Document:

Exhibit 10.3

	
 
    	
 
    	
 
    

 

CREDIT AGREEMENT

 

dated as of

 

August 6, 2014,

 

among

 

RIGHTSIDE GROUP, LTD.,

 

UNITED TLD HOLDCO LTD.,

 

THE LENDERS PARTY HERETO

 

and

 

OBSIDIAN AGENCY SERVICES, INC.,

as Administrative Agent and Collateral Agent

	
 
    	
 
    	
 
    

 

 

Table of Contents

 

	
 
    	
Page
    
	
 
    
	
ARTICLE I
    
	
 
    
	
DEFINITIONS
    
	
 
    
	
Section 1.01.
    	
Defined   Terms
    	
1
    
	
Section 1.02.
    	
Terms   Generally
    	
26
    
	
Section 1.03.
    	
Independence   of Covenants
    	
27
    
	
Section 1.04.
    	
Construction
    	
27
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
THE CREDITS
    
	
 
    
	
Section 2.01.
    	
Commitments
    	
27
    
	
Section 2.02.
    	
Loans;   Notice of Borrowing
    	
28
    
	
Section 2.03.
    	
Disbursement   of Funds
    	
28
    
	
Section 2.04.
    	
Evidence   of Debt; Repayment of Loans
    	
29
    
	
Section 2.05.
    	
Fees
    	
29
    
	
Section 2.06.
    	
Interest   on Loans
    	
30
    
	
Section 2.07.
    	
Default   Interest
    	
30
    
	
Section 2.08.
    	
Termination   of Commitments
    	
30
    
	
Section 2.09.
    	
Repayment   of Loans
    	
30
    
	
Section 2.10.
    	
Optional   Prepayment
    	
30
    
	
Section 2.11.
    	
Mandatory   Prepayments
    	
31
    
	
Section 2.12.
    	
Reserve   Requirements; Change in Circumstances
    	
34
    
	
Section 2.13.
    	
Indemnity
    	
35
    
	
Section 2.14.
    	
Pro   Rata Treatment
    	
35
    
	
Section 2.15.
    	
Ratable   Sharing
    	
35
    
	
Section 2.16.
    	
Payments
    	
36
    
	
Section 2.17.
    	
Taxes
    	
36
    
	
Section 2.18.
    	
Assignment   of Loans Under Certain Circumstances; Duty to Mitigate
    	
39
    
	
Section 2.19.
    	
[Reserved]
    	
40
    
	
Section 2.20.
    	
Obsidian   Agency Services as Administrative Agent
    	
40
    
	
Section 2.21.
    	
Original   Issue Discount
    	
40
    
	
Section 2.22.
    	
Investment   Unit
    	
41
    
	
Section 2.23.
    	
Special Provisions Relating to Collateral
    	
41
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
REPRESENTATIONS AND   WARRANTIES
    
	
 
    
	
Section 3.01.
    	
Organization;   Powers
    	
41
    
	
Section 3.02.
    	
Authorization
    	
41
    
	
Section 3.03.
    	
Enforceability
    	
42
    
	
Section 3.04.
    	
Governmental   Approvals
    	
42
    
	
Section 3.05.
    	
Financial   Statements
    	
42
    
	
Section 3.06.
    	
Title   to Properties; Possession Under Leases
    	
43
    
	
Section 3.07.
    	
Subsidiaries
    	
43
    
	
Section 3.08.
    	
Litigation;   Compliance with Laws
    	
44
    

 

i

 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 3.09.
    	
Contractual   Obligations
    	
45
    
	
Section 3.10.
    	
Federal   Reserve Regulations
    	
45
    
	
Section 3.11.
    	
Government   Regulation
    	
45
    
	
Section 3.12.
    	
Use   of Proceeds
    	
45
    
	
Section 3.13.
    	
Tax   Returns; Passive Foreign Investment Company; Controlled Foreign Corporation
    	
46
    
	
Section 3.14.
    	
No   Material Misstatements
    	
46
    
	
Section 3.15.
    	
Employee   Benefit Plans
    	
46
    
	
Section 3.16.
    	
Environmental   Matters
    	
47
    
	
Section 3.17.
    	
Insurance
    	
47
    
	
Section 3.18.
    	
Security   Documents
    	
47
    
	
Section 3.19.
    	
Location   of Real Property and Leased Premises
    	
48
    
	
Section 3.20.
    	
Labor   Matters
    	
48
    
	
Section 3.21.
    	
Solvency
    	
48
    
	
Section 3.22.
    	
Transaction   Documents; Revolving Loan Documents
    	
49
    
	
Section 3.23.
    	
Sanctioned   Persons
    	
49
    
	
Section 3.24.
    	
Financial   Advisors
    	
49
    
	
Section 3.25.
    	
Foreign   Assets Control Regulations, Etc.
    	
50
    
	
Section 3.26.
    	
Representations   and Warranties
    	
50
    
	
Section 3.27.
    	
Deposit   Accounts; Securities Accounts
    	
50
    
	
Section 3.28.
    	
Loans   to Officers and Directors
    	
50
    
	
Section 3.29.
    	
[Reserved]
    	
50
    
	
Section 3.30.
    	
Accounts   and Notes Receivable; Accounts and Notes Payable
    	
50
    
	
Section 3.31.
    	
Internal   Controls
    	
51
    
	
Section 3.32.
    	
Intellectual   Property; Copyright Matters
    	
51
    
	
Section 3.33.
    	
Change   of Control Provisions
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
CONDITIONS OF LENDING
    
	
 
    
	
Section 4.01.
    	
Conditions   Precedent to Closing
    	
52
    
	
Section 4.02.
    	
Post   Closing Obligations
    	
57
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    
	
AFFIRMATIVE COVENANTS
    
	
 
    
	
Section 5.01.
    	
Existence;   Compliance with Laws; Businesses and Properties
    	
59
    
	
Section 5.02.
    	
Insurance
    	
59
    
	
Section 5.03.
    	
Obligations   and Taxes
    	
60
    
	
Section 5.04.
    	
Financial   Statements, Reports, etc.
    	
61
    
	
Section 5.05.
    	
Litigation   and Other Notices
    	
63
    
	
Section 5.06.
    	
Information   Regarding Collateral
    	
63
    
	
Section 5.07.
    	
Maintaining   Records; Access to Properties and Inspections
    	
63
    
	
Section 5.08.
    	
Use   of Proceeds
    	
64
    
	
Section 5.09.
    	
Employee   Benefits
    	
64
    
	
Section 5.10.
    	
Compliance   with Environmental Laws
    	
64
    
	
Section 5.11.
    	
Preparation   of Environmental Reports
    	
64
    
	
Section 5.12.
    	
Further   Assurances
    	
64
    

 

ii

 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 5.13.
    	
Change   of Control Provisions
    	
66
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    
	
 
    
	
NEGATIVE COVENANTS
    
	
 
    
	
Section 6.01.
    	
Indebtedness
    	
66
    
	
Section 6.02.
    	
Liens
    	
68
    
	
Section 6.03.
    	
Sale   and Lease-Back Transactions
    	
71
    
	
Section 6.04.
    	
Investments
    	
71
    
	
Section 6.05.
    	
Acquisitions,   Consolidations, Dispositions of Assets and Acquisitions
    	
72
    
	
Section 6.06.
    	
Restricted   Payments; Restrictive Agreements
    	
74
    
	
Section 6.07.
    	
Transactions   with Affiliates
    	
75
    
	
Section 6.08.
    	
Business   of Borrowers and Subsidiaries
    	
75
    
	
Section 6.09.
    	
Other   Indebtedness and Agreements, etc.
    	
75
    
	
Section 6.10.
    	
Capital   Expenditures
    	
75
    
	
Section 6.11.
    	
[Reserved]
    	
76
    
	
Section 6.12.
    	
Maximum   Consolidated Net Leverage Ratio
    	
76
    
	
Section 6.13.
    	
Minimum   Liquidity
    	
76
    
	
Section 6.14.
    	
Fiscal   Year
    	
76
    
	
Section 6.15.
    	
Certain   Equity Securities
    	
76
    
	
Section 6.16.
    	
Amendments   or Waivers of Documents Relating to Subordinated Indebtedness, Organizational   Documents and Equity Interests
    	
76
    
	
Section 6.17.
    	
Antilayering
    	
77
    
	
Section 6.18.
    	
[Reserved]
    	
77
    
	
Section 6.19.
    	
Wholly   Owned Subsidiaries
    	
77
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    
	
EVENTS OF DEFAULT
    
	
 
    
	
ARTICLE VIII
    
	
 
    
	
THE ADMINISTRATIVE AGENT   AND THE COLLATERAL AGENT
    
	
 
    
	
ARTICLE IX
    
	
 
    
	
MISCELLANEOUS
    
	
 
    
	
Section 9.01.
    	
Notices
    	
84
    
	
Section 9.02.
    	
Survival   of Agreement
    	
85
    
	
Section 9.03.
    	
Binding   Effect
    	
85
    
	
Section 9.04.
    	
Successors   and Assigns
    	
85
    
	
Section 9.05.
    	
Expenses;   Indemnity
    	
88
    
	
Section 9.06.
    	
Right   of Setoff
    	
90
    
	
Section 9.07.
    	
Applicable   Law
    	
90
    
	
Section 9.08.
    	
Waivers;   Amendment
    	
90
    
	
Section 9.09.
    	
Interest   Rate Limitation
    	
91
    
	
Section 9.10.
    	
Entire   Agreement
    	
91
    

 

iii

 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 9.11.
    	
WAIVER   OF JURY TRIAL
    	
91
    
	
Section 9.12.
    	
Severability
    	
91
    
	
Section 9.13.
    	
Counterparts
    	
92
    
	
Section 9.14.
    	
Headings
    	
92
    
	
Section 9.15.
    	
Jurisdiction;   Consent to Service of Process
    	
92
    
	
Section 9.16.
    	
Confidentiality
    	
92
    
	
Section 9.17.
    	
USA   PATRIOT Act Notice
    	
93
    
	
Section 9.18.
    	
Judgment   Currency
    	
93
    

 

iv

 

Table of Contents

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    
	
SCHEDULES
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Schedule 1.01(a)
    	
-
    	
Guarantors
    
	
Schedule 1.01(b)
    	
-
    	
Mortgaged Property
    
	
Schedule 2.01
    	
-
    	
Lenders and Commitments
    
	
Schedule 3.07
    	
-
    	
Subsidiaries
    
	
Schedule 3.07(f)
    	
 
    	
Immaterial Subsidiaries
    
	
Schedule 3.07(b)
    	
-
    	
Outstanding Subscriptions, Options, Warrants,   Calls, Commitments
    
	
Schedule 3.13(b)
    	
 
    	
Controlled Foreign Corporations
    
	
Schedule 3.16
    	
-
    	
Environmental Matters
    
	
Schedule 3.17
    	
-
    	
Insurance
    
	
Schedule 3.18(a)
    	
-
    	
UCC Filing Offices
    
	
Schedule 3.19(a)
    	
-
    	
Owned Real Property
    
	
Schedule 3.19(b)
    	
-
    	
Leased Real Property
    
	
Schedule 3.24
    	
-
    	
Financial Advisors
    
	
Schedule 3.25
    	
-
    	
Foreign Assets Control Regulations
    
	
Schedule 3.27
    	
-
    	
Deposit Accounts and Securities Accounts
    
	
Schedule 3.30(b)
    	
-
    	
Delinquent Accounts Payable and Notes Payable
    
	
Schedule 3.32(a)
    	
-
    	
Intellectual Property
    
	
Schedule 3.33
    	
-
    	
Change of Control Provisions
    
	
Schedule 6.01
    	
-
    	
Existing Indebtedness
    
	
Schedule 6.02
    	
-
    	
Existing Liens
    
	
Schedule 6.04
    	
-
    	
Existing Investments
    
	
Schedule 6.07
    	
-
    	
Affiliate Transactions
    
	
 
    	
 
    	
 
    
	
EXHIBITS
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
-
    	
Form of Notice of Borrowing
    
	
Exhibit B-1
    	
-
    	
Form of Term Note (U.S. Borrower)
    
	
Exhibit B-2
    	
-
    	
Form of Term Note (Cayman Borrower)
    
	
Exhibit C
    	
-
    	
[Reserved]
    
	
Exhibit D
    	
-
    	
Form of Administrative Questionnaire
    
	
Exhibit E
    	
-
    	
Form of Assignment and Acceptance
    
	
Exhibit F-1
    	
-
    	
Form of U.S. Guarantee and Collateral Agreement
    
	
Exhibit F-2
    	
-
    	
Form of Unconditional Guarantee   (Non-U.S. Entities)
    
	
Exhibit G
    	
-
    	
Form of Warrant
    
	
Exhibit H
    	
-
    	
Form of Warrant Agreement
    
	
Exhibit I
    	
-
    	
Form of Collateral Information   Certificate
    
					

 

v

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT is dated as of August 6, 2014 and entered into by and among RIGHTSIDE GROUP, LTD., a Delaware corporation (the “U.S. Borrower”), UNITED TLD HOLDCO, LTD., an exempted company limited by shares incorporated under the laws of the Cayman Islands (the “Cayman Borrower”, and together with the U.S. Borrower, the “Borrowers”), the Lenders (as defined in Article I), and OBSIDIAN AGENCY SERVICES, INC., as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent”) for the Lenders.

 

PRELIMINARY STATEMENT

 

The Borrowers desire that the Lenders extend term loans to the Borrowers in connection with the distribution by Demand Media Inc. (“Demand”) to its stockholders of all of the equity interests of the U.S. Borrower, a corporation formed to own and operate the other Loan Parties and their respective Subsidiaries, and certain transactions related thereto (the “Spin-off”) to finance, in part, the acquisition of new gTLDs (as defined below) and for working capital and other general corporate purposes.

 

The Lenders have agreed to extend such term loans to the Borrowers.

 

The Borrowers desire to secure all of their respective Obligations hereunder and under the other Loan Documents by granting to the Collateral Agent, for the benefit of the Secured Parties, a second priority Lien on all of its real, personal and mixed property, including a pledge of the Equity Interests of their respective Subsidiaries, as and to the extent provided herein and in the other Loan Documents.

 

All material Domestic Subsidiaries of the Borrowers have agreed to guarantee the Obligations hereunder and under the other Loan Documents and to secure their guaranties by granting to the Administrative Agent, for the benefit of the Secured Parties, a second priority Lien on substantially all of their respective real, personal and mixed property, including a pledge of the Equity Interests of their respective Subsidiaries, as and to the extent provided herein and in the other Loan Documents.

 

Certain material Foreign Subsidiaries of the Borrowers have agreed to guarantee the Cayman Obligations hereunder and under the other Loan Documents and to secure their guaranties by granting to the Administrative Agent, for the benefit of the Secured Parties, a second priority Lien on all of their respective real, personal and mixed property, including a pledge of all of the Equity Interests of their respective Subsidiaries, as and to the extent provided herein and in the other Loan Documents.

 

The Lenders are willing to extend such term loans to the Borrowers on the terms and subject to the conditions set forth herein.  Accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.                                   Defined Terms.

 

As used in this Agreement, the following terms shall have the meanings specified below:

 

“Administrative Agent” shall have the meaning assigned to such term in the Preamble.

 

 

“Administrative Questionnaire” shall mean an Administrative Questionnaire in the form of Exhibit D, or such other form as may be supplied from time to time by the Administrative Agent.

 

“Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, that, for purposes of Section 6.07, the term “Affiliate” shall also include any Person that directly or indirectly owns 10% or more of any class of Equity Interests of the Person specified or that is an officer or director of the Person specified.  Notwithstanding anything to the contrary set forth herein, neither the Agents nor any Person that is a Lender shall be deemed an Affiliate of any Loan Party for purposes of the Loan Documents.

 

“Agents” shall have the meaning assigned to such term in Article VIII.

 

“Agreement” shall mean this Credit Agreement.

 

“Alternate Base Rate” means, for any day, a fluctuating rate of interest per annum equal to the highest of:

 

(i)                                     the Prime Rate in effect on such day; and

 

(ii)                                  the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1.0% per annum; and

 

(iii)                               1.50%

 

Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.  Interest calculated pursuant to clause (i) above will be determined based on a year of 365 days or 366 days, as applicable and actual days elapsed.  Interest calculated pursuant to clauses (ii) and (iii) above will be determined based on a year of 360 days and actual days elapsed.

 

“Applicable Prepayment Premium” shall have the meaning assigned to such term in Section 2.10.

 

“Asset Sale” shall mean the Disposition by the Borrowers or any Subsidiary to any Person other than the Borrowers or any Guarantor of (i) any of the Equity Interests of the Borrowers or any of their Subsidiaries (excluding any sale of Equity Interests of the U.S. Borrower), (ii) substantially all of the assets of any division or line of business of the Borrowers or any of their Subsidiaries, or (iii) any other assets (whether tangible or intangible) of the Borrowers or any of their Subsidiaries (other than (a) inventory sold in the ordinary course of business, (b) Dispositions of accounts in the ordinary course of business for purposes of collection and (c) any such other assets to the extent that the aggregate value of such assets Disposed of (x) in any single transaction or related series of transactions is equal to $250,000 or less and (y) for all transactions or related series of transactions equal to $500,000 or less per fiscal year); provided, that for purposes of Section 2.11(b) and the definition of “Net Asset Sale Proceeds”, “Asset Sales” shall not include dispositions permitted under clauses (iii) and (v) through (xvii) of Section 6.05.

 

“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit E or such other form as shall be approved by the Administrative Agent.

 

2

 

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.

 

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

 

“Borrowers” shall have the meaning assigned to such term in the Preamble.

 

“Business Day” shall mean any day other than a Saturday, Sunday or day on which banks in New York, New York or Los Angeles, California are authorized or required by law to close.

 

“Capital Expenditures” shall mean, for any period, the additions to property, plant and equipment and other capital expenditures of the U.S. Borrower and its consolidated Subsidiaries that are (or should be) set forth in a consolidated statement of cash flows of the U.S. Borrower for such period prepared in accordance with GAAP, including acquisitions of gTLDs, which may be in the form of an acquisition of assets or of a Person, substantially all of the assets of which are domain names, domain name portfolios and top-level domain names; provided that Capital Expenditures shall not include any such expenditure made to restore, replace or rebuild property to the condition of such property immediately prior to any damage, loss, destruction or condemnation of such property, to the extent such expenditure is made with insurance proceeds, condemnation awards or damage recovery proceeds relating to any such damage, loss, destruction or condemnation.

 

“Capital Lease Obligations” of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Casualty Event” shall mean any event or occurrence described in clauses (i) and/or (ii) of the definition of “Net Insurance/Condemnation Proceeds”.

 

“Cayman Borrower” shall have the meaning assigned to such term in the preamble of the Agreement.

 

“Cayman Guarantors” shall mean, collectively, (i) on the Closing Date, each Foreign Subsidiary listed on Schedule 1.01(a), and thereafter each other Subsidiary that is or becomes a party to the U.S. Guarantee and Collateral Agreement or the Guarantee (Non-U.S. Entities), as applicable, or otherwise provides a Guarantee in respect of the Cayman Obligations, (ii) the U.S. Borrower and (iii) the U.S. Guarantors.

 

“Cayman Law Charge” shall mean the charge over the Cayman Borrower’s assets dated on or about the date of this Agreement, whereby the Cayman Borrower grants a security interests in its assets in favor of the Collateral Agent.

 

“Cayman Law Share Charge” shall mean the charge over shares dated on or about the date of this Agreement entered into between Lender and DMIH, an Irish limited liability company, in respect of DMIH’s shares in the Cayman Borrower.

 

“Cayman Loan Parties” shall mean the Cayman Borrower and Cayman Guarantors.

 

3

 

“Cayman Obligations” shall mean all obligations of every nature of each Cayman Loan Party in respect of the principal, interest (including, without limitation, any interest accruing after the commencement of any bankruptcy case or insolvency proceeding involving a Cayman Loan Party, whether or not such interest is an allowed claim in such case or proceeding) and premium on account of the Cayman Term Loan from time to time owed to Administrative Agent, Lenders or any of them under the Loan Documents, and fees, expenses, indemnification or amounts (other than principal, interest and premium in respect of the U.S. Term Loan) owed by any Cayman Loan Party to Administrative Agent, Lenders or any of them under the Loan Documents.

 

“Cayman Term Loan” shall mean the term loan made by the Lenders to the Cayman Borrower pursuant to Section 2.01(b).

 

“Cayman Term Loan Commitments” with respect to each Lender, the commitment of such Lender to make Cayman Term Loans hereunder as set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed its Cayman Term Loan Commitment, as applicable.  The initial aggregate amount of the Lenders’ Cayman Term Loan Commitments is $20,000,000.

 

“Certificated Security” shall have the meaning assigned to such term in Section 3.18(a).

 

“CFC” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Code.

 

“Change in Control” shall mean the occurrence of any of the following:

 

(i)                                     the U.S. Borrower shall cease to beneficially own and Control, directly or indirectly, 100% (other than directors’ qualifying shares required by law) on a fully-diluted basis of the issued and outstanding Equity Interests of (a) DMIH, (b) the Cayman Borrower or (c) any other Loan Party (other than the U.S. Borrower);

 

(ii)                                  the direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Borrowers and the Subsidiaries, taken as a whole, to any Person;

 

(iii)                               during any period of 18 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the U.S. Borrower cease to be composed of individuals (x) who were members of that board or equivalent governing body on the first day of such period, (y) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (x) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (z) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (x) and (y) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (y) and clause (z), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

 

(iv)                              the occurrence of any “change of control” (or similar event, howsoever denominated) under the definitive documentation governing or evidencing any Material

 

4

 

Indebtedness, including the Revolving Loan Documents or any documents governing any Subordinated Indebtedness; or

 

(v)                                 any Person acting in concert with one or more other Persons shall have acquired beneficial ownership, directly or indirectly, of Equity Interests of the U.S. Borrower (or other Equity Interests convertible into such Equity Interests) representing a majority of the combined voting power of all Equity Interests of the U.S. Borrower entitled to vote in the election of members of the Governing Body of the U.S. Borrower, other than Equity Interests having such power only by reason of the happening of a contingency.

 

As used herein, the term “beneficially own” or “beneficial ownership” shall have the meaning set forth in the Exchange Act and the rules and regulations promulgated thereunder

 

“Change in Law” shall mean (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.12, by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives issued thereunder or in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the day enacted, adopted, issued or implemented.

 

“Charges” shall have the meaning assigned to such term in Section 9.09.

 

“Closing Date” shall mean the date on which the initial Term Loans are made.

 

“Closing Date Projections” shall have the meaning assigned to such term in Section 4.01(e).

 

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” shall mean all the real, personal, and mixed property in which Liens are purported to be granted pursuant to the Security Documents, including all “Collateral” (as defined therein) and Mortgaged Properties (if any).

 

“Collateral Agent” shall have the meaning assigned to such term in the Preamble.

 

“Collateral Information Certificate” shall mean the Collateral Information Certificate to be executed and delivered by the U.S. Borrower pursuant to Section 4.01, substantially in the form of Exhibit I.

 

“Consolidated EBITDA” shall mean, for any period, with respect to the U.S. Borrower and all of its Subsidiaries on a consolidated basis, the sum, without duplication, of the amounts for such period of (i) Consolidated Net Income, plus (ii) the following to the extent deducted in the calculation of Consolidated Net Income: (a) Consolidated Interest Expense for such period, (b) the provision for federal, state, local and foreign income taxes payable by the Borrowers and their Subsidiaries for such period, (c) depreciation and amortization expense for such period, (d) any (1) non-cash impairment or loss of goodwill or other intangibles required to be taken pursuant to GAAP, (2) non-cash deferred compensation

 

5

 

expenses, (3) non-cash losses from sales of assets and other property, other than from sales in the ordinary course of business, (4) non-cash expense recorded with respect to stock-options or other equity-based compensation, (e) losses related to the voluntary withdrawal or other loss of an application for gTLD rights, (f) any losses during such period related to foreign currency exchanges, conversions and/or contracts, (g) one-time, non-recurring charges, costs and expenses not in excess of $3,500,000 incurred during such period in connection with the Transactions, the closing of the Term Loans and the Revolving Loan Agreement, and other acquisition or disposition transactions, whether or not consummated, (h) start-up costs and expenses incurred in connection with Borrowers’ initiative regarding investments in gTLDs permitted hereunder not in excess of $11,000,000 in the aggregate through September 30, 2014, (i) expenses associated with early extinguishment of Indebtedness, (j) severance costs paid during such period in connection with any reduction in force, (k) any extraordinary loss in accordance with GAAP, (l) any other non-cash charges or expenses for such period that do not represent a cash item in such period or any future period, and plus (iii) (a) any increase in deferred revenue from the previous period, and (b) any decrease in deferred registration costs from the previous period, but minus (iv) the following to the extent included in the calculation of Consolidated Net Income: (a) any gains during such period related to foreign currency exchanges, conversions and/or contracts, (b) gains related to the voluntary withdrawal of an application for gTLD rights, and (c) any non-recurring or other unusual item of gain, and minus (v) (a) any decrease in deferred revenue from the previous period, and (b) any increase in deferred registration costs from the previous period.  Consolidated EBITDA shall be calculated on a pro forma basis with respect to any period for which a Permitted Disposition or an acquisition that is permitted under Section 6.10 has occurred.  Notwithstanding the foregoing, Consolidated EBITDA shall be deemed to be (i) $24,836,000 for the fiscal quarter ended June 30, 2013, (ii) $22,840,000 for the fiscal quarter ended September 30, 2013, (iii) $18,912,000 for the fiscal quarter ended December 31, 2013 and (iv) $14,580,000 for the fiscal quarter ended March 31, 2014.

 

“Consolidated Funded Indebtedness” shall mean, as of any date of determination, for the U.S. Borrower and its consolidated Subsidiaries, the sum (without duplication) of (a) all Indebtedness of such Persons for borrowed money as at such date, including all current maturities and current sinking fund payments in respect of any such Indebtedness, whether or not required to be paid within one year from the date of its creation, plus (b) Indebtedness of such Persons in respect of the Revolving Loans and Term Loans.

 

“Consolidated Interest Expense” shall mean, for any period, total cash interest expense (including that attributable to Capital Lease Obligations) of the U.S. Borrower and its consolidated Subsidiaries for such period with respect to all outstanding Indebtedness of such Persons (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Interest Rate Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).

 

“Consolidated Net Income” shall mean, for any period, the net income (or loss) of the U.S. Borrower and its consolidated Subsidiaries, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Leverage Ratio” shall mean, on any date, the ratio of (a) an amount equal to (i) Consolidated Funded Indebtedness as of such date plus (ii) Indebtedness under letters of credit as of such date minus (iii) Excess Cash as of such date, to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently ended for which the U.S. Borrower has delivered financial statements.

 

“Consolidated Total Assets” shall mean, as of any date, the total assets of the U.S. Borrower and its Subsidiaries, determined in accordance with GAAP, as set forth on the most recently delivered consolidated financial statements of the U.S. Borrower and its Subsidiaries as of such date.

 

6

 

“Contingent Obligation”, as applied to any Person, shall mean any direct or indirect liability, contingent or otherwise, of that Person (i) with respect to any Indebtedness, lease, dividend or other obligation of another if the primary purpose or intent thereof by the Person incurring the Contingent Obligation is to provide assurance to the obligee of such obligation of another that such obligation of another will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, (ii) with respect to any acceptance, letter of credit or surety bond or similar facility issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings, or (iii) under Hedging Agreements.  Contingent Obligations shall include (a) the direct or indirect Guarantee, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another, (b) the obligation to make take or-pay or similar payments if required regardless of non-performance by any other party or parties to an agreement, and (c) any liability of such Person for the obligation of another through any agreement (contingent or otherwise) (1) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (2) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (1) or (2) of this sentence, the primary purpose or intent thereof is as described in the preceding sentence.  The amount of any liability in respect of a Hedging Agreement shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Hedging Agreement had terminated at the end of such fiscal quarter.  In making such determination, if any agreement relating to such Hedging Agreement provides for the netting of amounts payable by and to such Person thereunder or if such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined, in each case to the extent that such agreement is legally enforceable in Insolvency Proceedings against the applicable counterparty thereof.  The amount of any other Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if less, the amount to which such Contingent Obligation is specifically limited.

 

“Contractual Obligation” shall mean, as applied to any Person, any provision of any Equity Interest issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or subject.

 

“Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

 

“Control Agreement” shall mean an agreement, satisfactory in form and substance to the Collateral Agent and executed by the financial institution or securities intermediary at which a Deposit Account or a Securities Account, as the case may be, is maintained, pursuant to which such financial institution or securities intermediary confirms and acknowledges the Collateral Agent’s security interest in such account, and agrees that the financial institution or securities intermediary, as the case may be, will comply with instructions or entitlement orders, as applicable, originated by the Collateral Agent as to disposition of funds in such account, without further consent by the Borrowers or any Subsidiary.

