLC
    
	
 
    	
Its:
    	
Managing   Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Scopa
    
	
 
    	
Name:
    	
James   P. Scopa
    
	
 
    	
Title:   Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MPM   BIOVENTURES IV GMBH & CO. BETEILIGUNGS KG
    
	
 
    	
 
    
	
 
    	
By:
    	
MPM   BioVentures IV GP LLC
    
	
 
    	
Its:
    	
Managing   Limited Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
MPM   BioVentures IV LLC
    
	
 
    	
Its:
    	
Managing   Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Scopa
    
	
 
    	
Name:   
    	
James   P. Scopa
    
	
 
    	
Title:   Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MPM   ASSET MANAGEMENT INVESTORS BV4 LLC
    
	
 
    	
By:
    	
MPM   BioVentures IV LLC
    
	
 
    	
Its:
    	
Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Scopa
    
	
 
    	
Name:
    	
James   P. Scopa
    
	
 
    	
Title:   Member
    
				

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
MAYO   FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James A. Rogers III
    
	
 
    	
 
    	
Name:   James A. Rogers III
    
	
 
    	
 
    	
Title:   Chairman
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MAYO   CLINIC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James A. Rogers III
    
	
 
    	
 
    	
Name:   James A. Rogers III
    
	
 
    	
 
    	
Title:   Chairman
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
AMV   PARTNERS II, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Accuitive Medical Ventures II, LLC
    
	
 
    	
Its:  General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles Larsen
    
	
 
    	
 
    	
Name:   Charles Larsen
    
	
 
    	
 
    	
Title:   Managing Director
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
/s/   Mark B. Knudson
    
	
 
    	
MARK   B. KNUDSON
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MARK   B. KNUDSON REVOCABLE TRUST U/A DTD 4/18/2003
    
	
 
    	
 
    
	
 
    	
By:  Mark B. Knudson, Trustee
    
	
 
    	
 
    
	
 
    	
/s/   Mark B. Knudson
    
	
 
    	
Name:
    	
Mark   B. Knudson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
Dorsey &   Whitney Trust Company LLC, Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Troy Steinbeck
    
	
 
    	
Name:   Troy Steinbeck
    
	
 
    	
Title:    Chief Investment Officer
    
				

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
SUSAN   J. KNUDSON REVOCABLE TRUST U/A DTD 4/18/2003
    
	
 
    	
 
    
	
 
    	
By:  Susan J. Knudson, Trustee
    
	
 
    	
 
    
	
 
    	
/s/   Susan J. Knudson
    
	
 
    	
Name:   Susan J. Knudson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:  Dorsey & Whitney Trust Company   LLC, Trustee
    
	
 
    	
 
    
	
 
    	
/s/   Troy Steinbeck
    
	
 
    	
Name:   Troy Steinbeck
    
	
 
    	
Title:    Chief Investment Officer
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

	
 
    	
/s/   Sarah Brenzel Conrad
    
	
 
    	
SARAH   BRENZEL CONRAD
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

	
 
    	
/s/   Konstantinos Alataris
    
	
 
    	
KONSTANTINOS   ALATARIS
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

	
 
    	
/s/   Michael DeMane
    
	
 
    	
MICHAEL   DEMANE
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

 

	
 
    	
/s/   Robert S. Nickoloff
    
	
 
    	
ROBERT   S. NICKOLOFF
    

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the party below has executed this Agreement as of March     , 2013.

 

	
 
    	
NEA   VENTURES 2013, LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Louis S. Citron
    
	
 
    	
 
    	
Name:   Louis S. Citron
    
	
 
    	
 
    	
Title:   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NEW   ENTERPRISE ASSOCIATES 14, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:  NEA Partners 14, L.P.
    
	
 
    	
By:  NEA 14 GP, LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Louis S. Citron
    
	
 
    	
 
    	
Name:   Louis S. Citron
    
	
 
    	
 
    	
Title:   Chief Legal Officer
    
					

 

SIGNATURE PAGE TO NEVRO CORP.

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the party below has executed this Agreement as of March     , 2013.