 

“Copyright Act” shall mean Title 17 of the United States Code, including the Copyright Act of 1976, and all rules and regulations issued or promulgated thereunder, all as amended and in effect from time to time.

 

7

 

“Credit Facilities” shall mean the term loan facilities provided for by this Agreement.

 

“Cumulative Excess Cash Flow Amount” shall mean the aggregate amount equal to the sum of (i) the product of Excess Cash Flow from the Closing Date to the end of the fiscal year ended on December 31, 2014 and the ECF Percentage for such fiscal year and (ii) for each fiscal year thereafter, the product of Excess Cash Flow for such fiscal year and the ECF Percentage for such fiscal year, ending with the fiscal year most recently ended as of the date 90 days prior to the Revolving Loan Payoff Date.

 

“Current Assets” shall mean, as at any date of determination, the total assets of U.S. Borrower and its Subsidiaries on a consolidated basis which may properly be classified as current assets in conformity with GAAP at such time, excluding (i) cash and Permitted Investments and (ii) deferred income taxes.

 

“Current Liabilities” shall mean, at any time, the consolidated total liabilities of the U.S. Borrower and the Subsidiaries which may properly be classified as current liabilities in conformity with GAAP at such time, but excluding, without duplication, (a) the current portion of any long-term Indebtedness, and (b) outstanding Revolving Loans.

 

“Declined Proceeds” shall have the meaning assigned to such term in Section 2.11(h).

 

“Default” shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default.

 

“Deposit Account” shall mean a demand, time, savings, passbook or similar account maintained with a Person engaged in the business of banking, including savings bank, savings and loan association, credit union or trust of the Loan Parties or as otherwise defined in the UCC.

 

“Disclosure Letter” shall mean the disclosure letter, dated as of the date hereof, as amended or supplemented from time to time by the Borrowers with the written consent of the Administrative Agent (or as supplemented by the Borrowers pursuant to the terms of this Agreement), delivered by the Borrowers to the Administrative Agent.

 

“Disposition” shall mean with respect to any property, any sale, lease, sublease, sale and leaseback, assignment, conveyance, transfer, license or other disposition thereof.  The terms “Dispose” and “Disposed of” shall have correlative meanings.

 

“Disqualified Stock” shall mean any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, or requires the payment of any cash dividend or any other scheduled payment constituting a return of capital, in each case at any time on or prior to the date that is 90 days following the Maturity Date; or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interest referred to in clause (a) above, in each case at any time on or prior to the date that is 90 days following the Maturity Date.

 

“DMIH” shall mean DMIH Limited, a limited liability company organized under the laws of Ireland.

 

“Dollars” or “$” shall mean lawful money of the United States of America.

 

8

 

“Domains” shall mean Rightside Domains Europe Limited, a limited liability company organized under the laws of Ireland.

 

“Domestic Subsidiary” shall mean (a) any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia, other than a Wholly Owned Subsidiary of the U.S. Borrower that (i) has no significant assets other than Equity Interests in controlled foreign corporations within the meaning of Section 957 of the Code and with respect to which the U.S. Borrower is a “United States shareholder,” within the meaning of Section 951(b) of the Code and (ii) conducts no business other than holding such Equity Interests and (b) any Subsidiary that is treated as a disregarded entity under Treasury Regulations Section 301.7701-3 of a Subsidiary described in clause (a).

 

“ECF Percentage” shall mean fifty percent 50%.

 

“Eligible Assignee” shall mean (i) any Lender, any Affiliate of any Lender and any Related Fund of any Lender; and (ii) (a) a commercial bank organized under the laws of the United States or any state thereof; (b) a savings and loan association or savings bank organized under the laws of the United States or any state thereof; (c) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (1) such bank is acting through a branch or agency located in the United States or (2) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; and (d) any other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) that extends credit or buys loans as one of its businesses including insurance companies, mutual funds and lease financing companies; provided that neither the Borrowers nor any Affiliate of the Borrowers shall be an Eligible Assignee.

 

“Employee Benefit Plan” shall mean, at any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which the U.S. Borrower or any ERISA Affiliate maintains, contributes to or has an obligation to contribute.

 

“eNom” shall mean eNom, Incorporated, a Nevada corporation.

 

“Environmental Laws” shall mean all former, current and future Federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments, directives, orders (including consent orders), and agreements in each case, relating to protection of the environment, natural resources, human health and safety or the presence, Release of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, recycling or handling of, or the arrangement for such activities with respect to, Hazardous Materials.

 

“Environmental Liability” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, shares in the share capital of a company, beneficial interests in a trust or

 

9

 

other equity interests in any Person, and any option, warrant or other right entitling the holder thereof to purchase or otherwise acquire any such equity interest.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

 

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that, together with the U.S. Borrower, is, or was within the last six preceding plan years, treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is, or was within the last six preceding plan years, treated as a single employer under Section 414 of the Code.

 

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, (d) the incurrence by the U.S. Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of the U.S. Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan, (e) the receipt by the U.S. Borrower or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (f) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, (g) the receipt by the U.S. Borrower or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the U.S. Borrower or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA, (h) the occurrence of a “prohibited transaction” with respect to which the U.S. Borrower or any of the Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or with respect to which the U.S. Borrower or any such Subsidiary could otherwise incur a material liability, (i) the incurrence by the U.S. Borrower or any of its ERISA Affiliates of any liability pursuant to Section 4063 or 4064 of ERISA, (j) the imposition of liability on the U.S. Borrower or any of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA or (k) the imposition of a Lien on the U.S. Borrower pursuant to Section 430(k) of the Code or ERISA.

 

“Euro” shall mean the single currency of the Participating Member States.

 

“Events of Default” shall have the meaning assigned to such term in Section 7.01.

 

“Excess Cash” shall mean as of any date of determination, the excess, if any, of (a) the aggregate amount of Unrestricted Cash and Permitted Investments held by the U.S. Borrower and its Subsidiaries as of such date, over (b) the sum of (i) the aggregate amount of the then outstanding Revolving Loans as of such date and (ii) $15,000,000.  For the avoidance of doubt, “Excess Cash” shall not be less than zero.

 

“Excess Cash Flow” shall mean, for any fiscal year of the Borrowers (or, in the case of the fiscal year ended December 31, 2014 (except as otherwise specified below), the portion thereof commencing on the Closing Date and ending on December 31, 2014), determined on a consolidated basis, the excess of:

 

(a) the sum, without duplication, of

 

10

 

(i) Consolidated EBITDA for such fiscal year (or portion thereof) and

 

(ii) the decrease, if any, in Current Assets minus Current Liabilities from the beginning to the end of such fiscal year (provided, that for the fiscal year ending December 31, 2014, such decrease, if any, in Current Assets minus Current Liabilities shall be calculated for the period commencing on January 1, 2014 and ending on December 31, 2014,

 

over

 

(b) the sum, without duplication, of

 

(i) federal, state, local and foreign income taxes paid in cash by the Borrowers and the Subsidiaries during such fiscal year (or portion thereof),

 

(ii) Consolidated Interest Expense for such fiscal year (or portion thereof) paid in cash,

 

(iii) capital expenditures, acquisitions permitted hereunder, Investments permitted hereunder, or Restricted Payments permitted hereunder, in each case, to the extent made in cash, except to the extent financed with the proceeds of Indebtedness, Equity Issuances, casualty proceeds, condemnation proceeds or other proceeds that would not be included in Consolidated EBITDA,

 

(iv) permanent repayment of Indebtedness (other than voluntary prepayments and mandatory prepayments of the Term Loans under Section 2.10 and Section 2.11, respectively) made in cash by the Borrowers and the Subsidiaries during such fiscal year (or portion thereof), but only to the extent that the Indebtedness so prepaid by its terms cannot be reborrowed or redrawn and such prepayments do not occur in connection with a refinancing of all or any portion of such Indebtedness,

 

(v) the increase, if any, in Current Assets minus Current Liabilities from the beginning to the end of such fiscal year (provided, that for the fiscal year ending December 31, 2014, such increase, if any, in Current Assets minus Current Liabilities shall be calculated for the period commencing on January 1, 2014 and ending on December 31, 2014, and

 

(vi) all other payments added back to Consolidated EBITDA (subject to the limitations set forth in the definition thereof) for such fiscal year (or period) to the extent paid in cash.

 

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

 

“Excluded Taxes” shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) income or franchise Taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits Taxes imposed by the United States of America and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrowers under Section 2.18), U.S. federal withholding Taxes imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s failure to comply with Section 2.17(d), except in each case to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the

 

11

 

Borrowers with respect to such withholding Tax pursuant to Section 2.17 and (d) U.S. federal withholding Taxes imposed under FATCA.

 

“Facilities” shall mean any and all real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by the Borrowers or any of their Subsidiaries.

 

“Fair Labor Standards Act” shall mean the Fair Labor Standards Act of 1938, as amended from time to time.

 

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.

 

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

 

“Federal Power Act” shall mean the Federal Power Act of 1935, as amended from time to time.

 

“Fee Letter” shall mean that certain fee letter agreement entered into among the Borrowers and the Administrative Agent dated as of the Closing Date.

 

“Financial Officer” of any Person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such Person.

 

“First Tier Foreign Subsidiary” shall mean, at any date of determination, each Foreign Subsidiary in which any one or more of (a) a U.S. Borrower, (b) a U.S. domestic entity that is a Subsidiary that has no significant assets other than equity interests in CFCs and with respect to which a Borrower is a “United States shareholder,” within the meaning of Section 951(b) of the Code or (c) any Domestic Subsidiary of a U.S. Borrower owns directly more than 50%, in the aggregate, of the voting Equity Interests of such Foreign Subsidiary.

 

“Foreign Law Security Agreements” shall mean, those security documents evidencing the pledge of the assets of any Material Foreign Subsidiary.

 

“Foreign Lender” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the U.S. Borrower is located.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“Foreign Pledge Documents” shall mean, collectively, in respect of the grant by any Loan Party to the Collateral Agent for the benefit of the Secured Parties of a Lien on certain of the Equity Interest of any First Tier Foreign Subsidiary owned by such Loan Party, any related Foreign Law Pledge Agreement, any related filings, an opinion as is customary in the relevant jurisdiction delivered by local counsel in the foreign jurisdiction in which such First Tier Foreign Subsidiary is organized and addressing the effectiveness of the pledge and/or creation of a Lien by such Loan Party to the Collateral Agent for the benefit of the Secured Parties of the pledged Equity Interests of such First Tier Foreign Subsidiary having

 

12

 

been issued to such Loan Party, any related authorizing resolutions adopted by the board of directors (or equivalent) of such Loan Party in connection with such pledge, any amendments to the Organizational Documents of such First Tier Foreign Subsidiary required by the Collateral Agent to facilitate the pledge and/or creation of a Lien by such Loan Party to the Administrative Agent for the benefit of the Secured Parties of such pledged Equity Interests, and any other agreements, documents, instruments, notices, filings or other items reasonably required by the Administrative Agent to be executed and/or delivered in connection with any of the foregoing.

 

“Foreign Security Documents” shall mean, collectively, in respect of the grant by any Material Foreign Subsidiary to the Collateral Agent for the benefit of the Secured Parties of a Lien on the assets of any Material Foreign Subsidiary, any related Foreign Law Security Agreement, any related filings, an opinion as is customary in the relevant jurisdiction delivered by local counsel in the foreign jurisdiction in which such Material Foreign Subsidiary is organized and addressing the effectiveness of the pledge by such Material Foreign Subsidiary to the Collateral Agent for the benefit of the Secured Parties of the assets of such Material Foreign Subsidiary, any related authorizing resolutions adopted by the board of directors (or equivalent) of such Material Foreign Subsidiary in connection with such pledge, any amendments to the Organizational Documents of such Material Foreign Subsidiary required by the Administrative Agent to facilitate the pledge by such Material Foreign Subsidiary to the Collateral Agent for the benefit of the Secured Parties of such assets, and any other agreements, documents, instruments, notices, filings or other items reasonably required by the Administrative Agent to be executed and/or delivered in connection with any of the foregoing.

 

“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.

 

“GAAP” shall mean United States generally accepted accounting principles applied on a consistent basis.

 

“Governing Body” shall mean the board of directors or other body having the power to direct or cause the direction of the management and policies of a Person that is a corporation, partnership, trust or limited liability company.

 

“Governmental Authority” shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality, regulatory body, board or commission.

 

“Granting Lender” shall have the meaning assigned to such term in Section 9.04(j).

 

“gTLDs” shall mean domain names, domain name portfolios and top-level domain names, including domain name suffixes, also known as generic Top Level Domains, approved by the Internet Corporation for Assigned Names and Numbers.

 

“Guarantee” of or by any Person shall mean any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other obligation, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment of such Indebtedness or other obligation or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation;

 

13

 

provided, however, that the term “Guarantee” shall not include endorsements of negotiable instruments for collection or deposit in the ordinary course of business.

 

“Guarantee (Non-U.S. Entities)” shall mean the Unconditional Guarantee (Non-U.S. Entities) to be executed and delivered by DMIH and each Subsidiary of a Borrower or other Subsidiary (other than any U.S. Loan Party) which has become a Guarantor of the Cayman Obligations pursuant thereto, substantially in the form of Exhibit F-2.

 

“Guarantors” shall mean the U.S. Guarantors and Cayman Guarantors, collectively.

 

“Hazardous Materials” shall mean (a) any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances and (b) any chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

 

“Hedging Agreement” shall mean any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

 

“Hot Media” shall mean Hot Media, Inc., a Delaware corporation.

 

“ICANN” shall mean the Internet Corporation for Assigned Names and Numbers.

 

“ICC Termination Act” shall mean the ICC Termination Act of 1995, as amended from time to time.

 

“Immaterial Subsidiaries” shall mean any Subsidiary that (a) did not, as of the last day of the fiscal quarter of the U.S. Borrower most recently ended, have assets with a value in excess of 5.0% of the Consolidated Total Assets or revenues representing in excess of 5.0% of total revenues of U.S. Borrower and its Subsidiaries on a consolidated basis as of such date, and (b) taken together with all Immaterial Subsidiaries as of the last day of the fiscal quarter of the U.S. Borrower most recently ended, did not have assets with a value in excess of 10.0% of Consolidated Total Assets or revenues representing in excess of 10.0% of total revenues of the U.S. Borrower and its Subsidiaries on a consolidated basis as of such date.

 

“Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, including any earn-out obligations, (d) [reserved], (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding (i) trade accounts payable and accrued obligations incurred in the ordinary course of business and (ii) accruals for payroll and other liabilities, including deferred compensation arrangements, accrued in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Contingent Obligations of such Person in respect of Indebtedness of others, (h) all Capital Lease Obligations and Synthetic Lease Obligations of such Person, (i) all obligations of such Person as an account party in respect of letters of credit and (j) all obligations of such Person in respect of bankers’ acceptances, and (k) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including any Hedging Agreement, in each case, whether entered into for hedging or speculative purposes or otherwise; provided, in no event shall obligations under any derivative transaction be deemed “Indebtedness” for any purpose under Section 6.12 unless such obligations relate

 

14

 

to a transaction that has been terminated.  The amount of any Indebtedness of any Person in respect of a Hedging Agreement shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Hedging Agreement had terminated at the end of such fiscal quarter. In making such determination, if any agreement relating to such Hedging Agreement provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined, in each case to the extent that such agreement is legally enforceable in Insolvency Proceedings against the applicable counterparty thereof.  The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venturer.

 

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

 

“Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

 

“Independent Financial Advisor” shall mean an accounting, appraisal or investment banking firm of national standing or any third party appraiser or recognized expert with experience in appraising the terms and conditions of the type of transaction or series of related transactions for which an opinion is required, provided that such firm or appraiser is not an Affiliate of the Borrowers.

 

“Information” shall have the meaning assigned to such term in Section 9.16.

 

“Insolvency Proceeding” shall mean (i) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, examinership, dissolution, winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, formal or informal moratorium, composition, marshaling of assets for creditors or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each case, undertaken under United States federal or state or non-United States legal requirements, including the Bankruptcy Code.

 

“Installment” shall have the meaning assigned to such term in Section 2.09.

 

“Intellectual Property” shall mean all present and future:  (a) all inventions and discoveries (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, (c) all copyrightable works, all copyrights and all applications, registrations and renewals in connection therewith, (d) all broadcast rights, (e) all mask works and all applications, registrations and renewals in connection therewith, (f) all know-how, trade secrets and confidential business information, whether patentable or unpatentable and whether or not reduced to practice (including ideas, research and development, know-how, formulas, compositions and manufacturing and production process and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals), (g) all computer software (including data and related documentation), (h) all other proprietary rights, (i) all copies and tangible embodiments thereof (in whatever form or medium) and (j) all licenses and agreements in connection therewith.

 

15

 

“Intellectual Property Security Agreement” shall mean any intellectual property security agreement entered into between a Loan Party and the Collateral Agent pursuant to the terms of the U.S. Guarantee and Collateral Agreement, together with each other intellectual property security agreement and supplement thereto delivered pursuant to Section 5.12, in each case as amended, restated, supplemented or otherwise modified from time to time.

 

“Intercreditor Agreement” shall mean a subordination and intercreditor agreement dated as of the date hereof among the Collateral Agent, the Revolving Loan Lender and the U.S. Borrower in form and substance reasonably acceptable to the Collateral Agent.

 

“Interest Payment Date” shall mean September 30, 2014 and on the last day of each fiscal quarter of the U.S. Borrower thereafter, provided if any such day is not a Business Day, such Interest Payment Date shall be extended to the next succeeding Business Day and interest shall accrue for each day of such extension.

 

“Interest Rate Agreement” shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement to which any Borrower or any of its Subsidiaries is a party.

 

“Interstate Commerce Act” shall mean the Interstate Commerce Act of 1887, as amended from time to time.

 

“Investment” shall mean (i) any direct or indirect purchase or other acquisition by the Borrowers or any of their Subsidiaries of, or of a beneficial interest in, any stocks, bonds, notes, debentures or other obligations or securities of any other Person; (ii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by the Borrowers or any of their Subsidiaries to any other Person, including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business and (iii) all investments consisting of any exchange traded or over the counter derivative transaction, including any Hedging Agreement, whether entered into for hedging or speculative purposes or otherwise.  The amount of any Investment of the type described in clauses (i) and (ii) shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write ups, write downs or write offs with respect to such Investment and after giving effect to any return of capital, repayment or dividends or distributions in respect thereof received in cash with respect to such Investment.

 

“Investment Company Act of 1940” shall mean the Investment Company Act of 1940, as amended from time to time.

 

“Irish Law Charges” shall mean (a) the security deed (debenture) dated on or about the date hereof by and between the Collateral Agent and DMIH in respect of the assets of DMIH and (b) the security deed (debenture) dated on or about the date hereof by and between the Collateral Agent and Domains in respect of the assets of Domains.

 

“Irish Law Share Charges” shall mean (a) the security over shares deed dated on or about the date of this Agreement, entered into between the Collateral Agent and the U.S. Borrower in respect of 65% of the U.S. Borrower’s shares in DMIH;  (b) the security over shares deed dated on or about the date of this Agreement, entered into between the Collateral Agent and the U.S. Borrower in respect of 100% of the U.S. Borrower’s shares in DMIH; and (c) the security over shares deed dated on or about the date of

 

16

 

this Agreement, entered into between the Collateral Agent and DMIH in respect of 100% of DMIH’s shares in Domains.

 

“Lenders” shall mean (a) the Persons listed on Schedule 2.01 (other than any such Person that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any Person that has become a party hereto pursuant to an Assignment and Acceptance.

 

“Libor Rate” shall mean, for any date of determination, the three-month London Interbank Offered Rate (rounded upward to the nearest 1/16 of one percent) that appears on Bloomberg as of approximately 11:00 a.m. (Local Time) on such date of determination; provided, that if such index ceases to exist or is no longer published or announced, then the term “Libor Rate” shall mean the three-month London Interbank Offered Rate (rounded upward to the nearest 1/16 of one percent) as published in The Wall Street Journal on such date of determination, and if this latter index ceases to exist or is no longer published or announced, then the term “Libor Rate” shall mean the Prime Rate (rounded upward to the nearest 1/16 of one percent) as published in The Wall Street Journal on such date of determination.  The Libor Rate shall be determined on any date of determination by the Administrative Agent.  The LIBOR Rate shall in no event be less than 0.5% per annum.

 

“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, or (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

 

“Liquidity” shall mean an amount equal to the sum of (i) the amount of Unrestricted Cash and Permitted Investments of U.S. Borrower and its Subsidiaries in the aggregate and (ii) aggregate amount of unused Revolving Commitments available to be borrowed by any Loan Party (without duplication) as of the relevant date of determination.

 

“Loan Documents” shall mean this Agreement, the Security Documents, the Term Notes, the Intercreditor Agreement, the Related Documents and any other document or agreement executed in connection herewith or therewith; provided that, solely for purposes of Section 9.08(b), the Related Documents and any side letter between or among two or more Lenders shall not be a Loan Document.

 

“Loan Parties” shall mean the U.S. Loan Parties and Cayman Loan Parties.

 

“Local Time” shall mean Los Angeles time.

 

“Management Fee Recipient” shall have the meaning assigned to such term in the definition of “Management Fees”.

 

“Management Fees” shall mean any fees or other amounts (whether structured as a fee, an underwriting discount or otherwise) payable, directly or indirectly, to or for the benefit of any direct or indirect holder of Equity Interests of any Affiliate of any such holder of Equity Interests (each of the foregoing, a “Management Fee Recipient”) or in respect of management, consulting, financial advisory, financing, underwriting or placement services or other investment banking activities provided by or on behalf of any Management Fee Recipient to or for the benefit, directly or indirectly, of any of the Borrowers or the Borrowers’ Affiliates, whether payable, earned or otherwise provided for pursuant to a management agreement (howsoever denominated) or otherwise.

 

“Margin Stock” shall have the meaning assigned to such term in Regulation U.

 

17

 

“Material Adverse Effect” shall mean (a) a materially adverse effect on and/or material adverse developments with respect to (i) the value of the Collateral, (ii) the enterprise value of the Borrowers or (b) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Borrowers and their Subsidiaries, taken as a whole; (c) a material impairment of the rights and remedies of either Agent or the Lenders under any Loan Document, or of the ability of the Borrowers, or the Guarantors taken as a whole, to perform their respective obligations under any Loan Document to which it is a party, or to which they are parties, as applicable; or (d) a material adverse effect upon the legality, validity, binding effect or enforceability against any Borrower or any Guarantor of any Loan Document to which it is a party.

 

“Material Domestic Subsidiary” shall mean any Material Subsidiary which is also a Domestic Subsidiary.

 

“Material Foreign Subsidiary” shall mean any Material Subsidiary which is also a Foreign Subsidiary.

 

“Material Inbound License” shall mean an inbound license of any patent, patent application, trademark, trademark application, trade name, service mark, service mark application, copyrights or copyright applications (i) involving required payments in each case in excess of $500,000 by the Loan Parties over the life of such licenses or (ii) for which the failure to maintain could reasonably be expected to result in a Material Adverse Effect.

 

“Material Indebtedness” shall mean Indebtedness (other than the Term Loans), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrowers or any Subsidiary in an aggregate principal amount exceeding $2,500,000, including Indebtedness under the Revolving Loan Documents.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrowers or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements to the extent that such agreements are legally enforceable in Insolvency Proceedings against the applicable counterparty or counterparties thereof) that the Borrowers or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

 

“Material Subsidiary” shall mean any Subsidiary that is not an Immaterial Subsidiary.

 

“Maturity Date” shall mean August 6, 2019.

 

“Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

 

“Mortgaged Properties” shall mean, initially, the owned real properties of the Loan Parties specified on Schedule 1.01(b), and shall include each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.12.

 

“Mortgages” shall mean the mortgages, deeds of trust, assignments of leases and rents, modifications and other security documents delivered with respect to Mortgaged Properties pursuant to Section 5.12, each in form and substance reasonably satisfactory to the Agents.

 

“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

18

 

“Net Asset Sale Proceeds” shall mean the cash proceeds received by the Borrowers or any of their Subsidiaries in respect of an Asset Sale (including cash proceeds subsequently received (as and when received) in respect of noncash consideration initially received), net of (a) actual and reasonable documented selling expenses (including reasonable broker’s fees or commissions, legal fees, transfer and similar taxes and the Borrowers’ good faith estimate of income taxes, in each case paid or payable in connection with such sale), (b) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations or purchase price adjustment associated with such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Asset Sale Proceeds) and (c) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money that is secured by the asset sold in such Asset Sale and that is required to be repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such asset and other than Indebtedness hereunder).

 

“Net Insurance/Condemnation Proceeds” shall mean any cash payments or proceeds received by the Collateral Agent or by the Borrowers or any of their Subsidiaries (i) under any business interruption or casualty insurance policy in respect of a covered loss thereunder or (ii) as a result of the taking of any assets of the Borrowers or any of their Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, in each case net of any actual and reasonable documented costs incurred by the Borrowers or any of their Subsidiaries in connection with the adjustment or settlement of any claims of the Borrowers or such Subsidiary in respect thereof.

 

“Net Securities Proceeds” shall mean the cash proceeds (net of reasonable underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses) from the incurrence of Indebtedness by the Borrowers or any of their Subsidiaries.

 

“New Proceeds” shall mean net cash proceeds of issuances of Equity Interests received by the U.S. Borrower on or after the Closing Date and promptly designated as “New Proceeds” in writing to the Administrative Agent following such receipt.  Any such cash proceeds so designated may only be utilized by the Borrowers and their Subsidiaries solely for the purposes permitted hereunder.  The aggregate amount of New Proceeds shall be reduced following the application of any such proceeds (or portion thereof).

 

“Notes” shall mean the Term Notes.

 

“Notice of Borrowing” shall have the meaning assigned to such term in Section 2.02(c).

 

“Obligations” shall mean the U.S. Obligations and the Cayman Obligations, collectively.

 

“OFAC” shall have the meaning assigned to such term in Section 3.23.

 

“OID” shall have the meaning assigned to such term in Section 2.21.

 

“Opco” shall mean Rightside Operating Co., a Delaware corporation.

 

“Organizational Documents” shall mean with respect to any Person, its charter, certificate, memorandum or articles of incorporation, bylaws, articles of organization, memorandum and articles of association, operating agreement, members agreement, partnership agreement, voting trust, or similar agreement or instrument governing the formation or operation of such Person.

 

19

 

“Other Taxes” shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

 

“Participant Register” shall have the meaning assigned to such term in Section 9.04(h).

 

“Participating Member State” shall mean any member state of the European Community that adopts or has adopted the Euro as its lawful currency in accordance with the legislation of the European Community relating to Economic and Monetary Union.

 

“Payment Office” shall mean the office of the Administrative Agent located at 2951 28th Street, Suite 1000, Santa Monica, California 90405 or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

 

“Permitted Investments” shall mean:

 

(a)                                 direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

 

(b)                                 investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

 

(c)                                  investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000;

 

(d)                                 fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (c) above;

 

(e)                                  securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s

 

(f)                                   securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (c) of this definition;

 

(g)                                  investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, at least 95% of whose assets are invested in investments of the type described in clauses (a) through (e) above, and are rated AAA by S&P and Aaa by Moody’s; and

 

20

 

(h)                                 equivalents to the foregoing investments in any foreign jurisdiction in which the U.S. Borrower or its Subsidiaries conduct business.

 

“Person” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership, Governmental Authority or other entity.

 

“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code, and in respect of which the U.S. Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Prime Rate” means, for any day, the rate of interest in effect for such day that is identified and normally published by The Wall Street Journal as the “Prime Rate” (or, if more than one rate is published as the Prime Rate, then the highest of such rates), with any change in Prime Rate to become effective as of the date the rate of interest which is so identified as the “Prime Rate” is different from that published on the preceding Business Day.  If The Wall Street Journal no longer reports the Prime Rate, or if the Prime Rate no longer exists, or the Administrative Agent determines in good faith that the rate so reported no longer accurately reflects an accurate determination of the prevailing Prime Rate, then the Administrative Agent may select a reasonably comparable index or source to use as the basis for the Prime Rate.

 

“Qualified Capital Stock” of any Person shall mean any Equity Interest of such Person that is not Disqualified Stock.

 

“Recipient” shall mean (a) the Administrative Agent and (b) any Lender, as applicable.

 

“Register” shall have the meaning assigned to such term in Section 9.04(d).

 

“Registration Rights Agreement” shall mean the registration rights agreement among the U.S. Borrower and the Lenders as of the Closing Date in respect of Equity Interests issued upon the exercise of the Warrants, dated the date hereof, in form and substance acceptable to the Lenders.

 

“Regulation T” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation U” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Regulation X” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“Related Documents” shall mean, collectively, the Warrants, the Warrant Agreement and the Registration Rights Agreement.

 

“Related Fund” shall mean, with respect to any Lender that is a fund or commingled investment vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

 

“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

 

21

 

“Release” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

 

“Required Lenders” shall mean, at any time, Lenders having Term Loans representing more than 50% of the sum of all Term Loans at such time.

 

“Responsible Officer” of any Person shall mean any executive officer, Financial Officer or any director of such Person and any other officer or similar official thereof responsible for the administration of the obligations of such Person in respect of this Agreement.

 

“Restricted Indebtedness” shall mean Indebtedness of the Borrowers or any Subsidiary, the payment, prepayment, repurchase or defeasance of which is restricted under Section 6.09.

 

“Restricted Payment” shall mean (i) any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrowers or any Subsidiary, (ii) any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrowers or any Subsidiary, and (iii) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to, any Subordinated Indebtedness.

 

“Revolving Commitments” shall mean “Commitments” as defined in the Revolving Loan Agreement.

 

“Revolving Loan Agreement” shall mean that certain Credit Agreement dated as of August 1, 2014 by and among Silicon Valley Bank, the Borrowers and certain other Subsidiaries of the U.S. Borrowers party thereto.

 

“Revolving Loan Documents” shall mean the loan documents entered into in connection with the Revolving Loan Agreement as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the Intercreditor Agreement.

 

“Revolving Loan Lender” shall mean Silicon Valley Bank as the lender under the Revolving Loan Agreement.

 

“Revolving Loan Payoff Date” shall mean the date that any of the following first occurs: (i) the maturity date of the Revolving Loan Agreement (as in effect on the Closing Date), (ii) the termination of the Revolving Loan Agreement, (iii) the refinancing of the Revolving Loan Agreement and (iv) acceleration of Revolving Loans and the termination of Revolving Commitments.

 

“Revolving Loans” shall mean the loans made pursuant to the Revolving Loan Agreement.

 

“S&P” shall mean Standard & Poor’s Ratings Service, or any successor thereto.

 

“SEC” shall mean the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act.

 

“Secured Parties” shall have the meaning assigned to such term in the U.S. Guarantee and Collateral Agreement.

 

22

 

“Securities Account” is defined in the UCC.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.

 

“Security Documents” shall mean the Mortgages, the U.S. Guarantee and Collateral Agreement, the Intercreditor Agreement, Control Agreements, the Intellectual Property Security Agreements, the Foreign Pledge Documents, the Foreign Security Documents, and all other security documents hereafter delivered to the Collateral Agent granting a Lien on any property of any Person to secure the Obligations of any Loan Party under any Loan Document and all financing statements, fixture filings, patent, trademark and copyright filings, assignments, acknowledgments and other filings, documents and agreements made or delivered pursuant thereto.

 

“SPC” shall have the meaning assigned to such term in Section 9.04(j).

 

“Spin-off” shall have the meaning assigned to such term in the recitals to the Agreement.

 

“Spin-off Agreement” shall mean that certain Separation and Distribution Agreement dated as of August 1, 2014, between Demand Media, Inc. and the U.S. Borrower.

 

“Spot Rate” means, for any currency, on any relevant date of determination, the rate determined by the Administrative Agent to be the rate quoted by the Administrative Agent as the spot rate for the purchase by the Administrative Agent of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on such date; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Administrative Agent does not have as of the date of determination a spot buying rate for any such currency.

 

“Sterling” shall mean freely transferable lawful money of the United Kingdom (expressed in pounds sterling).

 

“Subordinated Indebtedness” shall mean any Indebtedness of the Borrowers or any of their Subsidiaries incurred from time to time and subordinated in right of payment to the Obligations.

 

“Subsidiary” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, partnership, limited liability company, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, Controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.  Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the U.S. Borrower.

 

“Synthetic Lease” shall mean, as to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor.

 

23

 

“Synthetic Lease Obligations” shall mean, as to any Person, an amount equal to the capitalized amount of the remaining lease payments under any Synthetic Lease that would appear on a balance sheet of such Person in accordance with GAAP if such obligations were accounted for as Capital Lease Obligations.

 

“Synthetic Purchase Agreement” shall mean any swap, derivative or other agreement or combination of agreements pursuant to which the Borrowers or any Subsidiary is or may become obligated to make (a) any payment in connection with a purchase by any third party from a Person other than the Borrowers or any Subsidiary of any Equity Interest or Restricted Indebtedness or (b) any payment (other than on account of a permitted purchase by it of any Equity Interest or Restricted Indebtedness) the amount of which is determined by reference to the price or value at any time of any Equity Interest or Restricted Indebtedness; provided that for the avoidance of doubt, the following shall not be deemed to be a “Synthetic Purchase Agreement”:  (i) phantom stock or similar plan (including, any stock compensation plan or similar benefit plan) providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrowers and their Subsidiaries (ii) any stock option or warrant agreement for the purchase of Equity Interests, (iii) the purchase of Equity Interests or Indebtedness (including securities convertible into Equity Interests) pursuant to delayed delivery contracts, accelerated stock repurchase agreements, forward contracts or other similar agreements and (iv) any of the foregoing to the extent that it constitutes a derivative embedded in a convertible security.

 

“Tax Returns” shall mean (i) all returns, declarations, reports, schedules or information return or statement of, or with respect to, Taxes required to be filed with any Governmental Authority or depository and (ii) Form TD F 90-22.1.

 

“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Term Loans” shall mean the U.S. Term Loans and the Cayman Term Loans, collectively.

 

“Term Loan Commitment” shall mean, collectively, the U.S. Term Loan Commitments and the Cayman Term Loan Commitments.

 

“Term Note” shall have the meaning assigned to such term in Section 2.04(d).

 

“Terrorism Order” shall have the meaning assigned to such term in Section 3.25.

 

“Total Debt” shall mean, at any time, the total Indebtedness of the Borrowers and the Subsidiaries at such time.

 

“Transaction Documents” shall mean the Spin-off Agreement and all material exhibits and schedules thereto and all agreements expressly contemplated thereby and the Loan Documents, in each case as amended from time to time in accordance with the terms hereof and thereof.

 

“Transactions” shall mean, collectively, (a) the transactions to occur pursuant to the Transaction Documents, including consummation of the Spin-off; (b) the execution and delivery of the Loan Documents and the borrowings hereunder; (c) the issuance of Warrants; and (c) the payment of related fees and expenses.

 

24

 

“UCC” shall mean the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests.

 

“Unrestricted Cash and Permitted Investments” of any Person, shall mean cash or Permitted Investments of such Person, (a) that is not, and is not required to be, designated as “restricted” on the financial statements of such Person, (b) that is not contractually required, and has not been contractually committed by such Person, to be used for a specific purpose, (c) that is not subject to (i) any provision of law, statute, rule or regulation, (ii) any provision of the Organizational Documents of such Person, (ii) any order of any Governmental Authority or (iv) any contractual restriction (including the terms of any Equity Interests) preventing such cash or Permitted Investments, as applicable, from being applied to the payment of the Obligations (other than with respect to any restrictions under the Intercreditor Agreement or the Revolving Loan Agreement), (d) in which no Person (other than (i) the Collateral Agent, (ii) the Revolving Loan Lender or (iii) any holder of a Lien that is otherwise permitted pursuant to Section 6.02(xii)) has a Lien, (e) that is denominated in Dollars, Euros, or Sterling and (f) that is held in a Deposit Account or Securities Account, as applicable, in which the Collateral Agent has a valid and enforceable security interest and, with respect to Deposit Accounts and Securities Accounts maintained in the U.S., at any time after the date Control Agreements are required to be delivered under Section 4.02, are perfected by “control” (within the meaning of the applicable Uniform Commercial Code) (or the Revolving Loan Lender has “control” for both the Revolving Loan Lender and the Collateral Agent pursuant to the terms of the Intercreditor Agreement).

 

“USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

 

“U.S. Dollar Equivalent” shall mean, at any time, (a) with respect to any amount denominated in Dollars, such amount and (b) with respect to any amount denominated in any currency other than Dollars, the equivalent amount thereof in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent relevant date of determination) for the purchase of Dollars with such other currency.

 

“U.S. Guarantee and Collateral Agreement” shall mean the Guarantee and Collateral Agreement, in the form of Exhibit F-1, among the U.S. Loan Parties and the Collateral Agent for the benefit of the Secured Parties.

 

“U.S. Guarantors” shall mean, collectively, on the Closing Date, each Domestic Subsidiary listed on Schedule 1.01(a), and thereafter each other Domestic Subsidiary that is or becomes a party to the U.S. Guarantee and Collateral Agreement or otherwise provides a Guarantee in respect of the U.S. Obligations.

 

“U.S. Loan Parties” shall mean the U.S. Borrower and the U.S. Guarantors.

 

“U.S. Obligations” shall mean all obligations of every nature of each U.S. Loan Party in respect of the principal, interest (including, without limitation, any interest accruing after the commencement of any bankruptcy case or insolvency proceeding involving a U.S. Party, whether or not such interest is an allowed claim in such case or proceeding) and premium on account of the U.S. Term Loan from time to time owed to Administrative Agent, Lenders or any of them under the Loan Documents, and fees, expenses, indemnification or other amounts (other than principal, interest and premium in respect of the Cayman Term Loan) owed by the U.S. Loan Parties with respect to the U.S. Term Loans to Administrative Agent, Lenders or any of them under the Loan Documents.  For the avoidance of doubt, U.S. Borrower’s obligations under the Related Documents shall not be deemed to be U.S. Obligations.

 

25

 

“U.S. Term Loan” shall mean the term loan made by the Lenders to the U.S. Borrower pursuant to paragraph (a) of Section 2.02.

 

“U.S. Term Loan Commitments” with respect to each Lender, the commitment of such Lender to make U.S. Term Loans hereunder as set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed its U.S. Term Loan Commitment, as applicable.  The initial aggregate amount of the Lenders’ U.S. Term Loan Commitments is $10,000,000.

 

“U.S. Guarantors” shall mean, on the Closing Date, each Domestic Subsidiary listed on Schedule 1.01(a), and thereafter each other Domestic Subsidiary that is or becomes a party to the U.S. Guarantee and Collateral Agreement or otherwise provides a Guarantee in respect of the Obligations.

 

“U.S. Person” shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

 

“U.S. Tax Compliance Certificate” shall have the meaning assigned to such term in Section 2.17(f)(ii)(B)(iii).

 

“Warrant Agreement” shall mean the agreement to purchase Equity Interests of U.S. Borrower dated the date hereof, executed by the U.S. Borrower in order to issue the Warrants in the form of Exhibit H.

 

“Warrants” shall mean the warrants, in the form of Exhibit G, issued by U.S. Borrower in favor of each Lender.

 

“Wholly Owned Subsidiary” of any Person shall mean a Subsidiary of such Person of which securities (except for directors’ qualifying shares) or other ownership interests representing 100% of the Equity Interests are, at the time any determination is being made, owned, Controlled or held by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.

 

“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

 

“Withholding Agent” means any Loan Party and the Administrative Agent.

 

SECTION 1.02.                                   Terms Generally.  The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  All references herein to Articles, Sections, and Exhibits shall be deemed references to Articles and Sections of, and Exhibits to, this Agreement unless the context shall otherwise require.  All references herein to Schedules shall be deemed references to Schedules to the Disclosure Letter unless the context shall otherwise require.  Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document or any other documents shall mean such document as amended, restated, supplemented or otherwise modified from time to time to the extent not prohibited or restricted hereunder and (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time

 

26

 

to time; provided, however, that (x) any obligations of a Person under a lease (whether existing now or entered into in the future) that is not (or would not be) a Capital Lease Obligation under GAAP as in effect on the Closing Date shall not be treated as a Capital Lease Obligation solely as a result of the adoption of changes in GAAP and (y) if the Borrowers notify the Administrative Agent that the Borrowers wish to amend any covenant in Article VI or any related definition to eliminate the effect of any change in GAAP occurring after the date of this Agreement on the operation of such covenant and the Administrative Agent consents in writing (or if the Administrative Agent notifies the Borrowers that the Required Lenders wish to amend Article VI or any related definition for such purpose), then the Borrowers’ compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective and the Borrowers shall provide to the Administrative Agent and the Lenders the reconciliation statements provided for in Section 5.04, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrowers and the Required Lenders.

 

SECTION 1.03.                                   Independence of Covenants.  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 as an exception to, or would otherwise be within the limitations of, another covenants shall not avoid the occurrence of an Event of Default or Default if such action is taken or condition exists.

 

SECTION 1.04.                                   Construction.  Each of the parties hereto acknowledges that (i) it has been represented by counsel in the negotiation and documentation of the terms of this Agreement, (ii) it has had full and fair opportunity to review and revise the terms of this Agreement, (iii) this Agreement has been drafted jointly by all of the parties hereto, and (iv) no Lender has any fiduciary relationship with or duty to the Borrowers or any of their Subsidiaries arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Lenders, on the one hand, and the Borrowers and their Subsidiaries, on the other hand, in connection herewith or therewith is solely that of debtor and creditor in respect of the Indebtedness represented hereby.  Accordingly, each of the parties hereto acknowledges and agrees that the terms of this Agreement shall not be construed against or in favor of another party.

 

ARTICLE II

 

The Credits

 

SECTION 2.01.                                   Commitments.  Subject to the terms and conditions and relying upon the representations and warranties herein set forth:

 

(a)                                 Each Lender with a U.S. Term Loan Commitment agrees, severally and not jointly, to make the U.S. Term Loans to the U.S. Borrower on the Closing Date in a principal amount equal to its U.S. Term Loan Commitment at a purchase price of 100.0% of par.

 

(b)                                 Each Lender with a Cayman Term Loan Commitment agrees, severally and not jointly, to make the Cayman Term Loans to the Cayman Borrower on the Closing Date in a principal amount equal to its Cayman Term Loan Commitment at a purchase price of 100.0% of par.

 

(c)                                  The U.S. Borrower may make only one borrowing of U.S. Term Loans.  The Cayman Borrower may make only one borrowing of Cayman Term Loans.  Amounts paid or prepaid in respect of Term Loans may not be reborrowed.

 

27

 

SECTION 2.02.                                   Loans; Notice of Borrowing.

 

(a)                                 The failure of any Lender to make any Term Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Term Loan required to be made by such other Lender).

 

(b)                                 Each Lender shall make the Term Loan to be made by it hereunder on the Closing Date by wire transfer of immediately available funds to such account in New York City as the Borrowers may designate not later than 1:00 p.m., Local Time.

 

(c)                                  The Borrowers shall give the Administrative Agent at least 1 Business Day’s prior notice of its request to incur Term Loans hereunder, provided that any such notice shall be deemed to have been given on a certain day only if given before 1:00 p.m. Local Time on such day.  Such notice (the “Notice of Borrowing”) shall be irrevocable and shall be in writing, or by telephone promptly confirmed in writing, in the form of Exhibit A, appropriately completed to specify: (i) the applicable Borrower, (ii) the aggregate principal amount of the Term Loan to be incurred and (iii) the date of such borrowing (which shall be (x) a Business Day and (y) the Closing Date).  The Administrative Agent shall promptly give each Lender, notice of such proposed borrowing, of such Lender’s proportionate share thereof and of the other matters required by the immediately preceding sentence to be specified in the Notice of Borrowing.

 

(d)                                 Without in any way limiting the obligation of the Borrowers to confirm in writing any telephonic notice of any borrowing or prepayment of Term Loans, the Administrative Agent may act without liability upon the basis of telephonic notice of such borrowing or prepayment, as the case may be, believed by the Administrative Agent in good faith to be from the Borrowers, prior to receipt of written confirmation.  In each such case, each Borrower hereby waives the right to dispute the Administrative Agent’s record of the terms of such telephonic notice of such borrowing or prepayment of Term Loans, as the case may be, absent manifest error.

 

SECTION 2.03.                                   Disbursement of Funds.  No later than 1:00 P.M. (Local Time) on the Closing Date, each Lender will make available its pro rata portion (determined based upon its applicable Term Loan Commitment) of the borrowing requested to be made.  All such amounts will be made available in Dollars and in immediately available funds at the Payment Office, and the Administrative Agent will make available to the Borrowers at the Payment Office the aggregate of the amounts so made available by the Lenders.  Unless the Administrative Agent shall have been notified by any Lender prior to the date of borrowing that such Lender does not intend to make available to the Administrative Agent such Lender’s portion of the borrowing to be made on the Closing Date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the Closing Date of borrowing and the Administrative Agent may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrowers a corresponding amount.  If such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender.  If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Borrowers and the Borrowers shall immediately pay such corresponding amount to the Administrative Agent.  The Administrative Agent also shall be entitled to recover on demand from such Lender or the Borrowers, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrowers until the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if recovered from such Lender, the overnight Federal Funds Effective Rate for the first three days and at the interest rate otherwise applicable to such Term Loans for each day thereafter and (ii) if recovered from the Borrowers, the rate of interest

 

28

 

applicable to the respective borrowing, as determined pursuant to Section 2.06.  Nothing in this Section 2.03 shall be deemed to relieve any Lender from its obligation to make Term Loans hereunder or to prejudice any rights which the Borrowers may have against any Lender as a result of any failure by such Lender to make Term Loans hereunder.  This Section 2.03 is subject to Section 2.20.

 

SECTION 2.04.                                   Evidence of Debt; Repayment of Loans.

 

(a)                                 The U.S. Borrower hereby unconditionally promises to pay to each Lender the principal amount of each U.S. Term Loan of such Lender as provided in Section 2.09.  The Cayman Borrower hereby unconditionally promises to pay to each Lender the principal amount of each Cayman Term Loan of such Lender as provided in Section 2.09.

 

(b)                                 Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to such Lender resulting from the Term Loans made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c)                                  The entries made in the accounts maintained pursuant to paragraph (b) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrowers to repay the Term Loans in accordance with their terms.

 

(d)                                 The Borrowers’ obligation to pay the principal of, and interest on, the Term Loans made by each Lender shall be evidenced in the Register maintained by the Borrowers pursuant to Section 9.04(d) and shall, if requested by such Lender, also be evidenced by a promissory note duly executed and delivered by (i) in the case of the U.S. Borrower in the form of Exhibit B-1 and (ii) in the case of the Cayman Borrower in the form of Exhibit B-2, in each case, with blanks appropriately completed in conformity herewith (each a “Term Note” and, collectively, the “Term Notes”).  To the extent of any conflict between the Register and the entries made in the accounts maintained pursuant to paragraph (b) above, the entries made in the Register shall control.

 

(e)                                  Notwithstanding anything to the contrary contained above in this Section 2.04 or elsewhere in this Agreement, Notes shall only be delivered to Lenders that at any time specifically request the delivery of such Notes.  No failure of any Lender to request or obtain a Note evidencing its Term Loans to the Borrowers shall affect or in any manner impair the obligations of the Borrowers to pay the Term Loans (and all related Obligations) incurred by the Borrowers that would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guaranties therefor provided pursuant to the Loan Documents.  Any Lender that does not have a Note evidencing its outstanding Term Loans shall in no event be required to make the notations otherwise described in preceding clause (b).  At any time when any Lender requests the delivery of a Note to evidence any of its Term Loans, the Borrowers shall promptly execute and deliver to the respective Lender the requested Note in the appropriate amount or amounts to evidence such Term Loans.

 

SECTION 2.05.                                   Fees.

 

(a)                                 All fees payable by the Borrowers to the Administrative Agent or the Lenders shall be paid on the dates due, in immediately available funds, to the Administrative Agent or the Lenders, as applicable.  Once paid, no such fees shall be refundable under any circumstances or subject to any right of setoff, counterclaim or any similar right (each of which is hereby waived by the Borrowers).

 

29

 

SECTION 2.06.                                   Interest on Loans.

 

(a)                                 Subject to the provisions of Section 2.07, the Term Loans shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the the sum of the Libor Rate plus 8.75% (or, to the extent the Administrative Agent shall have delivered a LIBOR Unavailability Notice to the Borrower and the Lenders pursuant to Section 2.12(e), the Alternate Base Rate plus 7.75% per annum).

 

(b)                                 Interest on each Term Loan shall be payable on the Interest Payment Dates except as otherwise provided in this Agreement.

 

SECTION 2.07.                                   Default Interest.  Upon the occurrence and during the continuation of (x) any Event of Default under clauses (a), (b), (g) and (h) of Section 7.01 or (y) any other Event of Default (in the case of this clause (y), following the request of the Required Lenders (it being understood that any default interest payable under this Section 2.07 may apply retroactively to the date on which the relevant Event of Default occurred)), the outstanding principal amount of all Term Loans and, to the extent permitted by applicable law, any interest payments thereon not paid when due and any fees and other amounts then due and payable hereunder (including to the extent permitted by applicable law, accrued and unpaid interest), shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable upon demand at the rate otherwise applicable to a Term Loan pursuant to Section 2.06 plus 2.0% per annum.  Payment or acceptance of the increased rates of interest provided for in this Section 2.07 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Administrative Agent, the Collateral Agent or any Lender.

 

SECTION 2.08.                                   Termination of Commitments.  The Term Loan Commitments shall automatically terminate upon the making of the Term Loans on the Closing Date.  Notwithstanding the foregoing, all the Term Loan Commitments shall automatically terminate at 5:00 p.m., Local Time, on August 6, 2014, if the Closing Date shall not have occurred by such time.

 

SECTION 2.09.                                   Repayment of Loans.

 

(a)                                 The principal amount of the Term Loans shall be repaid at par in consecutive quarterly installments (each, an “Installment”) on the last day of each calendar quarter (or if such day is not a Business Day, on the next preceding Business Day) commencing March 31, 2015 in an amount, per Installment, equal to (i) in the case of U.S. Term Loans, $125,000 and (ii) in the case of Cayman Term Loans, $250,000.

 

(b)                                 To the extent not previously paid, all Term Loans shall be due and payable on the Maturity Date (or, if such day is not a Business Day, on the next preceding Business Day) together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment.

 

SECTION 2.10.                                   Optional Prepayment.

 

(a)                                 The Borrowers shall have the right at any time and from time to time to prepay any of the Term Loans, in whole or in part, at 100% of the principal amount so prepaid, plus the prepayment premium (expressed as percentages of principal amount) set forth below (the “Applicable Prepayment Premium”) determined for the prepayment date with respect to such principal amount, plus accrued and unpaid interest thereon, if any, to the applicable prepayment date (provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000):

 

30

 

	
If Prepaid:
    	
 
    	
Percentage
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
From and after the   Closing Date but prior to the first anniversary of the Closing Date
    	
 
    	
4
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
From and after the   first anniversary of the Closing Date but prior to the second anniversary of   the Closing Date
    	
 
    	
2.5
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
From and after the   second anniversary of the Closing Date but prior to the third anniversary of   the Closing Date
    	
 
    	
1
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
Thereafter
    	
 
    	
0
    	
%
    

 

(b)                                 The Borrowers will give at least 10 Business Days’ prior written notice of each optional prepayment under this Section 2.10 to the Administrative Agent and the Lenders.  Each such notice shall specify the prepayment date, the aggregate principal amount of the Term Loans to be prepaid on such date, the principal amount of each Term Loan owned by such Lender to be prepaid (determined in accordance with Section 2.14), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Financial Officer of the Borrowers as to the estimated Applicable Prepayment Premium due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  Such notice shall be irrevocable and shall commit the Borrowers to prepay the Term Loans by the amount stated therein on the date stated therein.  All prepayments under this Section 2.10 shall be subject to Section 2.13.  All prepayments under this Section 2.10 shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.  Each prepayment pursuant to this Section 2.10 in respect of the Term Loans shall be (i) applied pro rata among the Term Loans and (ii) applied to prepay the outstanding principal amount of the Term Loans pro rata against the remaining Installments of principal due in respect of the Term Loans pursuant to Section 2.09.

 

SECTION 2.11.                                   Mandatory Prepayments.

 

(a)                                 Excess Cash Flow.  (i) On the Revolving Loan Payoff Date, the Borrowers shall be required to make a mandatory prepayment of the Obligations in an amount equal to the Cumulative Excess Cash Flow Amount and (ii) commencing with the fiscal year following the last fiscal year for which Excess Cash Flow is included in the calculation of Cumulative Excess Cash Flow, on or prior to the fifth Business Day following the earlier of (A) the date on which the annual audited financial statements for such fiscal year are delivered pursuant to Section 5.04(a) or (B) the date on which such annual audited financial statements were required to be delivered pursuant to Section 5.04(a), the Borrowers shall be required to make a mandatory prepayment of the Term Loans in an amount equal to product of the Excess Cash Flow for such fiscal year and the ECF Percentage for such fiscal year.  Each mandatory prepayment required to be made from Excess Cash Flow shall be reduced dollar-for-dollar by any voluntary prepayment made in accordance with Section 2.10 in the period as to which such Excess

 

31

 

Cash Flow payment has been calculated.  Each such prepayment shall be made in accordance with Section 2.11(g) and Section 2.11(h) and be accompanied by a certificate signed by the Borrowers’ chief financial officer certifying the manner in which Excess Cash Flow and the resulting prepayment were calculated (including the deduction of any voluntary prepayments that reduce such Excess Cash Flow prepayment), which certificate shall be in form and substance reasonably satisfactory to the Administrative Agent.

 

(b)                                 Net Asset Sale Proceeds.  Not later than the tenth Business Day following the receipt of Net Asset Sale Proceeds by the Borrowers or any other Loan Party, the Borrowers shall either (1) apply an amount equal to 100% of the Net Asset Sale Proceeds received with respect thereto to prepay outstanding Loans in accordance with Section 2.11(g) and Section 2.11(h) or (2), so long as no Default or Event of Default shall have occurred and be continuing and to the extent that aggregate Net Asset Sale Proceeds from the Closing Date through the date of determination that have not been applied to repay the Term Loans do not exceed $500,000, deliver to the Administrative Agent a certificate of a Responsible Officer setting forth (x) the portion of such Net Asset Sale Proceeds that such Borrower or such Subsidiary intends to reinvest in long term productive assets of the general type used in the business of the Borrowers and their Subsidiaries within 180 days of such date of receipt (which may be extended by an additional 90 days if the a binding contract for the purchase of such assets has been entered into within the initial 90-day period) and (y) the proposed use of such portion of the Net Asset Sale Proceeds and such other information with respect to such reinvestment as the Administrative Agent may reasonably request, and the Borrowers shall, or shall cause one or more of their Subsidiaries to, promptly and diligently apply such portion to such reinvestment purposes; provided, however, that, pending such reinvestment, such portion of the Net Asset Sale Proceeds shall be applied to prepay outstanding Revolving Loans (without a reduction in Revolving Commitments) to the full extent thereof.  In addition, the Borrowers shall, no later than 180 days (as extended pursuant to the parenthetical above if a binding contract has been entered into) after receipt of such Net Asset Sale Proceeds that have not theretofore been applied to the Obligations or that have not been so reinvested as provided above, make an additional prepayment of the Term Loans (and/or the Revolving Commitments shall be permanently reduced) in the full amount of all such Net Asset Sale Proceeds.  Notwithstanding anything to the contrary herein, the Borrowers’ obligation to prepay the Term Loans under this Section 2.11(b) shall be deemed satisfied to the extent that the amount that would otherwise be required to be used to prepay the Term Loans under this Section 2.11(b) is required to be applied and is in fact applied to prepay the Revolving Loans (with a permanent reduction of the Revolving Commitments) within the time period required by the terms of the Revolving Loan Agreement.

 

(c)                                  Net Insurance/Condemnation Proceeds.  No later than the first Business Day following the date of receipt by the Collateral Agent or by the Borrowers or any of their respective Subsidiaries of any Net Insurance/Condemnation Proceeds in excess of $150,000 for any Casualty Event and in excess of $300,000 for all Casualty Events in any fiscal year of the Borrowers, the Borrowers shall prepay outstanding Term Loans in an aggregate amount equal to such excess; provided, so long as no Default or Event of Default shall have occurred and be continuing, the Borrowers shall have the option, directly or through one or more of their Subsidiaries to invest such excess amount within 180 days of receipt thereof (which may be extended by an additional 90 days if the a binding contract for the purchase of such assets has been entered into within the initial 90-day period) (i) in long term productive assets of the general type used in the business of the Borrowers and their respective Subsidiaries or (ii) to repair, restore or replace the assets subject to the applicable Casualty Event; and provided, further, that, pending such reinvestment, such portion of the Net Insurance/Condemnation Proceeds shall be applied to prepay outstanding Revolving Loans (without a reduction in Revolving Commitments) to the full extent thereof.  In addition, the Borrowers shall, no later than 180 days (as extended pursuant to the parenthetical above if a binding contract has been entered into) after receipt of such Net Insurance/Condemnation Proceeds that have not theretofore been applied to the Obligations or that have not been so reinvested as provided

 

32

 

above, make an additional prepayment of the Term Loans (and/or the Revolving Commitments shall be permanently reduced) in the full amount of all such Net Insurance/Condemnation Proceeds.  Notwithstanding anything to the contrary herein, the Borrowers’ obligation to prepay the Term Loans under this Section 2.11(c) shall be deemed satisfied to the extent that the amount that would otherwise be required to be used to prepay the Term Loans under this Section 2.11(c) is required to be applied and is in fact applied to prepay the Revolving Loans (with a permanent reduction of the Revolving Commitments) within the time period required by the terms of the Revolving Loan Agreement.