 

	
 
    	
COVIDIEN   GROUP S.A.R.L.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michaelanglo Federico Stefani
    
	
 
    	
 
    	
Name:   Michaelanglo Federico Stefani
    
	
 
    	
 
    	
Title:   General Manager
    

 

 

EXHIBIT A

 

STOCKHOLDERS

 

	
Name/Address:
    	
 
    	
No. of Shares
   of
   Common
   Stock
    	
 
    	
No. of Shares of
   Series A
   Preferred Stock
    	
 
    	
No. of Shares of
   Series B
   Preferred Stock
    	
 
    	
No. of Shares of
   Series C
   Preferred Stock
    	
 
    
	
Novo   A/S
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
43,196,544
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Johnson &   Johnson Development Corporation

Attn: Brad Vale
    6500 Paseo Padre Dr.
    Fremont, CA 94555

 

With a Copy to:
    Attn: Jayne Zall
    Assistant General Counsel
    One Johnson & Johnson Plaza
    New Brunswick, NJ 08933
    	
 
    	
—
    	
 
    	
—
    	
 
    	
66,964,285
    	
 
    	
5,923,871
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bay City Capital Fund IV, L.P.
    Attention: Carl Goldfischer
   750 Battery Street
   Suite 400
   San Francisco, CA 94111
    	
 
    	
562,868
    	
 
    	
30,548,195
    	
 
    	
16,387,835
    	
 
    	
4,591,539
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bay   City Capital Fund IV Co-Investment Fund, L.P.

Attention: Carl Goldfischer
   750 Battery Street
   Suite 400
   San Francisco, CA 94111
    	
 
    	
12,132
    	
 
    	
658,461
    	
 
    	
353,236
    	
 
    	
98,970
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Three Arch Partners IV, L.P.
    Attention: Bill Harrington
   3200 Alpine Road
   Portola Valley, CA 94028
    	
 
    	
97,840
    	
 
    	
30,532,495
    	
 
    	
16,379,412
    	
 
    	
4,897,841
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Three Arch Associates IV, L.P.
    Attention: Bill Harrington
   3200 Alpine Road
   Portola Valley, CA 94028
    	
 
    	
2,160
    	
 
    	
674,161
    	
 
    	
361,659
    	
 
    	
108,145
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Mayo   Foundation for Medical Education and Research

Attn: Jeffrey Torborg
    	
 
    	
1,000,000
    	
 
    	
2,747,252
    	
 
    	
—
    	
 
    	
—
    	
 
    

 

 

	
Name/Address:
    	
 
    	
No. of Shares
   of
   Common
   Stock
    	
 
    	
No. of Shares of
   Series A
   Preferred Stock
    	
 
    	
No. of Shares of
   Series B
   Preferred Stock
    	
 
    	
No. of Shares of
   Series C
   Preferred Stock
    	
 
    
	
200 1st Street SW
   Rochester, MN 55905
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Mayo Clinic
    Attn: Jeffrey Torborg
   200 1st Street SW
   Rochester, MN 55905
    	
 
    	
—
    	
 
    	
2,747,252
    	
 
    	
1,116,071
    	
 
    	
621,875
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MPM   BioVentures IV GmBH & Co. Beteiligungs KG  

c/o MPM Capital
   The John Hancock Tower
   200 Clarendon Street, 54th Floor
   Boston, MA 02116
    	
 
    	
—
    	
 
    	
346,711
    	
 
    	
185,995
    	
 
    	
62,389
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MPM   BioVentures IV-QP, L.P.
    c/o MPM Capital
   The John Hancock Tower
   200 Clarendon Street, 54th Floor
   Boston, MA 02116
    	
 
    	
—
    	
 
    	
8,999,431
    	
 
    	
4,827,821
    	
 
    	
1,619,423
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MPM   Asset Management Investors BV4 LLC

c/o MPM Capital
   The John Hancock Tower
   200 Clarendon Street, 54th Floor
   Boston, MA 02116
    	
 
    	
—
    	
 
    	
255,904
    	
 
    	
137,282
    	
 
    	
46,049
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Konstantinos Alataris
    411 Acacia Avenue
    Palo Alto, CA 94306
    	