 

(d)                                 [Reserved]

 

(e)                                  Issuance of Indebtedness.  On the date of receipt of the Net Securities Proceeds from the issuance of any Indebtedness of the Borrowers or any of their Subsidiaries after the Closing Date, other than Indebtedness permitted under Section 6.01) the Borrowers shall prepay the Term Loans in accordance with Section 2.11(g) and Section 2.11(h) in an aggregate amount equal to such Net Securities Proceeds.

 

(f)                                   [Reserved].

 

(g)                                  The Borrowers shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.11(i) a certificate signed by a Financial Officer of the Borrowers setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) to the extent practicable, at least three days’ prior written notice of such prepayment.  Each notice of prepayment shall specify the prepayment date, the principal amount of each Term Loan (or portion thereof) to be prepaid and the Applicable Prepayment Premium to be paid according to Section 2.11(h).  All prepayments of Term Loans under this Section 2.11 shall be subject to Section 2.11(g), Section 2.11(h), Section 2.11(i) and Section 2.13 and shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment.

 

(h)                                 Notwithstanding anything to the contrary herein, any Lender may elect, by notice to the Borrowers prior to any prepayment of Term Loans required to be made by the Borrowers pursuant to paragraph (b), (c) or (e) of this Section 2.11, to decline all (but not a portion) of its pro rata share of such prepayment (such declined amounts, the “Declined Proceeds”).  Any Declined Proceeds shall be offered on a pro rata basis to the Lenders not so declining such prepayment.  To the extent such non-declining Lenders elect to decline their pro rata shares of such Declined Proceeds, such Declined Proceeds may be retained by the Borrowers.

 

(i)                                     With respect to any prepayment of Term Loans required to be made by the Borrowers pursuant to paragraph (b) or (e) of this Section 2.11 or pursuant to Article VII, the Borrowers shall pay the Applicable Prepayment Premium determined for the prepayment date with respect to such principal amount paid, plus accrued and unpaid interest thereon, if any, and in accordance with Section 2.11(g). No Applicable Prepayment Premium shall be payable with respect to prepayment of Term Loans required to be made by the Borrowers pursuant to paragraph (b) or (c) of this Section 2.11.

 

(j)                                    Each amount required to be applied pursuant to paragraph (a), (b), (c) or (e) of this Section 2.11 shall be (i) applied pro rata among the Term Loans and (ii) applied to prepay the outstanding principal amount of the Term Loans in inverse order of maturity against the remaining Installments of principal due in respect of the Term Loans pursuant to Section 2.09.

 

(k)                                 Notwithstanding anything to the contrary in the foregoing, to the extent that any amounts required to prepay the Term Loans were generated by a Cayman Loan Party (other than a U.S. Loan Party), any such amounts shall be applied only to the repayment of the Cayman Term Loan.

 

33

 

SECTION 2.12.                                   Reserve Requirements; Change in Circumstances.

 

(a)                                 Notwithstanding any other provision of this Agreement, if any Change in Law shall:

 

(i)                                     impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by any Lender or shall impose on such Lender any other condition affecting this Agreement or Term Loans made by such Lender; or

 

(ii)                                  subject any Recipient to any Taxes (other than (A) Indemnified Taxes and (B) Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Term Loan or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrowers will pay to such Lender, upon demand, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

 

(b)                                 If any Lender shall have determined that any Change in Law regarding capital adequacy or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Term Loan Commitments of such Lender or the Term Loans made by such Lender pursuant hereto to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

 

(c)                                  A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as applicable, as specified in paragraph (a) or (b) of this Section 2.12 shall be delivered to the Borrowers and shall be conclusive absent manifest error.  The Borrowers shall pay such Lender the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same.

 

(d)                                 Failure or delay on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrowers shall not be under any obligation to compensate any Lender under paragraph (a) or (b) of this Section 2.12 with respect to increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).  The protection of this Section 2.12(d) shall be available to each Lender and regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed.

 

(e)                                  Notwithstanding anything to the contrary, in the event that the Administrative Agent shall have determined that dollar deposits in the principal amounts of the Term Loans are not generally available in the London interbank market, or that the rates at which such dollar deposits are being offered

 

34

 

will not adequately and fairly reflect the cost to the majority of Lenders of making or maintaining loans at the three-month London Interbank Offered Rate, or that reasonable means do not exist for ascertaining the Libor Rate, the Administrative Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to the Borrowers and the Lenders (a “LIBOR Unavailability Notice”).  In the event of any such determination, until the Administrative Agent shall have advised the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, interest on the Term Loans shall accrue by reference to the Alternate Base Rate.  Each determination by the Administrative Agent under this Section 2.12(e) shall be conclusive absent manifest error.

 

SECTION 2.13.                                   Indemnity.  The Borrowers shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of any default in the making of any payment or prepayment required to be made hereunder.  A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.13 shall be delivered to the Borrowers and shall be conclusive absent manifest error.

 

SECTION 2.14.                                   Pro Rata Treatment.  Except as otherwise provided in this Agreement the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrowers in respect of any Obligations hereunder, the Administrative Agent shall distribute such payment to the Lenders entitled thereto (other than any Lender that has consented in writing to waive its pro rata share of any such payment) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received.  This Section 2.14 is subject to Section 2.20.

 

SECTION 2.15.                                   Ratable Sharing.  Each Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Borrowers or any other Loan Party, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means (but excluding any sale or participation of its Term Loans to a Person other than the Borrowers or an Affiliate thereof, which shall be included), obtain payment (voluntary or involuntary) in respect of any principal of or interest on any Term Loan as a result of which the unpaid principal portion of its Term Loans shall be proportionately less than the unpaid principal portion of the Term Loans of any other Lender, it shall (a) notify the Administrative Agent of such fact and (b) be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Term Loans of such other Lender, so that the aggregate unpaid principal amount of the Term Loans and participations in Term Loans held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Term Loans then outstanding as the principal amount of its Term Loans prior to such exercise of banker’s lien, setoff or counterclaim or other event was to the principal amount of all Term Loans outstanding prior to such exercise of banker’s lien, setoff or counterclaim or other event; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.15 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest.  The Borrowers expressly consent to the foregoing arrangements and agree that any Lender holding a participation in a Term Loan deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim or other event with respect to any and all moneys owing by the Borrowers to such Lender by reason thereof as fully as if such Lender had made a Term Loan directly to the Borrowers in the amount of such participation.

 

35

 

SECTION 2.16.                                   Payments.

 

(a)                                 The Borrowers shall make each payment (including principal of or interest on any Term Loan or any fees or other amounts) hereunder and under any other Loan Document not later than 12:00 (noon), Local Time, on the date when due in immediately available Dollars, without setoff, defense or counterclaim.  Subject to Section 2.20, each such payment shall be made to the Administrative Agent for distribution to the Lenders or other appropriate Person.  Each such payment that is payable to a Lender shall be paid directly to such Lender at the office identified on Schedule 2.01 for such Lender or as otherwise directed by such Lender in writing from time to time, and each such payment that is payable to the Administrative Agent or the Collateral Agent shall be paid directly to the Administrative Agent or Collateral Agent, as applicable, at their respective offices identified on Schedule 2.01 or as otherwise directed by the Administrative Agent or Collateral Agent, as applicable, in writing from time to time.  This Section 2.16 is subject to Section 2.19.

 

(b)                                 Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Term Loan or any fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, if applicable.

 

SECTION 2.17.                                   Taxes.

 

(a)                                 Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

(b)                                 The Borrowers shall, or shall cause each of the Loan Parties to, timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(c)                                  The U.S. Loan Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient with respect to U.S. Obligations or required to be withheld or deducted from a payment to such Recipient with respect to U.S. Obligations and any reasonable expenses arising therefrom or with respect thereto and the Cayman Loan Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient with respect to Cayman Obligations or required to be withheld or deducted from a payment to such Recipient with respect to Cayman Obligations and any reasonable expenses arising therefrom or with respect thereto, in each case whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender (with a copy to the Administrative Agent), or

 

36

 

by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

(d)                                 Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Administrative Agent has not already been indemnified by any of the Loan Parties for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(h) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to such Lender from any other source against any amount due to the Administrative Agent under this paragraph (d).

 

(e)                                  As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 2.17, the Borrowers shall, or shall cause the relevant Loan Party to, deliver to the Administrative Agent or the applicable Lender, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent or the applicable Lender, as the case may be.

 

(f)                                   (i)                                     Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments under any Loan Document shall deliver to the Borrowers and the Administrative Agent, at the time or times prescribed by applicable law, or reasonably requested by the applicable Withholding Agent such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrowers or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate.  In addition, any Lender, if reasonably requested by the Borrowers or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

 

(ii)                                  Without limiting the generality of the foregoing, any Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrowers or the Administrative Agent), whichever of the following is applicable:

 

(A)                               any Lender that is a U.S. Person shall deliver to the Borrowers and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrowers or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

 

37

 

(B)                               any Foreign Lender shall deliver to the Borrowers and the Administrative Agent on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement whichever of the following is applicable:

 

(i)                                     in the case of a Foreign Lender claiming the benefits of an income Tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN-E, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such Tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such Tax treaty;

 

(ii)                                  executed originals of IRS Form W-8ECI;

 

(iii)                               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that (A) such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrowers within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (B) the interest payments in question are not effectively connected with a U.S. trade or business conducted by such Foreign Lender (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN;

 

(iv)                              to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership or participating Lender granting a typical participation), executed originals of IRS Form W-8IMY, accompanied by a Form W-8ECI, W-8BEN-E, U.S. Tax Compliance Certificate, Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership (and not a participating Lender) and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; or

 

(v)                                 executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrowers or the Administrative Agent to determine the withholding or deduction required to be made.

 

(iii)                               If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such

 

38

 

additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrowers and the Administrative Agent in writing of its legal inability to do so.

 

(g)                                  If the Administrative Agent or any Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment of additional amounts pursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been paid.

 

(h)                                 Nothing contained in this Section 2.17 shall require any Lender (or any transferee or assignee) or either Agent to make available any of its Tax Returns or any other information that it deems to be confidential or proprietary.

 

SECTION 2.18.                                   Assignment of Loans Under Certain Circumstances; Duty to Mitigate.

 

(a)                                 In the event (i) any Lender delivers a certificate requesting compensation pursuant to Section 2.12, (ii) a Borrower is required to pay any Indemnified Taxes or any additional amount to any Lender or any Governmental Authority on account of any Lender pursuant to Section 2.17 or (iii) any Lender refuses to consent to any amendment, waiver or other modification of any Loan Document requested by the Borrowers that requires the consent of a greater percentage of the Lenders than the Required Lenders and such amendment, waiver or other modification is consented to by the Required Lenders, and, in the case of clause (i) or (ii), such Lender has declined or is unable to designate a different lending office in accordance with Section 2.18(b), the Borrowers, at their sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender and the Administrative Agent, may require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.12 or Section 2.17) and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Borrowers shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld or delayed, and

 

39

 

(z) the Borrowers or such assignee shall have paid to the affected Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Term Loans of such Lender, plus all fees and other amounts accrued for the account of such Lender hereunder with respect thereto (including any amounts under Section 2.12 and Section 2.13); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender’s claim for compensation under Section 2.12 or the amounts paid pursuant to Section 2.17, as the case may be, cease to cause such Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital or cease to result in amounts being payable under Section 2.17, as the case may be (including as a result of any action taken by such Lender pursuant to paragraph (b) of this Section 2.18), or if such Lender shall waive its right to claim further compensation under Section 2.12 in respect of such circumstances or event or shall waive its right to further payments under Section 2.17 in respect of such circumstances or event or shall consent to the proposed amendment, waiver, consent or other modification, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder.  Each Lender hereby grants to the Administrative Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment and Acceptance necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 2.18.

 

(b)                                 If (i) any Lender shall request compensation under Section 2.12 or (ii) the Borrowers are required to pay any Indemnified Taxes or any additional amount to any Lender or any Governmental Authority on account of any Lender pursuant to Section 2.17, then such Lender shall (at the request of the Borrowers) use reasonable efforts (which shall not require such Lender to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) to assign (at the request of the Borrowers) its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.12 or would reduce amounts payable pursuant to Section 2.17, as the case may be, in the future.  The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such filing or assignment, delegation and transfer.

 

SECTION 2.19.                                   [Reserved]

 

SECTION 2.20.                                   Obsidian Agency Services as Administrative Agent.  Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document, at any time that Obsidian Agency Services, Inc. serves as the Administrative Agent hereunder, (a) the Lenders shall directly fund the Term Loans to the Borrowers, (b) each Lender shall provide wire instructions to the Borrowers with respect to payments to be received from the Borrowers hereunder and the Borrowers shall directly make any payments required or permitted hereunder to the Lenders and (c) neither the Lenders nor the Borrowers shall remit any funds to the Administrative Agent to forward to another party hereunder.

 

SECTION 2.21.                                   Original Issue Discount.  The Borrowers and each of the Lenders agree, and the Borrowers shall cause the other Loan Parties to agree, (i) that the Term Loans are debt for U.S. federal income tax purposes, (ii) that the Term Loans are issued with original issue discount (“OID”) on account of the Warrants, (iii) that the Term Loans are not governed by the rules set out in Treasury Regulations Section 1.1275-4, (iv) not to file any Tax Return, report or declaration inconsistent with the foregoing, and (v) any such OID shall constitute principal for all purposes under this Agreement.  The inclusion of this Section 2.21 is not an admission by any Lender that it is subject to United States taxation.

 

40

 

SECTION 2.22.                                   Investment Unit.  In connection with the Term Loans, each of the Lenders is receiving a Warrant on the Closing Date.  The Term Loans and Warrants are considered to be the issuance of an “investment unit” under Section 1273(c)(2) of the Code, and the parties agree that the aggregate fair market value of the Warrants shall be, for purposes of the investment unit allocation rules under Section 1273(c)(2) of the Code, such amount as separately agreed to among the Borrowers and the Administrative Agent.  The Borrowers and each of the Lenders agree, and the Borrowers shall cause the other Loan Parties to agree, to report in a manner that is consistent with this allocation for all tax purposes.

 

SECTION 2.23.                                   Special Provisions Relating to Collateral.  Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents to the contrary, (i) no Cayman Loan Party (other than a U.S. Loan Party) shall be liable for any U.S. Obligations, (ii) no security interest granted by any Cayman Loan Party (other than a U.S. Loan Party) under any of the Loan Documents shall secure any U.S. Obligations, and (iii) all amounts received by any Agent or any Lender on account of the Cayman Obligations from any Cayman Loan Party (other than a U.S. Loan Party) shall be applied or credited solely to the Cayman Obligations.

 

ARTICLE III

 

Representations and Warranties

 

In order to induce the Lenders to enter into this Agreement and to make the Term Loans, the Borrowers represent and warrant to the Administrative Agent, the Collateral Agent and each of the Lenders that the following statements are true and correct (it being understood and agreed that the representations and warranties made on the Closing Date are deemed to be made concurrently with the consummation of the Transactions):

 

SECTION 3.01.                                   Organization; Powers.  Each of the Loan Parties (a) is duly organized or incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization or incorporation, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the power and authority to execute, deliver and perform its obligations under each of the Loan Documents to which it is or will be a party and, in the case of the Borrowers, to borrow hereunder.

 

SECTION 3.02.                                   Authorization.  The Transactions (a) have been duly authorized by all requisite corporate, including, where applicable, board and, if required, stockholder or shareholder action and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, (B) any provision of the Organizational Documents of the Borrowers or any Subsidiary, (C) any order of any Governmental Authority or (D) any provision of any material Contractual Obligation of the Borrowers or any Subsidiary, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such Contractual Obligation, (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Borrowers or any Subsidiary (other than any Lien created hereunder or under the Security Documents or under the Revolving Loan Documents), or (iv) require any approval of holders of Equity Interests of the Borrowers or any of their respective Subsidiaries or any approval or consent of any Person under any Contractual Obligation of the Borrowers or any of their respective Subsidiaries, except for such approvals or consents which will be obtained on or before the Closing Date and disclosed in writing to the Lenders.

 

41

 

SECTION 3.03.                                   Enforceability.  This Agreement has been duly executed and delivered by the Borrowers and constitutes, and each other Loan Document when executed and delivered by each Loan Party party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

SECTION 3.04.                                   Governmental Approvals.  No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, except for (a) the filing of UCC financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) recordation of the Mortgages and (c) such as have been made or obtained and are in full force and effect.

 

SECTION 3.05.                                   Financial Statements.

 

(a)                                 The U.S. Borrower has heretofore furnished to the Lenders (i) GAAP audited consolidated or combined, as applicable, balance sheets and related statements of income, stockholders’ equity and cash flows of the U.S. Borrower and its Subsidiaries for the fiscal years ended on December 31, 2013 and December 31, 2012, audited by and accompanied by the opinion of PricewaterhouseCoopers LLP, independent public accountants and (ii) GAAP unaudited consolidated or combined, as applicable, balance sheets and related statements of income, stockholders’ equity and cash flows of the U.S. Borrower and its Subsidiaries for (A) each subsequent fiscal quarter ended 45 days before the Closing Date and (B) to the extent available, each fiscal month after the most recent fiscal quarter for which financial statements were received by the Lenders as described above and ended 30 days before the Closing Date and, in each case, certified by the chief financial officer of the U.S. Borrower.  Such financial statements present fairly, in all material respects, the financial condition and results of operations and cash flows of the U.S. Borrower and its Subsidiaries as of such dates and for such periods.  Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of the U.S. Borrower and its Subsidiaries as of the dates thereof.  Such financial statements were prepared in accordance with GAAP applied on a consistent basis, subject, in the case of unaudited financial statements, to normal and audit year-end audit adjustments and the absence of footnotes.

 

(b)                                 The U.S. Borrower has heretofore furnished to the Lenders unaudited pro forma consolidated balance sheets and related pro forma consolidated statements of income and cash flows of the U.S. Borrower as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days prior to the Closing Date, in each case prepared after giving effect to the Transactions as if they had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such other financial statements).  Such pro forma financial statements have been prepared in good faith by the U.S. Borrower, based on assumptions believed by the U.S. Borrower on the date hereof and on the Closing Date to be reasonable, are based on the best information available to the U.S. Borrower as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Transactions and present fairly, in all material respects, on a pro forma basis the estimated consolidated financial position of the U.S. Borrower as of such date and for such period, assuming that the Transactions had actually occurred at such date or at the beginning of such period, as the case may be, and such financial statements are based on actual results of the U.S. Borrower and its Subsidiaries, without giving effect to projected synergies or cost savings.  All such adjustments shall be set forth in a reasonably detailed certificate of a Responsible Officer of the U.S. Borrower.

 

42

 

SECTION 3.06.                                   Title to Properties; Possession Under Leases.

 

(a)                                 Each of the Loan Parties has good and marketable title to, or valid leasehold interests in, all its properties and assets (including all Mortgaged Property), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes.  All such properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.02.

 

(b)                                 Each of the Loan Parties has complied with all obligations under all leases to which it is a party and all such leases are in full force and effect, except to the extent non-compliance could not reasonably be expected to result in a Material Adverse Effect.  Each of the Loan Parties enjoys peaceful and undisturbed possession under all such leases, except to the extent failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  As of the Closing Date, none of the Loan Parties has received any notice of, nor has any knowledge of, any pending or contemplated condemnation proceeding affecting the Mortgaged Properties or any sale or disposition thereof in lieu of condemnation.

 

(d)                                 As of the Closing Date, none of the Loan Parties is obligated under any right of first refusal, option or other contractual right to Dispose of any Mortgaged Property or any interest therein.

 

(e)                                  There are no pending or, to the best of the knowledge of the Loan Parties, after reasonable investigation, threatened (in writing) proceedings or litigation, nor any presented claims that could reasonably be expected to result in a Material Adverse Effect on the Intellectual Property held by any Loan Party or any of its Subsidiaries, and, to the best of the knowledge of the Loan Parties, after reasonable investigation, no Person is infringing, misusing, violating or breaching such Intellectual Property in a manner that could reasonably be expected to result in a Material Adverse Effect.  Each Loan Party and its Subsidiaries owns or has a valid license to all material Intellectual Property necessary to operate their business as currently conducted.  Neither any Loan Party nor any of its Subsidiaries has received written notice of any claim of infringement, misuse, violation or breach by such Loan Party or any of its Subsidiaries of any Intellectual Property owned or controlled by another Person that could reasonably be expected to result in a Material Adverse Effect.  Neither any Loan Party nor any of its Subsidiaries are infringing, misusing, violating or breaching any Intellectual Property owned or controlled by any other Person in a manner that could reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.07.                                   Subsidiaries.

 

(a)                                 Schedule 3.07 sets forth as of the Closing Date a list of all Subsidiaries of the Borrowers and the percentage ownership interest of the Borrowers and their Subsidiaries.

 

(b)                                 As of the Closing Date, the authorized capital stock of the U.S. Borrower consists of 100,000,000 common shares, 18,412,985 of which are issued and outstanding, and 20,000,000 preferred shares.  Except as set forth in Schedule 3.07(b), neither U.S. Borrower nor any of its Subsidiaries has and is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreement of any character calling for the purchase or issuance of any Equity Interests of such Person or any securities representing the right to purchase or otherwise receive any Equity Interests of such Person.

 

(c)                                  As of the Closing Date, except as set forth on Schedule 3.07, each Subsidiary of the Borrowers is a Wholly Owned Subsidiary, and all of the issued and outstanding Equity Interests of Subsidiaries of each Loan Parties constituting Collateral are legally and beneficially owned and Controlled directly by such Loan Party, free and clear of any Liens, rights, options, warrants or similar

 

43

 

agreements or understandings, other than Liens in favor of the Collateral Agent created pursuant to the Security Documents and Liens in favor of the Revolving Loan Lender (subject to the Intercreditor Agreement).

 

(d)                                 [Reserved]

 

(e)                                  All the outstanding shares of Equity Interests of U.S. Borrower are duly authorized, validly issued, fully paid, nonassessable and have been issued in compliance with applicable law.  The Warrants and Warrant Shares (as defined in the Warrant Agreement), upon issuance and payment therefor in accordance with the terms of the Warrant Agreement and the Warrants, as applicable, will be duly authorized, validly issued, fully paid and nonassessable.  The Warrant Shares (as defined in the Warrant Agreement) have been duly and validly reserved for issuance on the exercise of the Warrants.  As of the Closing Date, none of the shares of the Equity Interests of the U.S. Borrower are held in the U.S. Borrower’s treasury.  The U.S. Borrower has duly reserved a sufficient number of shares of Warrant Shares (as defined in the Warrant Agreement) for issuance upon exercise of the Warrants and other outstanding warrants at the initial exercise rate thereof.  As of the Closing Date, no Equity Interest of the U.S. Borrower is entitled to cumulative voting rights, preemptive rights, anti-dilution rights or so-called registration rights under the Securities Act, except as otherwise provided in Registration Rights Agreement.

 

(f)                                   Set forth on Schedule 3.07(f) (as may be updated from time to time pursuant to Section 5.04(f)) is a full list of the Immaterial Subsidiaries and their respective jurisdiction of organization. None of the Immaterial Subsidiaries (a) had, as of the last day of the fiscal quarter of the U.S. Borrower most recently ended and as to which financial statements have been delivered pursuant to Section 5.04, assets with a value in excess of 5.0% of the Consolidated Total Assets or revenues representing in excess of 5.0% of total revenues of U.S. Borrower and its Subsidiaries on a consolidated basis as of such date, and (b) taken together with all Immaterial Subsidiaries as of the last day of the fiscal quarter of the U.S. Borrower most recently ended and as to which financial statements have been delivered pursuant to Section 5.04, had assets with a value in excess of 10.0% of Consolidated Total Assets or revenues representing in excess of 10.0% of total revenues of the U.S. Borrower and its Subsidiaries on a consolidated basis as of such date, except to the extent any such Immaterial Subsidiary has become a “Loan Party” since such date (and the Loan Parties shall have complied with the applicable requirements of Section 5.12 with respect to such Immaterial Subsidiary).

 

SECTION 3.08.                                   Litigation; Compliance with Laws.

 

(a)                                 There are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of the Borrowers, threatened against or affecting any of the Loan Parties, any of their respective Subsidiaries or any business, property or rights of any such Person that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

(b)                                 None of the Loan Parties, any of their respective Subsidiaries or any material properties or assets of any such Person is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

 

44

 

(c)                                  Certificates of occupancy and permits are in effect for each Mortgaged Property as currently constructed, and true and complete copies of such certificates of occupancy have been delivered to the Collateral Agent as mortgagee with respect to each Mortgaged Property.

 

(d)                                 None of the Loan Parties or their respective Subsidiaries is or has been, in any material respect, in conflict or default with respect to or in violation of any applicable laws, regulations, orders or judgments.  Each Loan Party and each of its Subsidiaries have timely filed with the appropriate authorities all federal and other material Tax Returns and other material filings required to be filed by them with respect to Taxes for any period ending on or before the Closing Date, and all federal and other material Taxes that are due prior to the Closing Date have been duly paid.

 

SECTION 3.09.                                   Contractual Obligations.

 

(a)                                 None of the Loan Parties or their respective Subsidiaries is a party to any Contractual Obligation or subject to any organizational restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect.

 

(b)                                 None of the Loan Parties or their respective Subsidiaries is or has been in any material respect in default under or in violation of the performance of any of its obligations under any material Contractual Obligation, and, to the knowledge of the Loan Parties, no other party thereto is in default under or in violation of the performance of any of its obligations under any such material Contractual Obligation, in each case in a manner that could reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  None of the Loan Parties or their respective Subsidiaries is a party or subject to any Contractual Obligation pursuant to which any Loan Party is required to pay any Management Fees.

 

SECTION 3.10.                                   Federal Reserve Regulations.

 

(a)                                 None of the Loan Parties or their respective Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

 

(b)                                 No part of the proceeds of any Term Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation T, Regulation U or Regulation X.

 

SECTION 3.11.                                   Government Regulation.  None of the Loan Parties or their respective Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.  None of the Loan Parties or their respective Subsidiaries is subject to regulation under the Federal Power Act, the Interstate Commerce Act, the ICC Termination Act, as amended, or under any other federal or state statute or regulation that may limit its ability to incur Indebtedness or Contingent Obligations or which may otherwise render all or any portion of the Obligations unenforceable.

 

SECTION 3.12.                                   Use of Proceeds.  The Borrowers will use the proceeds of the Term Loans only for the purposes specified in Section 5.08.

 

45

 

SECTION 3.13.                                   Tax Returns; Passive Foreign Investment Company; Controlled Foreign Corporation.

 

(a)                                 Each of the Loan Parties and each of their respective Subsidiaries have filed or caused to be filed all Federal, material state, material local and material foreign Tax Returns required to have been filed by it and has paid or caused to be paid all Taxes due and payable by it, except Taxes that are being contested in good faith by appropriate proceedings and for which the applicable Loan Party or Subsidiary shall have set aside on its financial statements adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested Tax and the imposition or enforcement of any Lien.

 

(b)                                 Neither the Borrowers nor any of their Subsidiaries ever has been, is, or, upon the consummation of the transactions contemplated hereby, by any other Transaction Document or any related agreements, will be (i) a “passive foreign investment company” within the meaning of Section 1297 of the Code or (ii) except as set forth on Schedule 3.13(b), a CFC.

 

SECTION 3.14.                                   No Material Misstatements.

 

(a)                                 Except with respect to the Closing Date Projections, the information that the Loan Parties have provided, directly or indirectly, to the Administrative Agent, taken together with the U.S. Borrower’s filings with the Securities and Exchange Commission, is not misleading and does not contain any material misstatement of fact or omit to state any material fact that (i) is necessary to make the statements therein, in the light of the circumstances under which they were, not misleading as of the date such information is dated or certified, or (ii) could reasonably be expected to have a material negative effect on the business, assets or valuation of the Loan Parties and their Subsidiaries, taken as a whole.

 

(b)                                 The Closing Date Projections have been diligently prepared on a basis consistent with the financial statements delivered to the Lenders and the Administrative Agent pursuant to Section 3.05, and are based on good faith estimates and assumptions believed by management of the Borrowers to be reasonable as of the date of the Closing Date Projections, and there are no statements or conclusions in any of the Closing Date Projections that are based upon or include information known to any Loan Party or any of its Subsidiaries to be misleading in any material respect on the Closing Date or which fail on the Closing Date to take into account material information regarding the matters reported therein.  On the Closing Date, the Borrowers believe that the Closing Date Projections are reasonable, it being recognized by the Lenders and the Administrative Agent, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Closing Date Projections may differ from the projected results and such differences may be material.

 

SECTION 3.15.                                   Employee Benefit Plans.

 

(a)                                 Each Employee Benefit Plan of the Borrowers and their ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in material liability of the Borrowers or any of their ERISA Affiliates.  The present value of all benefit liabilities under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the last annual valuation date applicable thereto, exceed by more than $200,000 the fair market value of the assets of such Plan, and the present value of all benefit liabilities of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the last annual valuation dates applicable thereto, exceed by more than $200,000 the fair market value of the assets of all such underfunded Plans.  There

 

46

 

are no pending or threatened claims, sanctions, actions or lawsuits, asserted or instituted against any Employee Benefit Plan or any Person as fiduciary or sponsor of any such Employee Benefit Plan.  There are no pending or threatened claims, sanctions, actions or lawsuits, asserted or instituted against any Employee Benefit Plan or any Person as fiduciary or sponsor of any such Employee Benefit Plan.

 

(b)                                 With respect to each employee benefit scheme or arrangement mandated by a government other than the United States of America providing for post-employment benefits (each, a “Foreign Government Scheme or Arrangement”) and with respect to each employee benefit plan maintained or contributed to by any Loan Party or any Subsidiary or Affiliate of the Loan Parties that is not subject to United States law providing for post-employment benefits (each, a “Foreign Plan”):  (i) all employer and employee contributions required by law or by the terms of any Foreign Government Scheme or Arrangement or any Foreign Plan have been made, or, if applicable, accrued, in accordance with normal accounting practices; (ii) the liability of the Loan Parties or any Subsidiary or Affiliate of the Loan Parties with respect to a Foreign Plan is reflected in accordance with normal accounting practices on the financial statements of such Loan Party or such Subsidiary or Affiliate, as the case may be; and (iii) each Foreign Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities.

 

SECTION 3.16.                                   Environmental Matters.

 

(a)                                 Except as set forth in Schedule 3.16, and except for matters that could not reasonably be expected to result in a Material Adverse Effect, none of the Loan Parties or their respective Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

 

(b)                                 Since the date of this Agreement, there has been no change in the status of the matters disclosed on Schedule 3.16 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

 

SECTION 3.17.                                   Insurance.  Schedule 3.17 sets forth a true, complete and correct description of all insurance maintained by the Loan Parties or their respective Subsidiaries as of the Closing Date.  As of such date, such insurance is in full force and effect and all premiums have been duly paid.  The Loan Parties and their respective Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice.

 

SECTION 3.18.                                   Security Documents.

 

(a)                                 The U.S. Guarantee and Collateral Agreement is effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral described therein and the proceeds thereof.  In the case of the pledged Equity Interests described in the U.S. Guarantee and Collateral Agreement that are securities represented by stock certificates or otherwise constituting certificated securities within the meaning of Section 8-102(a)(15) of the UCC or the corresponding code or statute of any other applicable jurisdiction (“Certificated Securities”), when certificates representing such pledged Equity Interests are delivered to the Collateral Agent (or, if the Revolving Credit Agreement is outstanding, the Revolving Loan Lender as bailee for the Secured Parties pursuant to the Intercreditor Agreement), and in the case of the other Collateral constituting personal property described in the U.S. Guarantee and Collateral Agreement that can be perfected by the filing of a financing statement, when financing statements and other filings specified on Schedule 3.18(a) in appropriate form are filed in the offices specified on Schedule 3.18(a), the Collateral

 

47

 

Agent shall have a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations, in each case prior and superior in right to any other Person (except Liens permitted by Section 6.02).  As of the Closing Date, none of the Borrowers or any Guarantor that is a limited liability company or partnership has any Equity Interest that is a Certificated Security.

 

(b)                                 Each of the Mortgages delivered after the Closing Date will be, upon execution, effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and enforceable Lien on the Mortgaged Properties described therein and proceeds thereof, and when the Mortgages are filed in the offices for the applicable jurisdictions in which the Mortgaged Properties are located, each such Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior and superior in right to any other Person (except the Revolving Loan Lender and as noted in the relevant title reports).

 

(c)                                  Each of the Cayman Law Share Charge and Cayman Law Charge is effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and enforceable first (or, if the Revolving Loan Agreement is outstanding, second) priority Lien on the Collateral described therein and proceeds thereof.

 

SECTION 3.19.                                   Location of Real Property and Leased Premises.

 

(a)                                 Schedule 3.19(a) lists completely and correctly as of the Closing Date all real property owned by the Borrowers and the Subsidiaries and the addresses thereof.  As of the Closing Date, the Borrowers and the Subsidiaries own in fee all the real property set forth on Schedule 3.19(a).

 

(b)                                 Schedule 3.19(b) lists completely and correctly as of the Closing Date all real property leased by the Borrowers and the Subsidiaries and the addresses thereof.  As of the Closing Date, the Borrowers and the Subsidiaries have valid leases in all the real property set forth on Schedule 3.19(b).

 

SECTION 3.20.                                   Labor Matters.  As of the Closing Date, there are no strikes, lockouts or slowdowns against any of the Loan Parties or their respective Subsidiaries pending or, to the knowledge of the Borrowers, threatened.  The hours worked by and payments made to employees of the Loan Parties have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters in any manner that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  All payments due from any of the Loan Parties and their respective Subsidiaries, or for which any claim may be made against any of the Loan Parties or their respective Subsidiaries, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Loan Parties or their respective Subsidiaries.  The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any of the Loan Parties and their respective Subsidiaries is bound.

 

SECTION 3.21.                                   Solvency.  Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of the Term Loans and after giving effect to the application of the proceeds of the Term Loans, (a) the fair value of the assets of the Loan Parties and their Subsidiaries, taken as a whole, at a fair valuation, will exceed their debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of the Loan Parties and their Subsidiaries, taken as a whole, will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become due, absolute and matured; (c) the Loan Parties and their Subsidiaries,

 

48

 

taken as a whole, will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Loan Parties and their Subsidiaries, taken as a whole, will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Closing Date.  Such foregoing determination has been made by the chief executive officer and chief financial officer, if any, of the Borrowers after having conducted a diligent inquiry on a good faith basis, is based on such officers’ actual knowledge and such officers have not conveyed any information to the contrary to any other Person at any time on or prior to the date that this representation and warranty is being made or deemed made.

 

SECTION 3.22.                                   Transaction Documents; Revolving Loan Documents.

 

As of the Closing Date:

 

(a)                                 The Borrowers have delivered to the Administrative Agent a complete and correct copy of the Spin-off Agreement (including all schedules, exhibits, amendments, supplements and modifications thereto).  No Loan Party or, to the knowledge of the Borrowers, any other Person party thereto is in default in the performance or compliance with any material provisions thereof.  The Spin-off was consummated in accordance with all applicable laws.  All representations and warranties set forth in the Spin-off Agreement were true and correct in all material respects at the time as of which such representations and warranties were made (or deemed made).

 

(b)                                 The Borrowers have delivered to the Administrative Agent a complete and correct copy of the Revolving Loan Documents (including all schedules, exhibits, amendments, supplements and modifications thereto).  No Loan Party or, to the knowledge of the Borrowers, any other Person party thereto is in default in the performance or compliance with any material provisions thereof.  The Revolving Loan Documents complies in all material respects with all applicable laws.  All representations and warranties set forth in the Revolving Loan Documents made by the Loan Parties were true and correct in all material respects at the time as of which such representations and warranties were made (or deemed made).

 

SECTION 3.23.                                   Sanctioned Persons.  None of the Loan Parties and their respective Subsidiaries nor, to the knowledge of the Borrowers, any director, officer, agent, employee or Affiliate of any of the Loan Parties and their respective Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); the Borrowers and their respective Subsidiaries will not directly or indirectly use the proceeds of the Term Loans or otherwise make available such proceeds to any Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC; except, in each case under this Section 3.23, as set forth on Schedule 3.25 with respect to prior activities only (which matters set forth on such Schedule could not reasonably be expected to have a Material Adverse Effect).

 

SECTION 3.24.                                   Financial Advisors.  Except as set forth in Schedule 3.24, no agent, broker, investment banker, finder, financial advisor or other Person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee from any Loan Party with respect to this Agreement or any of the other Loan Documents or any of the transactions contemplated hereby, and the Borrowers hereby indemnify the Lenders and the Administrative Agent against, and agrees that it will hold the Lenders and the Administrative Agent harmless from, any claim, demand or liability for any such broker’s or finder’s fees alleged to have been incurred in connection herewith or therewith and any expenses (including reasonable fees, expenses and disbursements of counsel) arising in connection with any such claim, demand or liability.

 

49

 

SECTION 3.25.                                   Foreign Assets Control Regulations, Etc.

 

(a)                                 Neither the borrowing of the Term Loans by the Borrowers hereunder nor their use of the proceeds thereof will violate (i) the United States Trading with the Enemy Act, as amended, (ii) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, (iii) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism) (the “Terrorism Order”) or (iv) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001).  No part of the proceeds from the Term Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

(b)                                 No Loan Party or its Subsidiary (i) is or will become a “blocked person” as described in Section 1.01 of the Terrorism Order or (ii) except as set forth on Schedule 3.25 with respect to prior engagements only (which matters set forth on such Schedule could not reasonably be expected to have a Material Adverse Effect), engages or will engage in any dealings or transactions, or is otherwise associated, with any such blocked person.

 

(c)                                  Each of the Loan Parties and its Affiliates are in compliance, in all material respects, with the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26, 2001) and the other laws and regulations referenced in paragraph (a) above.

 

SECTION 3.26.                                   Representations and Warranties.  The representations and warranties of each Guarantor contained in the Loan Documents to which it is a party are true and correct as the date made or deemed made (after giving effect to any materiality standards set forth therein).

 

SECTION 3.27.                                   Deposit Accounts; Securities Accounts.  Set forth on Schedule 3.27 is a listing of all of the Loan Parties’ Deposit Accounts and Securities Accounts as of the Closing Date, including, with respect to each bank or securities intermediary (a) the name and address of such Person, (b) the account numbers of the Deposit Accounts or Securities Accounts maintained with such Person, and (c) the relevant Loan Party or Loan Parties.

 

SECTION 3.28.                                   Loans to Officers and Directors.  There are no outstanding loans made by the Borrowers or any of their Subsidiaries to any of their officers, directors or shareholders (directly or indirectly) or any of such Persons’ Affiliates (excluding the Borrowers and any of their Subsidiaries and excluding any advances for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business, in each case, to the extent permitted hereunder).

 

SECTION 3.29.                                   [Reserved]

 

SECTION 3.30.                                   Accounts and Notes Receivable; Accounts and Notes Payable.

 

(a)                                 All the accounts receivable and notes receivable owing to the Borrowers or any of their Subsidiaries as of the Closing Date constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business, consistent with past practice, and there are no known or asserted claims, refusals to pay or other rights of set-off against any thereof except those arising in the

 

50

 

ordinary course of business and which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(b)                                 All accounts payable and notes payable by the Borrowers or any of their Subsidiaries to third parties as of the Closing Date arise from bona fide transactions in the ordinary course of business, consistent with past practice and, except as set forth on Schedule 3.30(b), there is no such account payable or note payable delinquent in its payment, except those contested in good faith or payments made consistent with prior practice and which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.31.                                   Internal Controls.  The Borrowers and their Subsidiaries maintain a system of internal control over financial reporting.  Such internal controls over financial reporting provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

 

SECTION 3.32.                                   Intellectual Property; Copyright Matters.

 

(a)                                 Except as set forth on Schedule 3.32(a) or as thereafter otherwise disclosed in writing to the Administrative Agent by the Borrowers as required by Section 5.04(e), no Loan Party (A) owns any registered patents, patent applications, registered trademarks, trademark applications, registered trade names, registered service marks, service mark applications, registered copyrights or copyright applications, licenses or (B) Material Inbound Licenses.  Each Loan Party owns directly, or is entitled to use by license or otherwise, all Intellectual Property necessary for or material to the conduct of such Loan Party’s businesses, except (solely with respect to any occasion on which this representation and warranty is made or deemed made after the Closing Date) to the extent that the failure to so own or be entitled to use could not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.  All items listed on Schedule 3.32(a) and the further items disclosed pursuant to Section 5.04(e) are and, at all times (except to the extent no longer deemed necessary for or material to the conduct of the business of the Loan Parties in the good faith business judgment of the Loan Parties) will be:  (a) subsisting and have not been adjudged invalid or unenforceable, in whole or part; and (b) valid, in full force and effect and not in known conflict with the rights of any Person, in each case except (solely with respect to any occasion on which this representation and warranty is made or deemed made after the Closing Date) as could not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.  Each Loan Party has made all filings and recordings such Loan Party deems necessary in the exercise of reasonable and prudent business judgment to protect its interest in the Intellectual Property of such Loan Party necessary for or material to the conduct of such Loan Party’s businesses in the United States Patent and Trademark Office, and the Copyright Office and in corresponding offices throughout the world, as appropriate, in each case except (solely with respect to any occasion on which this representation and warranty is made or deemed made after the Closing Date) as could not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.  Except for not making filings or recordings in its exercise of such judgment, each Loan Party has performed all acts and has paid all required fees and taxes to maintain each and every item of the Intellectual Property of such Loan Party in full force and effect, except such items of Intellectual Property as are no longer deemed necessary for or material to the conduct of the businesses of the Loan Parties in the reasonable business judgment of the Loan Parties and except (solely with respect to any occasion on which this representation and warranty is made or deemed made after the Closing Date) as could not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.  There are no pending or, to the knowledge of the Loan Parties, threatened in writing (including by email or other electronic means) applications, proceedings or litigation, nor any presented claims which could reasonably be expected to materially and adversely affect any Intellectual Property of any Loan Party or any of its Subsidiaries necessary for or material to the conduct of such Loan Party’s or such Subsidiaries’

 

51

 

businesses, and, to the knowledge of the Loan Parties, no Person is infringing, misusing, violating or breaching such Intellectual Property in any material respect.  Neither any Loan Party nor any of its Subsidiaries has received written notice of any claim of infringement, misuse, violation or breach by such Loan Party or any of its Subsidiaries of any Intellectual Property owned or controlled by another Person which infringement, misuse, violation or breach could reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.  No Loan Party is in breach of or default under the provisions of any of the foregoing, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute, or result in a conflict, breach, default or event of default under, any of the foregoing that reasonably could be expected to result in, either individually or in the aggregate, a Material Adverse Effect.

 

(b)                                 Each Loan Party (a) has duly and timely filed all reports and other filings which are required to be filed under the Copyright Act, the non-filing of which could reasonably be expected to have a Material Adverse Effect, and (b) is in compliance in all material respects with the Copyright Act.  All information provided by or on behalf of any Loan Party in any material filing with the Copyright Office was, at the time of filing, true, complete and correct in all material respects when made, and the Copyright Office has been notified of any substantial or significant changes in such information as may be required by the Copyright Act.

 

SECTION 3.33.                                   Change of Control Provisions.  As of the Closing Date, no inbound license or agreement (other than as set forth on Schedule 3.33, the Revolving Loan Agreement and registry agreements with ICANN (and other agreements entered into in connection therewith)), the termination, expiration or suspension of which could reasonably be expected to result in a Material Adverse Effect entered into by or binding upon the Borrowers or any of their Subsidiaries, contains any “change of control” provision, howsoever denominated, or any other provision the inclusion of which in such agreement would automatically, or at the option of any party thereto, result in (i) the termination of or right to terminate such agreement, (ii) the suspension of or right to suspend any obligations of any parties thereto, or (iii) any change in the rights, duties or obligations of any party thereto (in the case of each of clause (i), clause (ii) or clause (iii), whether immediately or upon the passage of time or otherwise).

 

ARTICLE IV

 

Conditions of Lending

 

SECTION 4.01.                                   Conditions Precedent to Closing.

 

The obligations of the Lenders to make Term Loans hereunder are subject to the satisfaction of the following conditions on the Closing Date:

 

(a)                                 Loan Party Documents.  The Administrative Agent shall have received the following from or with respect to each Loan Party:

 

(i)                                     Except to the extent such Loan Party is organized or incorporated in a jurisdiction where the applicable Governmental Authority does not provide such certificates, a copy of the certificate or articles of incorporation or other such Organizational Documents, including all amendments thereto, certified as of a recent date by either the Secretary of State of the state of its organization or such Governmental Authority, and a certificate certifying that, where applicable, such Loan Party has paid all franchise Taxes due and payable on or prior to the date of such certificate and such Loan Party is duly organized and in good standing (which may, where applicable, be satisfied by means of a separate certificate), under the laws of such jurisdiction;

 

52

 

(ii)                                  A certificate of the Secretary or a director of each Loan Party dated the Closing Date and certifying (A) that attached thereto are true and complete copies of the Organizational Documents of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Governing Body of such Loan Party authorizing the execution, delivery and performance of the Loan Documents and the Transaction Documents, to which such Person is a party and, in the case of the Borrowers, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the Organizational Documents of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing or certification of the relevant Governmental Authority furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each director or officer executing any Loan Documents or any other document delivered in connection herewith on behalf of such Loan Party including the Transaction Documents;

 

(iii)                               a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii) above;

 

(iv)                              executed originals of the Loan Documents to which such Person is a party;

 

(v)                                 executed copies of the Related Documents;

 

(vi)                              the Collateral Information Certificate of each Loan Party, executed by a Responsible Officer of the U.S. Borrower; and

 

(vii)                           such other documents as the Lenders or the Administrative Agent may reasonably request.

 

(b)                                 Fees.  The Administrative Agent and the Lenders shall have received all fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrowers hereunder or under any other Loan Document.

 

(c)                                  Corporate and Capital Structure.  The capitalization, structure and equity ownership of the Borrowers and their Subsidiaries shall be as set forth in Schedule 3.07.

 

(d)                                 Financial Statements; Pro Forma Financial Statements.  The Lenders shall have received the financial statements, pro forma financial statements, and audit opinion referred to in Section 3.05.

 

(e)                                  Closing Date Projections.  The Lenders and the Administrative Agent shall have received the forecasted financial statements of the Borrowers and their Subsidiaries, consisting of balance sheets, income statements and cash flow statements for the Borrowers and their Subsidiaries giving effect to the consummation of the transactions contemplated by this Agreement and the other Transaction Documents, dated July 18, 2014 (the “Closing Date Projections”), in form and substance satisfactory to the Lenders and the Administrative Agent, together with an officers’ certificate from the U.S. Borrower’s chief executive officer and chief financial officer regarding the Closing Date Projections containing the certifications set forth in Section 3.14(b).

 

(f)                                   Solvency Assurances.  The Administrative Agent shall have received an officers’ certificate from the chief executive officer and chief financial officer of the U.S. Borrower, in form and

 

53

 

substance satisfactory to the Administrative Agent, to the effect that, immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of the Term Loans and after giving effect to the application of the proceeds of the Term Loans, (a) the fair value of the assets of the Loan Parties and their Subsidiaries, taken as a whole, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of the Loan Parties and their Subsidiaries, taken as a whole, will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Loan Parties and their Subsidiaries, taken as a whole, will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Loan Parties and their Subsidiaries, taken as a whole, will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Closing Date.  Such chief executive officer and chief financial officer shall certify that the foregoing determination has been made after conducting diligent inquiry by such officer on a good faith basis, is based on such officer’s actual knowledge and that such officer has not conveyed any information to the contrary to any other Person at any time on or prior to the Closing Date.

 

(g)                                  Opinions of Counsel to the Loan Parties.  The Administrative Agent shall have received, on behalf of itself, the Collateral Agent, the Lenders, a favorable written opinion of (i) Wilson Sonsini Goodrich & Rosati, transaction counsel for the Loan Parties, (ii) Lionel Sawyer & Collins, Nevada counsel for the Loan Parties, (iii) Maples & Calder, Cayman Islands counsel for the Cayman Borrower, and (iv) Arthur Cox, Irish counsel for the Loan Parties, in each case (A) dated the Closing Date, (B) addressed to the Administrative Agent, the Collateral Agent and the Lenders, and (C) covering such other matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and the Borrowers hereby request such counsel to deliver such opinions.

 

(h)                                 Evidence of Insurance.  The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a customary lender’s loss payable endorsement and to name the Collateral Agent as additional insured, in form and substance satisfactory to the Administrative Agent.

 

(i)                                     Necessary Governmental Authorizations and Consents; Expiration of Waiting Periods, etc.  All requisite Governmental Authorities and other material third parties shall have approved or consented to the Transactions and the other transactions contemplated hereby to the extent required, all applicable appeal periods shall have expired and there shall not be any pending or threatened litigation, governmental, administrative or judicial action, actual or threatened, that could reasonably be expected to restrain, prevent or impose materially burdensome conditions on the Transactions.

 

(j)                                    [Reserved]

 

(k)                                 Collateral Matters

 

(i)                                     Lien Searches.  The Administrative Agent shall have received the results of recent lien searches in each of the jurisdictions where any of the Loan Parties is formed or organized, and such searches shall reveal no liens on any of the assets of the Loan Parties except for Liens permitted by Section 6.02, or other Liens which shall be discharged prior to the Closing Date.

 

(ii)                                  Pledged Stock; Stock Powers; Pledged Notes.  The Administrative Agent (or, in the case of original certificates, original promissory notes or other possessory collateral, the Revolving Loan Lender, as the bailee for the Secured Parties pursuant to the Intercreditor Agreement)

 

54

 

shall have received (A) pursuant to the U.S. Guarantee and Collateral Agreement: (1) original certificates (if any) representing the shares of Equity Interests pledged to the Collateral Agent, for the benefit of the Secured Parties, pursuant thereto, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (2) the original promissory note(s) (if any) pledged to the Collateral Agent, for the benefit of the Secured Parties, pursuant thereto, endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof; (B) pursuant to the Irish Law Share Charges: (1) original certificates (if any) and other documents of title representing the Shares and Related Assets (as such terms are defined therein) charged in favor of the Collateral Agent, for the benefit of the Secured Parties, pursuant thereto, together with undated stock transfer forms or other instruments of transfer for each such certificate executed in blank by a duly authorized officer of the chargor thereof, (2) the dividend mandate in the form set out in Schedule 2 thereto executed by the chargor thereof, and (3) a letter of authority in the form set out in Schedule 3 thereto executed by the chargor thereof; (C) pursuant to the Irish Law Charges: (1) notices of assignment of insurances in the form set out on Part 2 of Schedule 3 thereto executed by DMIH, (2) notices to contract parties in the form set out on Part 2 of Schedule 3 thereto executed by DMIH and (3) acknowledgments from the applicable parties pursuant to items (1) and (2) each in the form set out on Part 3 of Schedule 3 executed by the applicable parties; and (D) pursuant to the Cayman Law Share Charge: (1) original certificates (if any) representing the shares charged pursuant thereto, along with an undated share transfer form in respect of such shares in the form set out in Schedule 1 thereto executed by DMIH, (2) (a) undated letters of resignation and release and (b) dated letters of authority with respect thereto, each in the form set out in Schedule 2 thereto executed by each director and officer of the Cayman Borrower, (3) a dated proxy in respect of the shares charged thereunder in the form set out in Schedule 3 thereto executed by DMIH, (4) a dated undertaking in the form set out in Schedule 4 thereto executed by the Cayman Borrower, (5) a dated notice of charge to the Cayman Borrower in the form set out in Schedule 5 thereto executed by DMIH, (6) a certified copy of the annotated register of members of the Cayman Borrower in a form acceptable to the Administrative Agent, noting the charge over the shares of the Cayman Borrower created pursuant thereto and (7) evidence satisfactory to the Administrative Agent that the memorandum and articles of association of the Cayman Borrower shall have, where applicable, been amended to remove any restriction on the transfer of shares subject to the security created thereby.

 

(iii)                               Filings, Registrations, Recordings, Agreements, Etc.  Each document (including any UCC financing statements, Intellectual Property Security Agreements, Control Agreements and landlord access agreements and/or bailee waivers) required by the Loan Documents or under law or reasonably requested by the Collateral Agent to be filed, executed, registered or recorded to create in favor of Collateral Agent (for the ratable benefit of the Secured Parties), a perfected Lien on the Collateral described therein, prior and superior in right and priority to any Lien in the Collateral held by any other Person (other than with respect to Liens expressly permitted by Section 6.02), shall have been executed (if applicable) and delivered to the Collateral Agent in proper form for filing, registration or recordation.

 

(l)                                     Existing Debt.  The Borrowers shall have delivered to the Administrative Agent all documents or instruments necessary to release all Liens granted by any of the Borrowers and their respective Subsidiaries securing Indebtedness of Demand Media, Inc. and its Subsidiaries (after giving effect to the Transactions), and to release each of the Borrowers and their respective Subsidiaries from any obligations or liabilities in respect of Indebtedness of Demand Media, Inc. and its Subsidiaries (after giving effect to the Transactions).

 

55

 

(m)                             Matters Relating to Spin-off and other Transactions.

 

(i)                                     (A) The Spin-off shall have been consummated; (B) the Spin-off Agreement and related documents shall be in full force and effect (without any amendments, waivers or alterations thereof unless consented to by the Administrative Agent) and (C) the Administrative Agent shall have received copies of each Transaction Document, the private letter ruling issued by the Internal Revenue Service in respect of the Spin-off and all other agreements relating to the Spin-off Agreement, certified by an officer of the U.S. Borrower to be true, correct and complete;

 

(ii)                                  (A) the “Closing Date” under the Revolving Loan Agreement shall have occurred, (B) the Administrative Agent shall have received duly executed copies of each Revolving Loan Document (each of which shall be in form and substance satisfactory to the Administrative Agent), certified by an officer of the U.S. Borrower to be true, correct and complete and (C) other than issuances of letters of credit thereunder, there shall be no Revolving Loans or other extensions of credit made under the Revolving Loan Documents on the Closing Date; and

 

(iii)                               The Spin-off and the other Transactions shall have been consummated in accordance with applicable law and on the terms described in the Spin-off Agreement and all other material related documentation, in the form filed with the Securities and Exchange Commission with respect to the U.S. Borrower’s Form 10 filing, and as of the date of the Spin-off, (A) the Borrowers shall have not less than $25,000,000 of cash and Permitted Investments and (B) the U.S. Borrower shall have an equity market capitalization of not less than $70,000,000.

 

(n)                                 The Administrative Agent shall have received a certificate, dated the Closing Date and signed by a Financial Officer of the U.S. Borrower, confirming compliance with the conditions precedent set forth in Section 4.01(m).

 

(o)                                 Other Legal Matters.

 

(i)                                     All corporate and other proceedings in connection with the transactions contemplated by this Agreement and the other Transaction Documents and all other agreements, documents and instruments incident to such transactions shall be satisfactory to the Lenders and the Administrative Agent, and the Lenders and the Administrative Agent shall have received all such counterpart originals or certified or other copies of such documents as the Lenders or Agent may reasonably request.

 

(ii)                                  The Administrative Agent and the Lenders shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

 

(iii)                               All legal matters incident to this Agreement, the extensions of credit hereunder and the other Loan Documents shall be satisfactory to the Lenders and to the Administrative Agent.

 

(p)                                 Funds Flow Memorandum.  The Administrative Agent shall have received a funds flow memorandum duly executed by a Responsible Officer of the U.S. Borrower, in form and substance reasonably satisfactory to the Administrative Agent.

 

56

 

(q)                                 Material Adverse Effect.  No Material Adverse Effect shall have occurred and no disruption, adverse change or condition in the financial, lending or capital markets generally in each case, in the Administrative Agent’s sole judgment, at any time prior to the Closing Date.

 

(r)                                    No Material Adverse Facts.  The Administrative Agent does not become aware of any new or inconsistent information or other matter not previously disclosed to the Administrative Agent relating to the Loan Parties or the Transactions which the Administrative Agent, in its reasonable judgment, deems material and adverse relative to the information or other matters disclosed to the Administrative Agent prior to the date hereof.

 

(s)                                   No Litigation.  There shall not exist any action, suit, investigation, litigation, proceeding, hearing or other legal or regulatory developments, pending or threatened in any court or before any arbitrator or Governmental Authority that, in the reasonable opinion of Administrative Agent, singly or in the aggregate, could reasonably be expected to materially impair any of the transactions contemplated by the Loan Documents, or that could reasonably be expected to have a Material Adverse Effect.

 

(t)                                    Due Diligence.  The Administrative Agent shall have completed a due diligence investigation of the Loan Parties in scope, and with results, satisfactory to the Administrative Agent, including without limitation, as to general affairs, environmental concerns, management, corporate structure, capital structure, other debt instruments, material contracts, governing documents, prospects, financial position, stockholders’ or shareholders’ equity and results of operations, and the tax, accounting, legal, regulatory, environmental and other issues relevant to the Loan Parties, and shall have been given access to the external independent auditors, management, records, books of account, contracts and properties of the Loan Parties and shall have received such financial, business and other information regarding the Loan Parties as it shall have requested.