 
    	
12,151,745*
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Michael Masterson
    750 Battery Street
   Suite 400
   San Francisco, CA 94111
    	
 
    	
70,939
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Aberdare Ventures III, L.P.
    Attention: Paul Klingenstein
   Aberdare Ventures
   One Embarcadero Center
   Suite 4000
   San Francisco, CA 94111
    	
 
    	
—
    	
 
    	
26,972,070
    	
 
    	
10,904,468
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Aberdare Partners III, L.P.
    Attention: Paul Klingenstein
   Aberdare Ventures
   One Embarcadero Center
   Suite 4000

    	
 
    	
—
    	
 
    	
633,817
    	
 
    	
256,246
    	
 
    	
—
    	
 
    

 

 

	
Name/Address:
    	
 
    	
No. of Shares
   of
   Common
   Stock
    	
 
    	
No. of Shares of
   Series A
   Preferred Stock
    	
 
    	
No. of Shares of
   Series B
   Preferred Stock
    	
 
    	
No. of Shares of
   Series C
   Preferred Stock
    	
 
    
	
San Francisco, CA 94111
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
AMV Partners II, L.P.
    Attention: John Deedrick
   Accuitive Medical Ventures
   3652 Hermann Court NE
   Rochester, MN 55906
    	
 
    	
—
    	
 
    	
24,005,120
    	
 
    	
12,877,747
    	
 
    	
3,565,327
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Mark B. Knudson
    c/o EnteroMedics
   2800 Patton Road
    St. Paul, MN 55113
    	
 
    	
—
    	
 
    	
206,043
    	
 
    	
—
    	
 
    	
17,029
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Mark   B. Knudson Revocable Trust

Mark B. Knudson, Trustee
   Dorsey & Whitney Trust
   Company, LLC, Trustee
   c/o EnteroMedics
   2800 Patton Road
   St. Paul, MN 55113
    	
 
    	
400,000
    	
 
    	
139,389
    	
 
    	
—
    	
 
    	
11,520
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Susan   J. Knudson Revocable Trust

Susan J. Knudson, -Trustee
   Dorsey & Whitney Trust
   Company, LLC, Trustee
   c/o EnteroMedics
   2800 Patton Road
   St. Paul, MN 55113
    	
 
    	
—
    	
 
    	
138,325
    	
 
    	
—
    	
 
    	
11,433
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sarah Brenzel Conrad
    12557 Riverview Road
   Eden Prairie, MN 55347
    	
 
    	
290,000
    	
 
    	
144,972
    	
 
    	
61,988
    	
 
    	
17,105
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Adrianus P. Donders
    15089 Crane Street
   Andover, MN 55304
    	
 
    	
250,000
    	
 
    	
139,389
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Robert   S. Nickoloff
    	
 
    	
100,000
    	
 
    	
69,644
    	
 
    	
—
    	
 
    	
5,756
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
James   R. Thacker and Kate Ward Thacker

4529 Thunder Ridge
   Eureka, MO 63025
    	
 
    	
141,872
    	
 
    	
549,450
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Michael DeMane
    c/o Nevro Corp.
    	
 
    	
13,403,954
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    

 

 

	
Name/Address:
    	
 
    	
No. of Shares
   of
   Common
   Stock
    	
 
    	
No. of Shares of
   Series A
   Preferred Stock
    	
 
    	
No. of Shares of
   Series B
   Preferred Stock
    	
 
    	
No. of Shares of
   Series C
   Preferred Stock
    	
 
    
	
4040 Campbell Avenue #210
   Menlo Park, California 94025
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Andrew Galligan
    c/o Nevro Corp.
 4040 Campbell Avenue #210
   Menlo Park, California 94025
    	
 
    	
3,639,843**
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Andre Walker
    c/o Nevro Corp.
 4040 Campbell Avenue #210
   Menlo Park, California 94025
    	
 
    	
4,136,186**
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    

 

*  Includes options to purchase 10,926,742 shares of Common Stock

 

**   Options to purchase Common Stock

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00236-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00236-of-00352.parquet"}]]