 

(u)                                 Closing Date.  The Closing Date shall in no event occur later than August 6, 2014.

 

(v)                                 Representations and Warranties.  (i) The representations and warranties in Article III and in the other Loan Documents shall be true and correct in all material respects on and as of the Closing Date (or, to the extent such representations and warranties specifically relate to an earlier date, that such representations and warranties were true and correct in all material respects on and as of such earlier date), (ii) the Borrowers and the other Loan Parties shall have performed in all material respects all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by it on or before the Closing Date except as otherwise disclosed to and agreed to in writing by the Administrative Agent, and (iii) the Borrowers shall have delivered to the Administrative Agent an officer’s certificate, in form and substance reasonably satisfactory to the Administrative Agent, certifying as to the accuracy of each of clause (i) and clause (ii); provided that, if a representation and warranty, covenant or condition is qualified as to materiality, the applicable materiality qualifier set forth above shall be disregarded with respect to such representation and warranty, covenant or condition for purposes of this condition.

 

(w)                            No Default.  At the time of each borrowing hereunder and also after giving effect thereto there shall exist no Default or Event of Default;

 

(x)                                 Notice of Borrowing.  Prior to the making of the Term Loans, the Administrative Agent shall have received a Notice of Borrowing meeting the requirements of Section 2.02(c).

 

SECTION 4.02.                                   Post Closing Obligations.  As an accommodation to the Borrowers, the Administrative Agent and the Lenders have agreed to execute this Agreement and to make Term Loans on the Closing Date notwithstanding the failure by the Borrowers to satisfy the conditions set forth below

 

57

 

on or before the Closing Date.  In consideration of such accommodation, the Lenders agree that, in addition to all other terms, conditions and provisions set forth in this Agreement and the other Loan Documents, including those conditions set forth in Section 4.01, the Borrowers shall satisfy each of the conditions subsequent set forth below on or before the date applicable thereto (it being understood that (i) the failure by the Borrowers to perform or cause to be performed any such condition subsequent on or before the date applicable thereto shall constitute an immediate Event of Default and (ii) to the extent that the existence of any such condition subsequent would otherwise cause any representation, warranty or covenant in this Agreement or any other Loan Document to be breached, the Required Lenders hereby waive such breach for the period from the Closing Date until the date on which such condition subsequent is required to be fulfilled pursuant to this Section 4.02):

 

(i)                                     deliver to the Administrative Agent Control Agreements with financial institutions, securities intermediaries and other Persons in order to perfect Liens by “control” (within the meaning of the applicable Uniform Commercial Code) in respect of Deposit Accounts and Securities Accounts maintained by the Loan Parties in the U.S. in form and substance reasonably satisfactory to the Administrative Agent no later than sixty (60) days after the Closing Date (or such later date as the Administrative Agent may agree to in its sole discretion);

 

(ii)                                  not later than sixty (60) days following the Closing Date (or such later date as the Administrative Agent may agree to in its sole discretion), the Borrowers shall deliver all necessary endorsements to the insurance certificates delivered on the Closing Date (a) providing that no cancellation or material change in coverage shall be effective until at least thirty (30) days after receipt by the Administrative Agent of written notice thereof, or such shorter period agreed by the Administrative Agent in its sole discretion, and (b) naming the Collateral Agent as either “additional insured” or “lender loss payee”, as applicable, in each case, in such form as are reasonably acceptable to the Administrative Agent;

 

(iii)                               not later than five (5) days following the Closing Date (or such later date as the Administrative Agent may agree to in its sole discretion), the Borrowers shall deliver to the Collateral Agent (or, if the Intercreditor Agreement is in effect, the Revolving Loan Lender) each of the following: (a) the original certificate or certificates representing 100% of the Equity Interests of Opco together with undated stock powers, in blank, executed and delivered by a duly authorized officer of U.S. Borrower; (b) 100% of the Equity Interests of Hot Media, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of Opco; (c) 100% of the Equity Interests of eNom together with undated stock powers, in blank, executed and delivered by a duly authorized officer of Opco; and (d) a certified copy of the board minutes of Bradwell Limited appointing John O’ Donoghue as an authorized signatory of Bradwell Limited with respect to the Loan Documents;

 

(iv)                              not later than twenty (20) days following the Closing Date (or such later date as the Administrative Agent may agree to in its sole discretion), the Borrowers shall deliver to the Collateral Agent (or, if the Intercreditor Agreement is in effect, the Revolving Loan Lender): (a) undated letters of resignation and release, executed as deeds by each director, alternate direct and secretary of each of DMIH and Domains respectively, each in the form set out in Schedule 4 to the Irish Share Charges; (b) the original certificate or certificates representing 65% and 35% of the Equity Intersts of DMIH, along with such executed transfer powers as are required by the applicable Irish Share Charge executed and delivered by U.S. Borrower; (c) the original certificate or certificates representing 65% of the Equity Interests of DMD Media Services, Inc., a corporation organized under the laws of Canada, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of Hot Media; and (d) the original certificate or certificates representing 65% of the Equity Interests of eNom Canada Corp., a corporation

 

58

 

organized under the laws of the Province of Nova Scotia, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of eNom; and

 

(v)                                 The Borrowers shall use commercially reasonable efforts to deliver consents to removal of personal property from the landlords of the real property located at the following addresses, in form and substance satisfactory to the Administrative Agent, not later than sixty (60) days following the Closing Date (or such later date as the Administrative Agent may agree to in its sole discretion):

 

(a)                                 5808 Lake Washington Blvd., NE, Ste. 300, Kirkland, WA 98033;

 

(b)                                 200 Academy Drive, Suite 100, Austin, TX 78704; and

 

(c)                                  2500 East Second Avenue, Second Floor, Denver CO 80206.

 

ARTICLE V

 

Affirmative Covenants

 

The Borrowers covenant and agree with each Lender that so long as this Agreement shall remain in effect and until the principal of and interest on each Term Loan, all fees and all other expenses or amounts payable under any Loan Document shall have been paid in full, the Borrowers will, and will cause each of the Subsidiaries to:

 

SECTION 5.01.                                   Existence; Compliance with Laws; Businesses and Properties.

 

(a)                                 Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05.

 

(b)                                 Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business except to the extent the failure to do so could not reasonably be expected to result in a Material Adverse Effect; maintain and operate such business in substantially the manner in which it is presently conducted and operated; comply in all material respects with all applicable laws, rules, regulations and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted; and at all times maintain and preserve all property material to the conduct of such business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times.

 

SECTION 5.02.                                   Insurance.

 

(a)                                 Keep its insurable properties adequately insured at all times by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses operating in the same or similar locations, including business interruption insurance, public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; and maintain such other insurance as may be required by law.

 

59

 

(b)                                 Cause all such policies (if any) covering any Collateral to be endorsed or otherwise amended to include a customary lender’s loss payable endorsement, in form and substance satisfactory to the Administrative Agent and the Collateral Agent, which endorsement shall provide that, from and after the Closing Date, if the insurance carrier shall have received written notice from the Administrative Agent or the Collateral Agent of the occurrence of an Event of Default, the insurance carrier shall pay all proceeds otherwise payable to the Borrowers or the Loan Parties under such policies directly to the Collateral Agent or the Revolving Loan Lender, as applicable, in accordance with the terms in the Intercreditor Agreement; cause all such policies to provide that none of the Borrowers, the Administrative Agent, the Collateral Agent nor any other party shall be a coinsurer thereunder and to contain a “Replacement Cost Endorsement”, without any deduction for depreciation, and such other provisions as the Administrative Agent or the Collateral Agent may reasonably require from time to time to protect their interests; deliver original or certified copies of all such policies to the Collateral Agent; cause each such policy to provide that it shall not be canceled, modified or not renewed except (i) by reason of nonpayment of premium upon not less than 10 days’ prior written notice thereof by the insurer to the Administrative Agent and the Collateral Agent (giving the Administrative Agent and Collateral Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason upon not less than 30 days’ prior written notice thereof by the insurer to the Administrative Agent and the Collateral Agent; deliver to the Administrative Agent and the Collateral Agent, prior to the cancellation, modification or nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent and the Collateral Agent) together with evidence satisfactory to the Administrative Agent and the Collateral Agent of payment of the premium therefor.

 

(c)                                  If at any time the area in which any properties subject to the Mortgages (if any) are located is designated (i) a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), obtain flood insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time, or (ii) a “Zone 1” area, obtain earthquake insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require.

 

(d)                                 With respect to any Mortgaged Property, carry and maintain comprehensive general liability insurance including the “broad form CGL endorsement” and coverage on an occurrence basis against claims made for personal injury (including bodily injury, death and property damage) and umbrella or liability insurance against any and all claims, in an amount reasonably satisfactory to the Administrative Agent, naming the Collateral Agent as an additional insured, on forms satisfactory to the Collateral Agent.

 

(e)                                  Notify the Administrative Agent and the Collateral Agent promptly whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.02 is taken out by any Loan Party; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies.

 

SECTION 5.03.                                   Obligations and Taxes.  Pay its Indebtedness and other obligations promptly and in accordance with their terms and pay and discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith

 

60

 

by appropriate proceedings and the Borrowers shall have set aside on its financial statements adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, Tax, assessment or charge and enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture of such property.

 

SECTION 5.04.                                   Financial Statements, Reports, etc.  In the case of Borrowers, furnish to the Administrative Agent and each Lender:

 

(a)                                 within 90 days after the end of each fiscal year of the U.S. Borrower, its consolidated balance sheet and related statements of income, stockholders’ equity and cash flows showing the financial condition of the U.S. Borrower and its consolidated Subsidiaries as of the close of such fiscal year and the results of its operations and the operations of such Subsidiaries during such year, together with comparative figures for the immediately preceding fiscal year of the U.S. Borrower, all audited by PricewaterHouseCoopers LLP or other independent public accountants of recognized national standing reasonably acceptable to the Administrative Agent and accompanied by an opinion of such accountants (which opinion shall be without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements fairly present in all material respects the financial condition and results of operations of U.S. Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

 

(b)                                 within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the U.S. Borrower (or, with respect to the fiscal quarter ended June 30, 2014, within 45 days of the date the U.S. Borrower’s Form 10 Registration Statement becomes effective), its consolidated balance sheet and related statements of income, stockholders’ equity and cash flows showing the financial condition of the U.S. Borrower and its consolidated Subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such Subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year of the U.S. Borrower, together with comparative figures for the same periods in the immediately preceding fiscal year, all certified by one of the Financial Officers of the U.S. Borrower, as fairly presenting in all material respects the financial condition and results of operations of the U.S. Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments;

 

(c)                                  concurrently with any delivery of financial statements under paragraph (a), a certificate of the accounting firm opining on or certifying such statements (which opinion or certificate may be limited to accounting matters and disclaim responsibility for legal interpretations) certifying that no knowledge was obtained of any Event of Default relating to any of the financial covenants set forth in this Agreement, except as specified in such certificate;

 

(d)                                 concurrently with any delivery of financial statements under paragraph (a) or (b) above, a certificate of the Financial Officer of the U.S. Borrower (i) certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto and (ii) setting forth computations in reasonable detail, together with supporting calculations, in each case satisfactory to the Administrative Agent demonstrating compliance with the covenants contained in Section 6.11, Section 6.12 and Section 6.13;

 

(e)                                  concurrently with any delivery of financial statements and paragraph (a) or (b) above, an officer’s certificate of a Responsible Officer of the U.S. Borrower, certifying that, except as expressly set forth therein, the representations and warranties in Article III are true and correct in all material respects on and as of the date of the certificate to the same extent as though made on and as of that date (or, to the

 

61

 

extent such representations and warranties specifically relate to an earlier date, certifying that such representations and warranties were true and correct in all material respects on and as of such earlier date); provided that, if a representation and warranty is qualified as to materiality, for purposes of such certification, the applicable materiality qualifier set forth above shall be disregarded with respect to such representation and warranty;

 

(f)                                   concurrently with any delivery of financial statements under paragraph (b) above (or, in the case of the fourth fiscal quarter of the U.S. Borrower, within 45 days after the end of such fourth fiscal quarter of the U.S. Borrower), (i) a list of any registered Intellectual Property, related rights thereto, and Material Inbound Licenses acquired since the last such list delivered pursuant to this Section 5.04(f) (or since the Closing Date, in the case of the first such list delivered after the Closing Date) and (ii) to the extent necessary to cause the representation and warranty set forth in Section 3.07(f) to be true and correct, an updated Schedule 3.07(f);

 

(g)                                  promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the U.S. Borrower or any Subsidiary with any Governmental Authority or securities exchange, or distributed to its shareholders, as the case may be;

 

(h)                                 promptly after the receipt thereof by the Borrowers or any of their Subsidiaries, a copy of any “management letter” received by any such Person from its certified public accountants and the management’s response thereto;

 

(i)                                     promptly after the request by any Lender, all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act;

 

(j)                                    promptly upon receipt or delivery by the Borrowers or any of their Subsidiaries of any material notice (including, without limitation, any notice of default) to or from the Revolving Loan Lender, the Borrowers shall deliver a copy of such notice to the Administrative Agent; and

 

(k)                                 promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the Borrowers or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request.

 

If, as a result of any change in accounting principles and policies from those used in the preparation of the audited financial statements referred to in Section 5.04(a), the consolidated financial statements of the U.S. Borrower and its Subsidiaries delivered pursuant to clause (b) of this Section 5.04 will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such clauses had no such change in accounting principles and policies been made, then, at the reasonable request of the Administrative Agent, (i) together with the first delivery of financial statements pursuant to clause (b) of this Section 5.04 following such change, consolidated financial statements of the U.S. Borrower and its Subsidiaries for the current fiscal year of the U.S. Borrower to the effective date of such change prepared on a pro forma basis as if such change had been in effect during such period and (ii) together with each delivery of financial statements pursuant to clause (b) of this Section 5.04 following such change, a written statement of the Financial Officer of the U.S. Borrower setting forth the differences (including any differences that would affect any calculations relating to the financial covenants in Section 6.11, Section 6.12 and Section 6.13) which would have resulted if such financial statements had been prepared without giving effect to such change.

 

62

 

SECTION 5.05.                                   Litigation and Other Notices.

 

(a)                                 Furnish to the Administrative Agent and each Lender prompt written notice of the following:

 

(b)                                 the occurrence of any Event of Default or Default, specifying the nature and extent thereof, the date of occurrence thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

 

(c)                                  the filing or commencement of, or any written threat or notice of intention of any Person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrowers or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;

 

(d)                                 the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrowers and their Subsidiaries in an aggregate amount exceeding $500,000; and

 

(e)                                  any development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.

 

SECTION 5.06.                                   Information Regarding Collateral.

 

(a)                                 Furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party’s corporate name, (ii) in the jurisdiction of organization or formation of any Loan Party, (iii) in any Loan Party’s identity or corporate structure or (iv) in any Loan Party’s Federal Taxpayer Identification Number or similar organizational number issued by the relevant foreign Governmental Authority.  The Borrowers agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral, with the priority required hereunder and under the Security Documents.  The Borrowers also agree promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed or if the value of the Collateral is impaired in an amount in excess of $250,000.

 

(b)                                 Each year, at the time of delivery of the annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04(a), deliver to the Administrative Agent an officer’s certificate of a Financial Officer of the U.S. Borrower setting forth the information required pursuant to Section 5.3 of the U.S. Guarantee and Collateral Agreement or confirming that there has been no change in such information since the Closing Date or the date of the most recent certificate delivered pursuant to this Section 5.06(b).

 

SECTION 5.07.                                   Maintaining Records; Access to Properties and Inspections.  Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law are made of all dealings and transactions in relation to its business and activities.  The Borrowers shall, and shall cause each of the Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the properties of such Person at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances and condition of such Person with the officers thereof and independent accountants therefor.  Such visit and inspection shall be at the sole cost and expense of the

 

63

 

Borrowers on a semi-annually basis so long as no Event of Default has occurred and is continuing or on a more frequent basis if an Event of Default has occurred and is continuing.

 

SECTION 5.08.                                   Use of Proceeds.  Use the proceeds of the Term Loans solely (i) to finance, in part, the acquisition of new gTLDs, (ii) to pay fees and expenses incurred in connection with the Transactions and (iii) for general corporate purposes.

 

SECTION 5.09.                                   Employee Benefits.

 

(a)                                 With respect to each Employee Benefit Plan, comply in all material respects with the applicable provisions of ERISA and the Code and furnish to the Administrative Agent as soon as possible after, and in any event within 10 days after any responsible officer of the Borrowers or any ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the Borrowers or any ERISA Affiliate in an aggregate amount exceeding $250,000, a statement of a Financial Officer of the U.S. Borrower setting forth details as to such ERISA Event and the action, if any, that the U.S. Borrower proposes to take with respect thereto.

 

(b)                                 Upon reasonable request by the Administrative Agent, furnish copies of (i) annual report (Form 5500 Series) filed by any Loan Party or any Subsidiary thereof or any of its ERISA Affiliates with respect to each Employee Benefit Plan; (ii) the most recent actuarial valuation report for each Plan, to the extent such exists; (iii) all notices received by any Loan Party or any of its ERISA Affiliates from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other information, documents or governmental reports or filings relating to any Employee Benefit Plan as the Administrative Agent shall reasonably request.

 

SECTION 5.10.                                   Compliance with Environmental Laws.  Comply, and cause all lessees and other Persons occupying its properties to comply, in all material respects with all Environmental Laws applicable to its operations and properties; obtain and renew all material environmental permits necessary for its operations and properties; and conduct any remedial action in accordance with Environmental Laws; provided, however, that none of the Borrowers or any Subsidiary shall be required to undertake any remedial action required by Environmental Laws to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

 

SECTION 5.11.                                   Preparation of Environmental Reports.  If a Default caused by reason of a breach of Section 3.16 or Section 5.10 shall have occurred and be continuing for more than 20 days without the Borrowers or any Subsidiary commencing activities reasonably likely to cure such Default, at the written request of the Required Lenders through the Administrative Agent, provide to the Lenders within 45 days after such request, at the expense of the Loan Parties, an environmental site assessment report regarding the matters that are the subject of such Default prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or remedial action in connection with such Default.

 

SECTION 5.12.                                   Further Assurances.

 

(a)                                 Execute any and all further documents, financing statements, agreements and instruments, and take all further action (including filing UCC and other financing statements, mortgages and deeds of trust) that may be required under applicable law, or that the Required Lenders, the Administrative Agent or the Collateral Agent may reasonably request, in order to effectuate the

 

64

 

transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and first priority (or if the Revolving Loan Agreement is outstanding, second priority), subject to Liens permitted under Section 6.02, of the security interests created or intended to be created by the Security Documents.  In addition, from time to time, the Borrowers will, at their cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected security interests with respect to such of its assets and properties and the assets and property of their Subsidiaries as the Administrative Agent or the Required Lenders shall designate, subject to the limitations set forth in the Loan Documents.  Such security interests and Liens will be created under the Security Documents and other security agreements, mortgages, deeds of trust and other instruments and documents in form and substance satisfactory to the Collateral Agent, and the Borrowers shall deliver or cause to be delivered to the Lenders all such instruments and documents (including legal opinions, title insurance policies and lien searches) as the Collateral Agent shall reasonably request to evidence compliance with this Section 5.12.  The Borrowers agree to provide such evidence as the Collateral Agent shall reasonably request as to the perfection and priority status of each such security interest and Lien.  In furtherance of the foregoing, the Borrowers will give prompt notice to the Administrative Agent of the acquisition by it or any of the Subsidiaries of any real property (or any interest in real property) having a value in excess of $500,000.

 

(b)                                 Upon the consummation of any acquisition of any Person by any of the Loan Parties, or upon the formation by any of the Loan Parties of any Subsidiary, the Borrowers shall cause the Person so acquired or formed, to the extent constituting a Material Subsidiary, to be designated as a Guarantor of the applicable Obligations.  Such Person shall become a Loan Party by executing the U.S. Guarantee and Collateral Agreement or the Guarantee (Non-U.S. Entities), as applicable, and each applicable Security Document in favor of the Collateral Agent.  In addition, (i) such Person shall execute and deliver such Security Documents, agreements and documents as the Administrative Agent, the Collateral Agent or the Required Lenders may reasonably request to grant a first priority (or, if the Revolving Loan Agreement is outstanding, second priority) perfected Lien in respect of substantially all of its real and personal property in favor of the Collateral Agent and the Lenders, and (ii) the Loan Parties owning Equity Interests in such Person shall pledge all such Equity Interests in such Person (subject to clause (c) below).

 

(c)                                  Notwithstanding anything to the contrary in paragraph (a) or (b) of this Section 5.12, (a) no Foreign Subsidiary that is a CFC shall be required to (i) grant a security interest in its assets to secure the U.S. Obligations or (ii) to guarantee the U.S. Obligations and (b) no Equity Interests of any Foreign Subsidiary (other than a First Tier Foreign Subsidiary of the U.S. Borrower or a U.S. Loan Party) shall be required to be pledged, in each of clauses (a) and (b) to the extent the foregoing would cause an inclusion of income under Section 951(a)(1)(B) of the Code to a Loan Party, and any pledge of Equity Interests of a First Tier Foreign Subsidiary of the U.S. Borrower or a U.S. Loan Party to secure U.S. Obligations shall be limited to 65% of the voting Equity Interests of such entity to the extent the pledge of a greater percentage would cause an inclusion of income under Section 951(a)(1)(B) of the Code to a Loan Party.

 

(d)                                 In the event that any Person becomes a First Tier Foreign Subsidiary of a Loan Party after the date hereof, the Borrowers will promptly notify the Lenders and the Collateral Agent of that fact and cause such First Tier Foreign Subsidiary, such Loan Party or both to execute and deliver to the Lenders and the Collateral Agent such documents and instruments and take such further actions as may be necessary, or in the reasonable opinion of the Collateral Agent, desirable to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a valid and perfected first priority (or if the Revolving Loan Agreement is outstanding, second priority) Lien on the total outstanding Equity Interests in such First Tier Foreign Subsidiary that is a CFC, including execution and delivery of a Foreign Law Pledge Agreement; provided that no more than 65% of the voting Equity Interests of a First Tier Foreign Subsidiary that is a CFC within the meaning of Section 957(a) of the Code and that is directly held by the U.S. Borrower or U.S. Loan Party shall be required to be pledged to secure the U.S. Obligations and no

 

65

 

Equity Interests of any Foreign Subsidiary (other than a First Tier Foreign Subsidiary of the U.S. Borrower or U.S. Loan Party) shall be required to be pledged to secure the U.S. Obligations.

 

(e)                                  Notwithstanding anything to the contrary in this Section 5.12, the Loan Parties shall not be required to provide a Foreign Pledge Agreement with respect to the Equity Interests of a First Tier Foreign Subsidiary that is a CFC and an Immaterial Subsidiary governed by the laws in which such First Tier Foreign Subsidiary is organized; provided that the foregoing shall not limit a pledge of such Equity Interests pursuant to the U.S. Guarantee and Collateral Agreement or such other Security Document to which the relevant Loan Party owning such Equity Interests is a party prior to the formation or acquisition of such First Tier Foreign Subsidiary.

 

(f)                                   Notwithstanding anything to the contrary in this Section 5.12 or any other Loan Document, (i) no Cayman Loan Party (other than a U.S. Loan Party) shall, or shall be required to, guarantee the U.S. Obligations or to grant a Lien on any of its assets to secure the U.S. Obligations and (ii) no Cayman Loan Party (other than a U.S. Loan Party) is, or shall be, obligated or liable for any Obligations other than Cayman Obligations.

 

SECTION 5.13.                                   Change of Control Provisions.  Other than registry agreements with ICANN, the Revolving Loan Agreement and extensions, replacements or other modifications of the agreements set forth on Schedule 3.33 (and other agreements entered into in connection therewith)), use commercially reasonable efforts to exclude from any inbound license and any agreement the termination, expiration or suspension of which could reasonably be expected to result in a Material Adverse Effect entered into by or becoming binding upon the Borrowers or any of their Subsidiaries after the Closing Date, any “change of control” provision, howsoever denominated, or any other provision the inclusion of which in such agreement would automatically, or at the option of any party thereto, result in (i) the termination of or right to terminate such agreement, (ii) the suspension of or right to suspend any obligations of any parties thereto, or (iii) any change in the rights, duties or obligations of any party thereto (in the case of each of clause (i), clause (ii) or clause (iii), whether immediately or upon the passage of time or otherwise).

 

ARTICLE VI

 

Negative Covenants

 

The Borrowers covenant and agree with each Lender that, so long as this Agreement shall remain in effect and until the principal of and interest on each Term Loan, all fees and all other expenses or amounts payable under any Loan Document have been paid in full, the Borrowers will not, nor cause or permit any of the Subsidiaries to:

 

SECTION 6.01.                                   Indebtedness.  Incur, create, assume or permit to exist any Indebtedness, except:

 

(i)                                     Indebtedness existing on the date hereof and set forth in Schedule 6.01 and any refinancings, refundings, extensions, renewals or replacements of such Indebtedness; provided that (i) the principal amount of such Indebtedness is not increased, (ii) neither the final maturity nor the weighted average life to maturity of such Indebtedness is decreased, (iii) such Indebtedness, if subordinated to the Obligations, remains so subordinated on terms no less favorable to the Lenders, and (iv) the original obligors in respect of such Indebtedness remain the only obligors thereon;

 

(ii)                                  Indebtedness created hereunder and under the other Loan Documents;

 

66

 

(iii)                               intercompany Indebtedness of the Borrowers and the Subsidiaries to the extent permitted by Section 6.04(iii);

 

(iv)                              Indebtedness of the Borrowers or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, and refinancings, refundings, extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this Section 6.01(iv), when combined with the aggregate principal amount of all Capital Lease Obligations and Synthetic Lease Obligations incurred pursuant to Section 6.01(v) shall not exceed $5,000,000 at any time outstanding;

 

(v)                                 Capital Lease Obligations and Synthetic Lease Obligations in an aggregate principal amount, when combined with the aggregate principal amount of all Indebtedness incurred pursuant to Section 6.01(iv), not in excess of $5,000,000 at any time outstanding;

 

(vi)                              Indebtedness under performance bonds or with respect to workers’ compensation claims, and Indebtedness secured by deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, and other obligations of a like nature incurred in the ordinary course of business (other than for indebtedness or any Liens arising under ERISA) in each case incurred in the ordinary course of business (other than for indebtedness or any Liens arising under ERISA);

 

(vii)                           Indebtedness incurred under the Revolving Loan Agreement and the Revolving Loan Documents (including, without limitation, guarantees of the Loan Parties in respect of such Indebtedness and cash management and swap obligations), subject to the Intercreditor Agreement, on terms and conditions reasonably satisfactory to the Administrative Agent;

 

(viii)                        Indebtedness under any Hedging Agreement; provided that if such Hedging Agreement relates to interest rates, (i) such Hedging Agreement relates to payment obligations on Indebtedness otherwise permitted to be incurred by the Loan Documents and (ii) the notional principal amount of such Hedging Agreement at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Agreement relate;

 

(ix)                              guaranties by the Borrowers of Indebtedness of a Guarantor or guaranties by a Guarantor of Indebtedness of the Borrowers or another Guarantor with respect, in each case, to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.01 (other than clause (a) of this Section 6.01); provided, that if the Indebtedness that is being guarantied is unsecured and/or subordinated to the Obligations, the guaranty shall also be unsecured and/or subordinated to the Obligations, in each case on terms no less favorable to the Lenders than the subordination terms of the Indebtedness so guarantied;

 

(x)                                 (A) Indebtedness of any Person that becomes a Guarantor after the date hereof, which Indebtedness is existing at the time such Person becomes a Subsidiary of the Borrowers (other than Indebtedness incurred in contemplation of or in connection with such Person becoming a Subsidiary) and (B) Indebtedness secured by assets purchased by a Loan Party that is assumed by such Loan Party (other than Indebtedness incurred in contemplation of or in connection with such purchase) in an aggregate principal amount under this clause (x) not to exceed $1,000,000;

 

67

 

(xi)                              Indebtedness incurred in the ordinary course of business in connection with cash pooling arrangements, cash management and other similar arrangements consisting of netting arrangements and overdraft protections incurred in the ordinary course of business and not in excess of $250, 000 in the aggregate at any time outstanding;

 

(xii)                           Indebtedness arising from agreements of the Borrowers or any Subsidiary providing for indemnification, contribution, earn-out, adjustment of purchase price or similar obligations, in each case incurred or assumed in connection with dispositions or acquisitions permitted under this Agreement; provided that the amount of all Indebtedness in respect of earn-outs shall not exceed $1,000,000 in the aggregate from the Closing Date to the Maturity Date;

 

(xiii)                        Indebtedness representing any Taxes, assessments or governmental charges to the extent such Taxes are being contested in good faith and adequate reserves have been provided therefor in conformity with GAAP;

 

(xiv)                       Subordinated Indebtedness in an aggregate principal amount not to exceed $2,500,000;

 

(xv)                          Surety Indebtedness and any other Indebtedness in respect of letters of credit, banker’s acceptances or similar arrangements, provided that the aggregate amount of any such Indebtedness outstanding at any time shall not exceed $5,000,000; provided, that any such letter of credit shall only be permitted pursuant to this clause (xv) if such letter of credit is of a type that cannot be issued pursuant to the terms of the Revolving Loan Agreement;

 

(xvi)                       Guarantees by a Loan Party or any of its Subsidiaries of the obligations of any Subsidiary under accreditation agreements (but not for borrowed money) entered into in the ordinary course of business with a registry accredited by ICANN; and

 

(xvii)                    other Indebtedness of Borrowers or their Subsidiaries in an aggregate principal amount not exceeding $1,000,000 (of which $500,000 may be secured) at any time outstanding.

 

SECTION 6.02.                                   Liens.  Create, incur, assume or permit to exist any Lien on any property or assets (including Equity Interests or other securities of any Person, including the Borrowers or any Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except:

 

(i)                                     Liens on property or assets of the Borrowers and the Subsidiaries existing on the date hereof and set forth in Schedule 6.02; provided that such Liens shall secure only those obligations that they secure on the date hereof and refinancings, refundings, extensions, renewals and replacements thereof permitted hereunder;

 

(ii)                                  any Lien created under the Security Documents;

 

(iii)                               any Lien existing on any property or asset prior to the acquisition thereof by the Borrowers or any Subsidiary or existing on any property or assets of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary, as the case may be; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, (ii) such Lien does not apply to any other property or assets of the Borrowers or any Subsidiary, (iii) such Lien secures only those obligations that it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be; and (iv) such obligations shall be permitted under this Agreement;

 

68

 

(iv)                              the replacement, extension or renewal of any Lien permitted by clause (iii) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Indebtedness or obligation secured thereby;

 

(v)                                 Liens for Taxes not yet due or that are being contested in compliance with Section 5.03;

 

(vi)                              carriers’, warehousemen’s, landlord’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business and securing obligations that are not overdue for a period of more than 30 days or that are being contested in compliance with Section 5.03;

 

(vii)                           pledges and deposits made in the ordinary course of business in compliance with workmen’s compensation, unemployment insurance and other social security laws or regulations;

 

(viii)                        deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations or Synthetic Lease Obligations), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

 

(ix)                              zoning restrictions, easements, rights-of-way, restrictions on use of real property and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrowers or any of their Subsidiaries;

 

(x)                                 purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by the Borrowers or any Subsidiary; provided that (i) such security interests secure Indebtedness permitted by Section 6.01(iv), (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within 90 days after such acquisition (or construction), (iii) the Indebtedness secured thereby does not exceed 100% of the lesser of the cost or the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction) and (iv) such security interests do not apply to any other property or assets of the Borrowers or any Subsidiary;

 

(xi)                              Liens on property or assets of a Person (other than any Equity Interests in any Person) existing at the time the assets of such Person are acquired or such Person is merged into or consolidated with the Borrowers or any Subsidiary or becomes a Subsidiary of the Borrowers or any Subsidiary; provided that any such Lien (i) was not created in contemplation of or in connection with such asset purchase, merger, consolidation or investment and (ii) does not extend to any assets other than those acquired in such asset purchase and those assets of the Person merged into or consolidated with the Borrowers or such Subsidiary or acquired by the Borrowers or such Subsidiary;

 

(xii)                           bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to (i) cash and Permitted Investments on deposit in one or more accounts maintained by any Loan Party, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements, and (ii) financial assets on deposit in one or more securities accounts maintained by any Loan Party, in each case granted in

 

69

 

the ordinary course of business in favor of the securities intermediaries with which such accounts are maintained, securing amounts owing to such securities intermediaries with respect to services rendered in connection with such securities accounts;

 

(xiii)                        precautionary filings of financing statements under the Uniform Commercial Code of any applicable jurisdictions in respect of operating leases or consignments entered into by the Borrowers or the Subsidiaries in the ordinary course of business;

 

(xiv)                       Liens arising out of judgments or awards not constituting an Event of Default in respect of which the Borrowers or any of the Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review in respect of which there shall be secured a subsisting stay of execution pending such appeal or proceedings; provided that the aggregate amount of all such judgments or awards (and any cash and the fair market value of any property subject to such Liens) does not exceed $250,000 at any time outstanding;

 

(xv)                          Liens securing the Indebtedness under the Revolving Loan Agreement and the other Revolving Loan Documents, subject to the Intercreditor Agreement; provided that the aggregate amount of cash collateral securing indebtedness under the letter of credit sub-facility under the Revolving Loan Agreement shall not exceed 105% of the aggregate face amount of all such issued and outstanding letters of credit;

 

(xvi)                       (A) any interest or title of a lessor or licensor under any lease or license entered into by a Borrower or any of its Subsidiaries in the ordinary course of its business and covering only the assets so leased or licensed or (B) leases, licenses, subleases or sublicenses granted to others in the ordinary course of business that do not interfere in any material respect with the business of the Borrowers and their Subsidiaries taken as a whole;

 

(xvii)                    (A) cash deposits and liens on cash and Permitted Investments pledged to secure Indebtedness permitted under Section 6.01(xv) (such cash and Permitted Investments not to exceed 105% of the face amount of all relevant letters of credit), (B) Liens securing reimbursement obligations with respect to letters of credit permitted by Section 6.01(xv) that encumber documents and other property relating to such letters of credit, and (C) Liens on cash and Permitted Investments securing Hedging Agreements that are permitted by Section 6.01(viii);

 

(xviii)                 Liens of sellers of goods to the Borrowers and any of their Subsidiaries arising under Article 2 of the Uniform Commercial Code or similar provisions of applicable law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related expenses;

 

(xix)                       Liens in favor of VeriSign or another ICANN accredited registry on cash deposits made pursuant to accreditation agreements entered into in the ordinary course of business not in excess of $1,000,000 in the aggregate at any time outstanding; and

 

(xx)                          other Liens securing Indebtedness not to exceed $500,000 in the aggregate at any time outstanding.

 

Notwithstanding anything to contrary hereunder or under any other Loan Document, no Liens (other than Liens permitted under clauses (ii), (iv) and (xiv) above) shall be permitted on Equity Interests issued by the Cayman Borrower or any Subsidiaries of the Borrowers which constitute Collateral.

 

70

 

SECTION 6.03.                                   Sale and Lease-Back Transactions.  Enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred unless (a) the sale or transfer of such property is permitted by Section 6.05 and (b) any Capital Lease Obligations, Synthetic Lease Obligations or Liens arising in connection therewith are permitted by Section 6.01 and Section 6.02, as the case may be.

 

SECTION 6.04.                                   Investments.  Purchase, hold, make or acquire any Investments, except:

 

(i)                                     (x) Investments by the Borrowers and the Subsidiaries existing on the date hereof in the Equity Interests of the Subsidiaries and (y) additional Investments by the Borrowers and the Subsidiaries in the Equity Interests of the Borrowers and the Subsidiaries; provided that (A) any such Equity Interests held by a Loan Party shall be pledged or charged pursuant to the U.S. Guarantee and Collateral Agreement or a Foreign Law Pledge Agreement (subject to the limitations applicable to voting capital stock or shares of a Foreign Subsidiary referred to therein with respect to the U.S. Obligations), (B) the aggregate amount of Investments made by Loan Parties after the date hereof in Subsidiaries that are not Loan Parties (determined without regard to any write downs or write-offs of such Investments) shall not exceed, when taken together with loans and advances made pursuant to clause (iii) below, $500,000 at any time outstanding and (C) U.S. Loan Parties shall not be permitted to make any Investments in Cayman Loan Parties (excluding U.S. Loan Parties) pursuant to this clause (i), in an aggregate amount not to exceed, when taken together with loans and advances made to Cayman Loan Parties (excluding U.S. Loan Parties) by U.S. Loan Parties pursuant to clause (iii) below, $4,000,000 at any time outstanding plus New Proceeds;

 

(ii)                                  Permitted Investments;

 

(iii)                               loans or advances made by the Borrowers to any Subsidiary and made by any Subsidiary to the Borrowers or any other Subsidiary; provided that (x) any such loans and advances made by a Loan Party shall be evidenced by a promissory note pledged to the Collateral Agent for the ratable benefit of the Secured Parties pursuant to the U.S. Guarantee and Collateral Agreement or a Foreign Law Pledge Agreement, (y) the aggregate amount of such loans and advances made by Loan Parties to Subsidiaries that are not Loan Parties (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed, when taken together with Investments made pursuant to clause (i) above, $500,000 at any time outstanding and (z) U.S. Loan Parties shall not be permitted to make any loans or advances to Cayman Loan Parties (excluding U.S. Loan Parties) pursuant to this clause (iii), in an aggregate amount not to exceed, when taken together Investments in Cayman Loan Parties (excluding U.S. Loan Parties) by U.S. Loan Parties pursuant to clause (i) above, $4,000,000 at any time outstanding plus New Proceeds;

 

(iv)                              Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

 

(v)                                 the Borrowers and their Subsidiaries may make loans and advances in the ordinary course of business to their respective employees so long as the aggregate principal amount thereof at any time outstanding (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $150,000;

 

71

 

(vi)                              the Borrowers and their Subsidiaries may enter into Hedging Agreements in the ordinary course of business that are not speculative in nature;

 

(vii)                           [Reserved];

 

(viii)                        Guarantees permitted by Section 6.01;

 

(ix)                              Investments consisting of intercompany debt permitted hereunder;

 

(x)                                 prepaid expenses or lease, utility and other similar deposits, in each case made in the ordinary course of business;

 

(xi)                              Investments consisting of any deferred portion (including promissory notes and non cash consideration) of the sales price received by the Borrowers or any Subsidiary in connection with any Disposition permitted hereunder;

 

(xii)                           Investments resulting from the reinvestment of net cash proceeds of a Disposition as permitted under Section 2.11 of this Agreement;

 

(xiii)                        Investments existing on the Closing Date and set forth on Schedule 6.04;

 

(xiv)                       Investments in the ordinary course of business consisting of endorsements of negotiable instruments for collection or deposit;

 

(xv)                          Investments representing non-cash consideration received in connection with any Dispositions permitted hereunder not in excess of $5,000,000 at any time outstanding;

 

(xvi)                       To the extent constituting an Investment, Capital Expenditures permitted under Section 6.10;

 

(xvii)                    cash Investments not to exceed $2,500,000 in Namecheap, Inc., a Delaware corporation; and

 

(xviii)                 in addition to Investments permitted by paragraphs (i) through (xvii) above, additional Investments by the Borrowers and the Subsidiaries so long as the aggregate amount invested pursuant to this paragraph (xviii) (determined without regard to any write-downs or write-offs of such Investments) does not exceed $5,000,000 in the aggregate, of which not less than $2,500,000 shall constitute Collateral.

 

SECTION 6.05.                                   Acquisitions, Consolidations, Dispositions of Assets and Acquisitions.  Consummate any transaction of merger or consolidation or amalgamation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, in one transaction or a series of transactions, all or any part of its business, property or assets (including its notes or receivables and Equity Interests of a Subsidiary, whether newly issued or outstanding), whether now owned or hereafter acquired, except:

 

(i)                                     (x) any Subsidiary of the Borrowers may be merged with or into any of the Borrowers or any Wholly Owned Subsidiary of the Borrowers that is a Guarantor, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be Disposed of, in one transaction or a series of transactions, to the Borrowers or any Wholly Owned Subsidiary of the Borrowers that is a Guarantor; provided that, in the case of such a merger, such

 

72

 

Borrower or Wholly Owned Subsidiary shall be the continuing or surviving Person and (y) mergers or consolidations in connection with Capital Expenditures permitted under Section 6.10; provided that, if a Loan Party is a party to such merger or consolidation, such Loan Party shall be the surviving entity; provided further that, if the the U.S. Borrower or Cayman Borrower is a party to such merger or consolidation, the U.S. Borrower or Cayman Borrower, as applicable, shall be the surviving entity.

 

(ii)                                  the Borrowers and their Subsidiaries may Dispose of assets in transactions that do not constitute Asset Sales; provided that (a) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof, and (b) at least 75% of such consideration consists of cash;

 

(iii)                               the Borrowers and their Subsidiaries may Dispose of obsolete, worn out or surplus property in the ordinary course of business;

 

(iv)                              the Borrowers and their Subsidiaries may make Asset Sales of assets having a fair market value not in excess of $5,000,000 between the Closing Date and the Maturity Date; provided that (a) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof; (b) not less than 75% of the consideration received shall be cash; (c) no Default or Event of Default shall have occurred or be continuing after giving effect thereto; and (d) the proceeds of such Asset Sales shall be applied as required by Section 2.11(b);

 

(v)                                 in order to resolve disputes that occur in the ordinary course of business, the Borrowers and their Subsidiaries may discount or otherwise compromise for less than the face value thereof, notes or accounts receivable;

 

(vi)                              non-exclusive licenses and sublicenses in the ordinary course of business and licenses of Intellectual Property that may be exclusive as to geographic location, limited time duration, field of use, exclusive use of domain names under a particular gTLD, or customized products for specific customers, that do not result in a legal transfer of title of the licensed property;

 

(vii)                           Dispositions of Inventory or domain names or any property incidental to the ownership of Inventory or domain names, in each case, in the ordinary course of business;

 

(viii)                        Dispositions between Loan Parties or between Subsidiaries that are not Loan Parties; provided that, the aggregate amount of all Dispositions by U.S. Loan Parties to the Cayman Loan Parties (excluding U.S. Loan Parties) shall not exceed $1,000,000;

 

(ix)                              (i) the sale of the Equity Interests of any Subsidiary that is not a Guarantor and the Equity Interests of which are not pledged to Collateral Agent to any other Subsidiary of the Borrowers, and (ii) the sale of the Equity Interests of any Wholly Owned Subsidiary that is not a Guarantor, but which Equity Interests are pledged to Collateral Agent, to any Loan Party so long as such Equity Interests remain pledged to Collateral Agent;

 

(x)                                 the sale of the Equity Interests of any Subsidiary of a Borrower to another Borrower or to any Guarantor that is a Wholly Owned Subsidiary, provided, that the Equity Interests of any U.S. Loan Party or Domestic Subsidiary shall not be transferred to any Foreign Subsidiary;

 

73

 

(xi)                              the use or transfer of money or Permitted Investments in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents;

 

(xii)                           Dispositions of property subject to a Casualty Event;

 

(xiii)                        leases or subleases of real property;

 

(xiv)                       any abandonment, cancellation, non-renewal or discontinuance of use or maintenance of Intellectual Property (or rights relating thereto) of any Borrower or any of its Subsidiaries that the Borrowers determine in good faith is desirable in the conduct of their business and not materially disadvantageous to the interests of the Secured Parties or the value of the Collateral;

 

(xv)                          Dispositions of applications for or operator rights to new gTLD registries prior to the first date that domain names are registered to such registries;

 

(xvi)                       [reserved]; and

 

(xvii)                    the Borrowers or a Subsidiary may Dispose of Equity Interests of any of its Subsidiaries solely to qualify directors of the Governing Body of the Subsidiary if required by applicable law.

 

SECTION 6.06.                                   Restricted Payments; Restrictive Agreements.

 

(a)                                 Declare or make, or agree to declare or make, directly or indirectly, any Restricted Payment (including pursuant to any Synthetic Purchase Agreement), or incur any obligation (contingent or otherwise) to do so; provided, however, that (i) any Subsidiary of the Borrowers may declare and pay dividends or make other distributions ratably to its equity holders; (ii) the Borrowers and the Subsidiaries may make Restricted Payments in the form of distributions payable solely in the common stock or other common Equity Interests of such Person; (iii) the Borrowers may redeem, repurchase, or otherwise acquire Equity Interests from employees, consultants, officers and directors in connection with employee agreements and plans in the amount of $1,000,000 in the aggregate each fiscal year; and (iv) the U.S. Borrower or any of its Subsidiaries may (x) pay cash in lieu of fractional shares in connection with any dividend, split or combination thereof, (y) effect non-cash conversions of convertible securities and make cash payments in lieu of fractional shares in connection with any such conversion and (z) make Restricted Payments in connection with the retention of Equity Interests in payment of withholding taxes in connection with equity-based compensation plans to the extent that net share settlement arrangements are deemed to be repurchases.

 

(b)                                 Enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (i) the ability of the Borrowers or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets to secure its Obligations under the Loan Documents, or (ii) the ability of any Subsidiary to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to the Borrowers or any other Subsidiary or to Guarantee Indebtedness of the Borrowers or any other Subsidiary; provided that (A) the foregoing clauses (i) and (ii) shall not apply to restrictions and conditions imposed by law or by any Loan Document (other than a Related Document) or the Revolving Loan Documents, (B) the foregoing clauses (i) and (ii) shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (C) clause (i) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted

 

74

 

by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness, (D) clause (i) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof, (E) the foregoing clauses (i) and (ii) shall not apply to any agreement in effect at the time any Subsidiary becomes a Subsidiary of a Loan Party, so long as (i) any such prohibition contained in any such agreement applies solely with respect to the creation, incurrence, assumption or sufferance by such Subsidiary of a Lien upon assets that are not Collateral, and (ii) such agreement was not entered into in contemplation of such Person becoming a Subsidiary or, in any such case, that is set forth in any agreement evidencing any amendments, restatements, supplements, modifications, extensions, renewals and replacements of the foregoing, so long as such amendment, restatement, supplement, modification, extension, renewal or replacement applies only to such Subsidiary and does not otherwise expand in any material respect the scope of any restriction or condition contained therein, and (e) the foregoing clauses (i) and (ii) shall not apply to any restriction pursuant to any document, agreement or instrument governing or relating to any Lien permitted under Sections 6.02(viii), (xii), (xvii) or (xix) or any agreement or option to Dispose any asset of the Borrowers or any of their Subsidiaries, the Disposition of which is permitted by any other provision of this Agreement (in each case, provided that any such restriction relates only to the assets or property subject to such Lien or being Disposed).

 

SECTION 6.07.                                   Transactions with Affiliates.  Except for (i) transactions between or among Loan Parties, (ii) mergers, consolidations and dissolutions permitted by Section 6.05(i), (iii) the transactions set forth on Schedule 6.07, and (iv) transactions between a Loan Party and a Subsidiary that is not a Loan party involving total payments in an amount not to exceed (A) $50,000 in a single transaction (or series of related transactions) and (B) $300,000 in the aggregate, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except that the Borrowers or any Subsidiary may engage in any of the foregoing transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrowers or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties.

 

SECTION 6.08.                                   Business of Borrowers and Subsidiaries.  With respect to the Borrowers and each of their respective Subsidiaries, engage at any time in any business or business activity other than the business conducted by it on the date hereof and business activities reasonably related, ancillary or incidental thereto.

 

SECTION 6.09.                                   Other Indebtedness and Agreements, etc.  ((i) Make any distribution, whether in cash, property, securities or a combination thereof, other than regularly scheduled payments of principal and interest as and when due to the extent not prohibited by, and may make other payments permitted by, applicable subordination provisions, in respect of, or pay, or commit to pay, or directly or indirectly redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for any of the foregoing purposes, any Subordinated Indebtedness or Disqualified Stock, or (ii) pay any Management Fee.

 

SECTION 6.10.                                   Capital Expenditures.  Permit the aggregate amount of Capital Expenditures made during the term of this Agreement with respect to gTLDs (including, but not limited to, any application fees in connection therewith but net of all refunds and receipts from Dispositions permitted under Section 6.05(xv)) to exceed, at any time, the total of (i) $70,000,000 and (ii) an amount, if any, equal to 50% of New Proceeds.

 

75

 

SECTION 6.11.                                   [Reserved]

 

SECTION 6.12.                                   Maximum Consolidated Net Leverage Ratio.  Permit the Consolidated Net Leverage Ratio, determined as of the last date for any period of four consecutive fiscal quarters of the U.S. Borrower ending on any date during any period set forth below, to be greater than the ratio set forth opposite such period below:

 

	
June 30, 2015
    	
 
    	
3.75:1.00
    
	
September 30, 2015 – June 30, 2016
    	
 
    	
3.25:1.00
    
	
September 30, 2016 – June 30, 2017
    	
 
    	
2.75:1.00
    
	
September 30, 2017 – Maturity Date
    	
 
    	
2.25:1.00
    

 

SECTION 6.13.                                   Minimum Liquidity.  Permit Liquidity at the end of any fiscal quarter (calculated based on average Liquidity for the last five business days of such fiscal quarter), to be less than $15,000,000.

 

SECTION 6.14.                                   Fiscal Year.  Permit any of the Borrowers or their Subsidiaries to change their fiscal year end to a date other than December 31.

 

SECTION 6.15.                                   Certain Equity Securities.  Issue any Equity Interest that is not Qualified Capital Stock.

 

SECTION 6.16.                                   Amendments or Waivers of Documents Relating to Subordinated Indebtedness, Organizational Documents and Equity Interests.

 

(a)                                 Amendments of Documents Relating to Subordinated Indebtedness.  Amend, waive, supplement, modify or otherwise change the terms of any Subordinated Indebtedness or terminate or release any Subordinated Indebtedness (other than any termination or release as a result of any repayment in full thereof in accordance with Section 6.09), or make any payment consistent with an amendment, waiver, modification, termination or release thereof or supplement or change thereto, if the effect of such amendment, waiver, supplement, modification, change, termination or release is to increase the interest rate on such Subordinated Indebtedness, accelerate any dates upon which payments of principal or interest are due thereon, change any event of default or condition with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof (other than changes that waive, reduce or delay redemption or other payments), change the subordination provisions thereof (or of any guaranty thereof), or change any collateral therefor (other than to release such collateral), or if the effect of such amendment, waiver, supplement, modification, change, termination or release, together with all other amendments, waivers, supplements, modifications, changes, terminations or releases made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of such Subordinated Indebtedness (or a trustee or other representative on their behalf) that would be adverse to the Borrower, any of the Subsidiaries, the Lenders or the Administrative Agent.

 

(b)                                 Amendments of Revolving Loan Documents.  Amend, waive, supplement, modify or otherwise change the terms of the Revolving Loan Documents except pursuant to the terms of the Intercreditor Agreement; provided that the Revolving Loan Documents shall not be amended, refinanced,

 

76

 

replaced or otherwise modified to (i) cause the extensions of credit thereunder to take the form of term loans or other long term indebtedness (other than revolving credit), or (ii) cause the maturity or termination date (or similar term) to be later than August 1, 2017.

 

(c)                                  Amendments of Organizational Documents.  Make any amendment, waiver, restatement, supplement or other modification to any Borrower’s or any Subsidiary’s Organizational Documents in any manner materially adverse to the Lenders or the Administrative Agent without in each case obtaining the prior written consent of the Required Lenders to such amendment, waiver, restatement, supplement or other modification.

 

(d)                                 Amendments of Equity Interests.  Make any amendment, waiver, restatement, supplement or other modification to the terms of any Equity Interests of the Borrowers or any of their respective Subsidiaries, (i) if the effect thereof would be to bring forward (to an earlier date) the dates on which any put right or other right of the holder thereof to require any mandatory prepayment can be exercised, (ii) if the effect thereof would cause such Equity Interests to constitute Disqualified Stock, or (iii) in any manner materially adverse to the Lenders or the Administrative Agent.

 

SECTION 6.17.                                   Antilayering.  Except to the extent expressly permitted under the Intercreditor Agreement (for all cases under this Section 6.17), create or incur any Indebtedness (other than the Obligations) which is contractually subordinated or made junior in right of payment to the Revolving Loans, unless such Indebtedness is also contractually subordinated or made junior in right of payment, in the same manner and to the same extent, to the Obligations, and no Loan Party shall have outstanding, create or incur any Indebtedness owing to any Affiliate except to the extent expressly permitted under Section 6.01.

 

SECTION 6.18.                                   [Reserved].

 

SECTION 6.19.                                   Wholly Owned Subsidiaries.  Except for non-Wholly-Owned Subsidiaries existing as of the Closing Date, neither the Borrowers nor any Subsidiary of the Borrowers will own, form or acquire any Subsidiary other than Subsidiaries that are, or will become, Wholly Owned Subsidiaries of the U.S. Borrower.

 

ARTICLE VII

 

Events of Default

 

Section 7.01                             Events of Default.  In case of the happening of any of the following events (“Events of Default”):

 

(a)                                 default shall be made in the payment of any principal of, or premium on, any Term Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

 

(b)                                 default shall be made in the payment of any interest on any Term Loan or any fee or any other amount (other than an amount referred to in (a) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of 5 Business Days;

 

(c)                                  any representation or warranty made or deemed made to any Agent or Lender in or in connection with or pursuant to any Loan Document or the Term Loans made hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement

 

77

 

or other instrument furnished in connection with or pursuant to any Loan Document, shall be false or misleading in any material respect when so made, deemed made or furnished (except to the extent already qualified by materiality, in which case it shall not be false or misleading in any respect);

 

(d)                                 default shall be made in the due observance or performance by the Borrowers or any Subsidiary of any covenant, condition or agreement contained in Section 4.02, Section 5.01(a), Section 5.04, Section 5.05, Section 5.08, Section 5.12, Section 5.13  or in Article VI;

 

(e)                                  default shall be made in the due observance or performance by the Borrowers or any Subsidiary of any covenant, condition or agreement contained in any Loan Document (other than those specified elsewhere in this Article VII 7.01) and such default shall continue unremedied for a period of 30 days after the earlier of (i) notice thereof from the Administrative Agent or any Lender to the Borrowers and (ii) knowledge thereof by the Borrowers;

 

(f)                                   (i) the Borrowers or any Subsidiary shall fail to pay any principal or interest, regardless of amount, due in respect of any Material Indebtedness (other than Indebtedness under the Revolving Loan Agreement), when and as the same shall become due and payable after giving effect to any applicable grace period; or (ii) unless otherwise cured or waived, any other event or condition occurs that results in any Material Indebtedness (other than Indebtedness under the Revolving Loan Agreement) becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness (other than Indebtedness under the Revolving Loan Agreement) or any trustee or agent on its or their behalf to cause any Material Indebtedness (other than Indebtedness under the Revolving Loan Agreement) to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (ii) shall not apply to secured Indebtedness that becomes due solely as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; or (iii) an “Event of Default” shall occur under, and as defined in, the Revolving Loan Agreement;

 

(g)                                  an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Borrower or any Subsidiary, or of a substantial part of the property or assets of any Borrower or any Subsidiary, under the Bankruptcy Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership, examinership or similar law, (ii) the appointment of a receiver, examiner, trustee, custodian, sequestrator, conservator or similar official for any Borrower or any Subsidiary or for a substantial part of the property or assets of any Borrower or any Subsidiary or (iii) the winding-up or liquidation of any Borrower or any Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

 

(h)                                 any Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under the Bankruptcy Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership, examinership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, examiner, trustee, custodian, sequestrator, conservator or similar official for any Borrower or any Subsidiary or for a substantial part of the property or assets of any Borrower or any Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing;

 

78

 

(i)                                     one or more final judgments shall be rendered against any Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of any Borrower or any Subsidiary to enforce any such judgment and such judgment either (i) is for the payment of money in an aggregate amount in excess of $2,000,000 (after giving effect to insurance as to which any Borrower or any Subsidiary has promptly submitted a written claim in respect thereof to the applicable insurance carrier and the insurance carrier has accepted liability and is solvent and not an Affiliate of any Borrower or any of its Subsidiaries) or (ii) is for injunctive relief and could reasonably be expected to result in a Material Adverse Effect;

 

(j)                                    an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other such ERISA Events, could reasonably be expected to result in liability of the Borrowers and their ERISA Affiliates in an aggregate amount exceeding $1,000,000;

 

(k)                                 any Guarantee under the U.S. Guarantee and Collateral Agreement or the Guarantee (Non-U.S. Entities) for any reason shall cease to be in full force and effect (other than in accordance with its terms), or any Guarantor shall deny in writing that it has any further liability under the U.S. Guarantee and Collateral Agreement to which it is a party (other than as a result of the discharge of such Guarantor in accordance with the terms of the Loan Documents);

 

(l)                                     any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by any Borrower or any other Loan Party not to be, a valid, perfected, first priority (or if the Revolving Loan Agreement is outstanding, second priority) (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties purported to be covered thereby;

 

(m)                             any subordinated Indebtedness of any Borrower or any Subsidiary constituting Material Indebtedness shall cease (or any Loan Party or an Affiliate of any Loan Party shall so assert), for any reason, to be validly subordinated to the Obligations as provided in the agreements evidencing such subordinated Indebtedness;

 

(n)                                 any Borrower or any of its Subsidiaries shall be convicted under any criminal law that could lead to a forfeiture of any property of such Person;

 

(o)                                 there shall have occurred a Change in Control; or

 

(p)                                 any event of default (or similar event, howsoever denominated) under any other Loan Document shall occur (to the extent that such event of default shall not otherwise be an Event of Default hereunder);

 

then, and in every such event (other than an event with respect to the Loan Parties described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrowers, declare the Term Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Term Loans so declared to be due and payable (and accrued interest thereon), together with the Applicable Prepayment Premium for the prepayment date with respect to such principal amount paid and accrued interest thereon, and any unpaid accrued Fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to any of the Loan Parties described in paragraph (g) or (h) above, the

 

79

 

principal of the Term Loans then outstanding (including accrued interest thereon), together with the Applicable Prepayment Premium for the prepayment date with respect to such principal amount paid and accrued interest thereon and any unpaid accrued fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding, and the Collateral Agent shall have the right to enforce all of the Liens created pursuant to the Security Documents and exercise on behalf of itself and the other Secured Parties all rights and remedies available to it and the other Secured Parties under the Loan Documents or applicable law, including the right to appoint a receiver.

 

If the Obligations are accelerated for any reason, including because of default, Disposition or encumbrance (including that by operation of law or otherwise), the Applicable Prepayment Premium will also be due and payable as though said indebtedness was voluntarily prepaid and shall constitute part of the Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender’s lost profits as a result thereof.  Any Applicable Prepayment Premium payable above shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination and each of the Borrowers agrees that it is reasonable under the circumstances currently existing.  The Applicable Prepayment Premium shall also be payable in the event the Obligations (and/or this Agreement or the Notes evidencing the Obligations) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means.  EACH BORROWER EXPRESSLY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING APPLICABLE PREPAYMENT PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION.  Each Borrower expressly agrees that:  (A) the Applicable Prepayment Premium is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) the Applicable Prepayment Premium shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between Lenders and such Borrower giving specific consideration in this transaction for such agreement to pay the Applicable Prepayment Premium; and (D) such Borrower shall be estopped hereafter from claiming differently than as agreed to in this paragraph.  Each Borrower expressly acknowledges that its agreement to pay the Applicable Prepayment Premium to Lenders as herein described is a material inducement to Lenders to make the Term Loans.

 

Section 7.02                             Application of Proceeds.  The Collateral Agent shall apply the proceeds of any collection, sale, foreclosure or other realization upon any Collateral, including any Collateral consisting of cash, as follows:

 

FIRST, to the payment of all costs and expenses incurred by the Administrative Agent or the Collateral Agent (in their respective capacities as such hereunder or under any other Loan Document) in connection with such collection, sale, foreclosure or realization or otherwise in connection with this Agreement, any other Loan Document or any of the Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent and/or the Collateral Agent hereunder or under any other Loan Document on behalf of any Loan Party and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;

 

SECOND, to the payment in full of interest due and payable in respect of any Term Loans (the amounts so applied to be distributed among the Lenders pro rata in accordance with the amounts of interest owed to them on the date of any such distribution);

 

80

 

THIRD, to the payment in full of principal on the Loans (the amounts so applied to be distributed among the Lenders pro rata in accordance with the amounts of principal owed to them on the date of any such distribution);

 

FOURTH, to the payment in full of all other Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and

 

SIXTH, to the Loan Parties, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

 

The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement.  Upon any sale of Collateral by the (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.

 

ARTICLE VIII

 

The Administrative Agent and the Collateral Agent

 

Each of the Lenders hereby irrevocably appoints the Administrative Agent and the Collateral Agent (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the “Agents”) its agent and authorizes the Agents to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.  Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to execute (i) any and all documents (including releases) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents and (ii) the Intercreditor Agreement.

 

The Person serving as the Administrative Agent and/or the Collateral Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such Person and its affiliates may provide debt financing, equity capital or other services (including financial advisory services) to any of the Loan Parties (or any Person engaged in similar business as that engaged in by any of the Loan Parties) as if such Person was not performing the duties specified herein, and may accept fees and other consideration from any of the Loan Parties for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.

 

Neither Agent shall have any duties or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the foregoing, (a) neither Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) neither Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is instructed in writing to exercise by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08), and (c) except as expressly set forth in the Loan Documents, neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to the Borrowers or any of the Subsidiaries that is communicated to or

 

81

 

obtained by the Person serving as the Administrative Agent and/or Collateral Agent or any of its Affiliates in any capacity.  Neither Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct as finally judicially determined by a court of competent jurisdiction.  Neither Agent nor any Lender shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent or such Lender by the Borrowers or a Lender, and neither Agent nor any Lender shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent or such Lender.

 

Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  Each Agent may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  Each Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it.  Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Credit Facilities as well as activities as Agent.

 

Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Lenders and the Borrowers.  Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank.  Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.  The Borrowers shall pay the reasonable fees of a successor Agent.  After an Agent’s resignation hereunder, the provisions of this Article VIII and Section 9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Agent.

 

Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own

 

82

 

decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder.

 

Each Lender hereby further authorizes the Collateral Agent, on behalf of and for the benefit of Lenders, to enter into each Security Document as secured party and to be the agent for and representative of the Lenders thereunder, and each Lender agrees to be bound by the terms of each Security Document; provided that the Collateral Agent shall not (i) enter into or consent to any material amendment, modification, termination or waiver of any provision contained in any Security Document or (ii) release any Collateral (except as otherwise expressly permitted or required pursuant to the terms of this Agreement or the applicable Security Document), in the case of each of clauses (i) and (ii) without the prior consent of Required Lenders (or, if required pursuant to Section 9.08, all Lenders); provided further, however, that, without further written consent or authorization from the Lenders, the Collateral Agent may execute any documents or instruments necessary to (a) release any Lien encumbering any item of Collateral that is the subject of a sale or other Disposition of assets permitted by this Agreement or to which Required Lenders have otherwise consented, (b) release any Guarantor from the U.S. Guarantee and Collateral Agreement or the Guarantee (Non-U.S. Entities) if all of the Equity Interests of such Guarantor are sold or otherwise Disposed of to any Person (other than an Affiliate of a Loan Party) pursuant to a sale or other Disposition permitted hereunder or to which Required Lenders have otherwise consented or (c) subordinate the Liens of the Collateral Agent, on behalf of the Secured Parties, to any Liens permitted by Section 6.02.  Anything contained in any of the Loan Documents to the contrary notwithstanding, the Borrowers, the Collateral Agent and each Lender hereby agree that (1) no Lender shall have any right individually to realize upon any of the Collateral under or otherwise enforce any Security Document, it being understood and agreed that all powers, rights and remedies under the Security Documents may be exercised solely by the Collateral Agent for the benefit of the Secured Parties in accordance with the terms thereof, and (2) in the event of a foreclosure by either on any of the Collateral pursuant to a public or private sale, either Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and the Collateral Agent, as agent for and representative of Lenders (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) 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 public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Notwithstanding anything to the contrary herein, the Collateral Agent shall be permitted to take any action it is authorized to take under any Loan Document.

 

In case of the pendency of any case or proceeding under the Bankruptcy Code or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Term Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrowers) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

 

(i)                                     to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Agents (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Agents and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 2.05, Section 2.13, Section 2.17, and Section 9.05) allowed in such judicial proceeding; and

 

(ii)                                  to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator,

 

83

 

sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 2.05 and Section 9.05.

 

The Collateral Agent’s duties in respect of the Irish Law Charges and the Irish Law Share Charges shall be supplemental to the Irish Trustee Act 1893 and in addition to any which may be vested in the Collateral Agent in such capacity by general law or otherwise.

 

By way of supplement to the Irish Trustee Act 1893 (as amended) it is expressly declared as follows:

 

(i)                                     the Collateral Agent may in relation to any of the provisions of this Agreement act or rely upon the opinion or advice of or any information obtained from any lawyer, accountant, valuer, surveyor, broker, auctioneer or other expert commissioned by the Collateral Agent and the Collateral Agent shall not be responsible for any loss occasioned by so acting or relying;

 

(ii)                                  the Collateral Agent may refrain from doing anything which would or might in its opinion be contrary to any law of any jurisdiction or any directive or regulation of any agency of any state or which would or might otherwise render it liable to any person and may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation; and

 

(iii)                               all moneys received and held by the Collateral Agent may be invested in the name of the Collateral Agent under this Agreement on behalf of the Secured Parties in any investment for the time being authorised for the investment by a trustee of trust moneys or by placing the same on deposit in the name of the Collateral Agent on behalf of the Secured Parties at such bank or institution as the Collateral Agent may decide and the Collateral Agent shall not be responsible for any loss occasioned thereby, whether by depreciation in value, fluctuation in exchange rates or otherwise.

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01.                                   Notices.  Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax, as follows:

 

(i)                                     if to the Borrowers, to them at 5808 Lake Washington Blvd. NE, Suite 300, Kirkland, WA 98033, Attention:  Tracy Knox (Fax No. (425) 298-2788, Telephone No. (425) 298-2336, E-Mail:tracy.knox@rightside.co);

 

(ii)                                  if to the Administrative Agent or Collateral Agent, to Obsidian Agency Services, Inc., c/o Tennenbaum Capital Partners, LLC, 2951 28th Street, Suite 1000, Santa Monica, California 90405, Attention: Asher Finci (Fax No. (310) 889-4950), with a copy (which shall not constitute notice) to Proskauer Rose LLP, 2049 Century Park East, Suite 3200, Los Angeles, California 90067, Attention:  Steven O. Weise and Glen K. Lim (Fax No. (310) 557-2193); and

 

84

 

(iii)                               if to a Lender, to it at its address (or fax number) set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto.

 

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax or on the date 5 Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01.  As agreed to among the Borrowers, the Administrative Agent and the applicable Lenders from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable Person provided from time to time by such Person.

 

SECTION 9.02.                                   Survival of Agreement.  All covenants, agreements, representations and warranties made by the Borrowers herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Term Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Term Loan or any fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid.  The provisions of Section 2.12, Section 2.13, Section 2.17 and Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Term Loans, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.

 

SECTION 9.03.                                   Binding Effect.  This Agreement shall become effective when it shall have been executed by the Borrowers, the Collateral Agent and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.

 

SECTION 9.04.                                   Successors and Assigns.

 

(a)                                 Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrowers, the Administrative Agent, the Collateral Agent or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

 

(b)                                 Each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Term Loan Commitment and the Term Loans at the time owing to it), with the prior written consent of the Borrowers and the Administrative Agent (not to be unreasonably withheld or delayed); provided, however, that (i) the consent of the Borrowers shall not be required to any such assignment made (A) to another Lender or an Affiliate of a Lender, (B) during the primary syndication of the Term Loans and the Term Loan Commitments to Persons identified to the Borrowers prior to the Closing Date or (C) after the occurrence and during the continuance of any Event of Default, (ii) unless otherwise approved by the Administrative Agent, the amount of the Term Loan Commitment or Term Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than, $1,000,000 (or, if less, the entire remaining amount of such Lender’s Term Loan Commitment or Term

 

85

 

Loans), (iii) the parties to each such assignment shall manually execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (provided that only one such fee shall be payable in the case of concurrent assignments to Persons that, after giving effect to such assignments, will be Related Funds), and (iv) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and all applicable tax forms.  Upon acceptance and recording pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.12, Section 2.13, Section 2.17 and Section 9.05).

 

(c)                                  By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows:  (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim; (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrowers or any Subsidiary or the performance or observance by the Borrowers or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05 or delivered pursuant to Section 5.04 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

(d)                                 Each Borrower shall maintain its respective principal executive office a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Term Loan Commitment of, and principal amount of the Term Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  Absent manifest error, the Borrowers, the Administrative Agent, the Collateral Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Administrative Agent, the Collateral Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(e)                                  Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect

 

86

 

of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above, if applicable, and the written consent of the Administrative Agent and, if required, the Borrowers to such assignment and any applicable tax forms, the Administrative Agent shall (i) accept such Assignment and Acceptance and (ii) notify the Borrowers of such acceptance.  The Borrowers shall promptly record the information contained therein in the Register.  No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e).  This Section 9.04(e) shall be construed so that any Term Loan Commitment, Term Loan or other Obligation under the Loan Documents is in registered form under Section 5f103-1(c) of the United States Treasury Regulations.

 

(f)                                   Each Lender may without the consent of the Borrowers or the Administrative Agent sell participations to one or more banks or other Persons in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Term Loan Commitment and the Term Loans owing to it); provided, however, that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other Persons shall be entitled to the benefit of the cost protection provisions contained in Section 2.12 and Section 2.17 to the same extent as if they were Lenders (but, with respect to any particular participant, to no greater extent than the Lender that sold the participation to such participant, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the participant acquired the applicable participation and (iv) the Borrowers, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrowers relating to the Term Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable to such participating bank or Person hereunder or the amount of principal of or the rate at which interest is payable on the Term Loans in which such participating bank or Person has an interest, extending any scheduled principal payment date or date fixed for the payment of interest on the Term Loans in which such participating bank or Person has an interest or Person has an interest or releasing any Guarantor (other than in connection with the sale of such Guarantor in a transaction permitted by Section 6.05) or all or substantially all of the Collateral).

 

(g)                                  Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrowers, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Term Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any participant or any information relating to a participant’s interest in any Term Loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Term Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

(h)                                 Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrowers furnished to such Lender by or on behalf of the Borrowers; provided that, prior to any such disclosure of information designated by the Borrowers as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions)

 

87

 

to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.16.

 

(i)                                     Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto.

 

(j)                                    Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Term Loan that such Granting Lender would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Term Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Term Loan, the Granting Lender shall be obligated to make such Term Loan pursuant to the terms hereof.  The making of a Term Loan by an SPC hereunder shall utilize the Term Loan Commitment of the Granting Lender to the same extent, and as if, such Term Loan were made by such Granting Lender.  Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender).  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof.  In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPC may (i) with notice to, but without the prior written consent of, the Borrowers and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in the Term Loans to the Granting Lender or to any financial institutions (consented to by the Borrowers and the Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Term Loans and (ii) disclose on a confidential basis any non-public information relating to its Term Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.  A Granting Lender that transfers all or any portion of its Term Loan to an SPC shall maintain a register that complies with the requirements set forth in Section 9.04(g).

 

(k)                                 The Borrowers shall not assign or delegate any of their respective rights or duties hereunder without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void.

 

SECTION 9.05.                                   Expenses; Indemnity.

 

(a)                                 Each of the Borrowers agrees to pay all costs and expenses, including reasonable attorneys’ fees (including reasonable allocated costs of internal counsel) and fees, costs and expenses of accountants, advisors and consultants, incurred by the Administrative Agent, the Collateral Agent and their counsel in connection with the syndication of the Credit Facilities and the negotiation, preparation and administration of this Agreement and the other Loan Documents (including travel costs) (subject, in the case of negotiation and preparation arising on or prior to the Closing Date, any applicable limitation as agreed among the Borrowers and the Administrative Agent (or one or more of its Affiliates)) or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or relating to efforts to evaluate or assess any Loan Party, its business or financial condition or protect, evaluate, assess or

 

88

 

Dispose of any of the Collateral; and all costs and expenses, including reasonable attorneys’ fees (including reasonable allocated costs of internal counsel), fees, costs and expenses of accountants, advisors and consultants and costs of settlement, incurred by the Administrative Agent, the Collateral Agent or any of the Lenders in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Loan Documents) or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings.

 

(b)                                 Each Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby (including the syndication of the Credit Facilities), (ii) the use of the proceeds of the Term Loans, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto or the plaintiff or defendant thereunder (and regardless of whether such matter is initiated by a third party or by a Borrower, any other Loan Party or any of their respective Affiliates), or (iv) any actual or alleged presence or Release of Hazardous Materials on any property currently or formerly owned or operated by any Borrower or any of the Subsidiaries, or any Environmental Liability related in any way to any Borrower or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee.

 

(c)                                  To the extent that the Borrowers fail to pay any amount required to be paid by them to the Administrative Agent or the Collateral Agent under paragraph (a) or (b) of this Section 9.05(c), each Lender severally agrees to pay to the Administrative Agent or the Collateral Agent, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent or the Collateral Agent in its capacity as such.  For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the outstanding Term Loans at the time.

 

(d)                                 To the extent permitted by applicable law, the Borrowers shall not assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the Transactions, any Term Loan or the use of the proceeds thereof.

 

(e)                                  The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Term Loans, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent or any Lender.  All amounts due under this Section 9.05 shall be payable on written demand therefor.

 

89

 

(f)                                   Notwithstanding anything to the contrary in this Section 9.05, in no event shall a Cayman Loan Party (other than a U.S. Loan Party) be liable for any payments owed in connection with the U.S. Term Loans.

 

SECTION 9.06.                                   Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the U.S. Borrower against any of and all the obligations of the U.S. Borrower, and to or for the credit or the account of the Cayman Borrower against any of and all the obligations of the Cayman Borrower, now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured.  The rights of each Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.07.                                   Applicable Law.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

SECTION 9.08.                                   Waivers; Amendment.

 

(a)                                 No failure or delay of the Administrative Agent, the Collateral Agent or any Lender in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the Collateral Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrowers or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances.

 

(b)                                 Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest or premium on any Term Loan, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Term Loan, without the prior written consent of each Lender directly adversely affected thereby (other than any waiver of any increase in the interest rate applicable to the Term Loans as a result of the occurrence of an Event of Default), (ii) increase or extend the Term Loan Commitment or decrease or extend the date for payment of any fees of any Lender without the prior written consent of such Lender, (iii) amend or modify the pro rata requirements of Section 2.14, the provisions of Section 9.04(k) or the provisions of this Section 9.08(b) or release any Guarantor (other than in connection with the sale or other disposition of such Guarantor in a transaction permitted by Section 6.05) or all or substantially all of the Collateral, without the prior written consent of each Lender, (iv) modify the protections afforded to an SPC pursuant to the provisions of Section 9.04(j) without the written consent of such SPC or (v) reduce the percentage contained in the definition of the term “Required Lenders” without

 

90

 

the prior written consent of each Lender (it being understood that with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Term Loans on the date hereof); provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent hereunder or under any other Loan Document without the prior written consent of the Administrative Agent or the Collateral Agent.

 

SECTION 9.09.                                   Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Term Loan, together with all fees, charges and other amounts that are treated as interest on such Term Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Term Loan in accordance with applicable law, the rate of interest payable in respect of such Term Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Term Loan but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

 

SECTION 9.10.                                   Entire Agreement.  This Agreement and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof.  Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents.  Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any Person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

 

SECTION 9.11.                                   WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.

 

SECTION 9.12.                                   Severability.  In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

91

 

SECTION 9.13.                                   Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03.  Delivery of an executed signature page to this Agreement by facsimile transmission or other electronic means shall be as effective as delivery of a manually signed counterpart of this Agreement.

 

SECTION 9.14.                                   Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

SECTION 9.15.                                   Jurisdiction; Consent to Service of Process.

 

(a)                                 Each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action 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 shall affect any right that the Administrative Agent, the Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrowers, or their respective properties in the courts of any jurisdiction.

 

(b)                                 Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any court located in the City of New York, Borough of Manhattan, or of the United States of America sitting in the Southern District of New York.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)                                  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

SECTION 9.16.                                   Confidentiality.  Each of the Administrative Agent, the Collateral Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ officers, directors, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Loan Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 9.16, to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Loan Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative

 

92

 

transaction relating to the Borrowers or any Subsidiary or any of their respective obligations, (f) with the consent of the Borrowers or (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.16.  For the purposes of this Section 9.16, “Information” shall mean all information received from the Borrowers or any Subsidiary and related to the Borrowers or any Subsidiary or their business, other than any such information that was available to the Administrative Agent, the Collateral Agent or any Lender on a nonconfidential basis prior to its disclosure by the Borrowers or any Subsidiary; provided that, in the case of Information received from the Borrowers or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section 9.16 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord its own confidential information.

 

SECTION 9.17.                                   USA PATRIOT Act Notice.  Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers and the Guarantors that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Borrowers and the Guarantors, which information includes the name and address of the Borrowers and the Guarantors and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrowers and the Guarantors in accordance with the USA PATRIOT Act.

 

SECTION 9.18.                                   Judgment Currency.

 

(a)                                 The Loan Parties’ obligations hereunder and under the other Loan Documents to make payments in the Dollars shall not be discharged or satisfied by any tender or recovery, including pursuant to any judgment, expressed in or converted into any currency other than Dollars, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent, the Collateral Agent or the respective Lender of the full amount of Dollars expressed to be payable to the Administrative Agent, the Collateral Agent or such Lender under this Agreement or the other Loan Documents.

 

(b)                                 If, for the purpose of obtaining or enforcing judgment against any Loan Party in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than Dollars (such other currency being hereinafter referred to as the “Judgment Currency”) an amount due in Dollars, the conversion shall be made at the U.S. Dollar Equivalent thereof, determined, in each case, as of the Business Day immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the “Judgment Currency Conversion Date”).

 

(c)                                  If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the applicable Loan Party covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date.

 

(d)                                 For purposes of determining the U.S. Dollar Equivalent or any other rate of exchange for this Section, such amounts shall include any premium and costs payable in connection with the purchase of Dollars.

 

[Signature pages follow]

 

93

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

	
 
    	
RIGHTSIDE GROUP, LTD., as U.S. Borrower
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Taryn Naidu
    
	
 
    	
Name:
    	
Taryn Naidu
    
	
 
    	
Title:
    	
CEO and President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
UNITED TLD HOLDCO LTD., as Cayman Borrower
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Taryn Naidu
    
	
 
    	
Name:
    	
Taryn Naidu
    
	
 
    	
Title:
    	
Director
    

 

 

	
 
    	
OBSIDIAN AGENCY SERVICES, INC.
    
	
 
    	
as Administrative Agent and Collateral Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Howard Levkowitz
    
	
 
    	
Name:
    	
Howard Levkowitz
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SPECIAL VALUE CONTINUATION PARTNERS, LP, as Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Tennenbaum Capital Partners, LLC
    
	
 
    	
Its:
    	
Investment Manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Howard Levkowitz
    
	
 
    	
Name:
    	
Howard Levkowitz
    
	
 
    	
Title:
    	
Managing Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TENNENBAUM OPPORTUNITIES FUND VI, LLC, as Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Tennenbaum Capital Partners, LLC
    
	
 
    	
Its:
    	
Investment Manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Howard Levkowitz
    
	
 
    	
Name:
    	
Howard Levkowitz
    
	
 
    	
Title:
    	
Managing Partner
    

 

S-2

 

EXHIBIT A

 

FORM OF NOTICE OF BORROWING

 

August       , 2014

 

Obsidian Agency Services, Inc.,

as Administrative Agent under the

Credit Agreement referred to below

c/o Tennenbaum Capital Partners, LLC
 2951 28th Street, Suite 1000
 Santa Monica, CA  90405
 Attention:  Asher Finci
 Fax:  (310) 889-4950

 

Re:                             [RIGHTSIDE GROUP, LTD.][UNITED TLD HOLDCO, LTD.]

 

Reference is made to that certain Credit Agreement, dated as of August 6, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among RIGHTSIDE GROUP, LTD., a Delaware corporation (the “U.S. Borrower”), UNITED TLD HOLDCO, LTD., an exempted company limited by shares incorporated under the laws of the Cayman Islands (the “Cayman Borrower”, and, together with the U.S. Borrower, the “Borrowers”), the lenders from time to time party thereto (the “Lenders”), and OBSIDIAN AGENCY SERVICES, INC., as administrative agent and as collateral agent for the Lenders. Capitalized terms used herein and not otherwise defined herein are used herein as defined in the Credit Agreement.

 

The [U.S. Borrower][Cayman Borrower] hereby gives you notice, irrevocably, pursuant to Section 2.02(c) of the Credit Agreement that the undersigned hereby requests a borrowing (the “Proposed Borrowing”) under the Credit Agreement and, in connection therewith, sets forth below the information relating to the Proposed Borrowing as required by Section 2.02(c) of the Credit Agreement:

 

(a)                                 The date of the Proposed Borrowing is the Closing Date.

 

(b)                                 The aggregate principal amount of the Proposed Borrowing is $[10,000,000] [20,000,000].

 

At the time of the Proposed Borrowing and also after giving effect thereto, (i) there is no Default or Event of Default, and (ii) all representations and warranties contained in Article III of the Credit Agreement are true and correct in all material respects (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date); provided that, if a representation or warranty is qualified as to materiality, the materiality qualifier set forth above shall be disregarded with respect to such representation or warranty for purposes of this condition.

 

At the time of the Proposed Borrowing, no injunction or other restraining order has been issued and no hearing to cause an injunction or other restraining order to be issued is pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the Transactions or the making of the Term Loans under the Credit Agreement. Delivery of an executed counterpart of this Notice of Borrowing by telecopier or other electronic means shall be effective as delivery of an original executed counterpart of this Notice of Borrowing.

 

[Remainder of page intentionally left blank]

 

A-1

 

	
 
    	
[RIGHTSIDE GROUP, LTD.][UNITED TLD HOLDCO, LTD.]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[SIGNATURE PAGE TO NOTICE OF BORROWING]

 

A-2

 

EXHIBIT B-1

 

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS TERM NOTE WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT.” RIGHTSIDE GROUP, LTD. WILL PROMPTLY MAKE AVAILABLE TO THE HOLDER HEREOF INFORMATION REGARDING THE ISSUE PRICE, ISSUE DATE, YIELD TO MATURITY, AMOUNT OF ORIGINAL ISSUE DISCOUNT (AND ANY OTHER INFORMATION REQUIRED TO BE MADE AVAILABLE TO SUCH HOLDER PURSUANT TO U.S. TREASURY REGULATIONS), UPON THE WRITTEN REQUEST OF SUCH HOLDER DIRECTED TO 2951 28TH STREET, SUITE 1000, SANTA MONICA, CA 90405.

 

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF AUGUST 6, 2014 AMONG SILICON VALLEY BANK (“SENIOR LENDER”), OBSIDIAN AGENCY SERVICES, INC., AS AGENT FOR THE LENDERS (AS DEFINED BELOW), AND RIGHTSIDE GROUP LTD. ON BEHALF OF THE BORROWERS (“BORROWERS”) OF THE INDEBTEDNESS (INCLUDING INTEREST) OWED PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF AUGUST 1, 2014 BY AND AMONG BORROWERS AND SENIOR LENDER, AS SUCH CREDIT AGREEMENT (SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT) HAS BEEN AND HEREAFTER MAY BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME AND (SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT) TO INDEBTEDNESS REFINANCING THE INDEBTEDNESS UNDER THAT AGREEMENT AS CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

 

FORM OF TERM NOTE (U.S. BORROWER)

 

	
$[·]
    	
 
    	
[·], 2014
    

 

FOR VALUE RECEIVED, the undersigned, RIGHTSIDE GROUP, LTD., a Delaware corporation (the “U.S. Borrower”, together with all successors and assigns), promises to pay [·] (hereinafter, together with all successors in title and permitted assigns, the “Lender”), the principal sum of $[·] or such lesser amount as is outstanding from time to time, on the dates and in the amounts set forth in the Credit Agreement (as hereafter defined), with interest, fees, expenses and costs at the rate and payable in the manner stated in the Credit Agreement.  As used herein, the “Credit Agreement” means and refers to that certain Credit Agreement, dated as of August 6, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time), by and among the U.S. Borrower, UNITED TLD HOLDCO, LTD., an exempted company limited by shares incorporated under the laws of the Cayman Islands (the “Cayman Borrower”, together with all successors and assigns), the lenders from time to time party thereto (the “Lenders”) and OBSIDIAN AGENCY SERVICES, INC., as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent”) for the Lenders. Capitalized terms used herein and not otherwise defined herein are used herein as defined in the Credit Agreement.

 

This Term Note is a “Term Note” to which reference is made in the Credit Agreement and is subject to all terms and provisions thereof.  This Term Note is also entitled to the benefits of the Guarantee and Collateral Agreement and is secured by the Collateral.  The principal of, and interest on, this Term Note shall be payable at the times, in the manner and in the amounts provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein.  The Administrative

 

B-1

 

Agent’s books and records concerning the Term Loans, the accrual of interest and fees thereon, and the repayment of such Term Loans shall be prima facie evidence of the indebtedness to the Lender hereunder, absent manifest error.

 

No delay or omission by the Administrative Agent, the Collateral Agent or the Lender in exercising or enforcing any of the Administrative Agent’s, the Collateral Agent’s or the Lender’s respective powers, rights, privileges, remedies or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion.  No waiver of any Event of Default shall operate as a waiver of any other Event of Default, nor as a continuing waiver.

 

The U.S. Borrower waives presentment, demand, notice and protest, and any delay on the part of the holder hereof.  The U.S. Borrower assents to any extension or other indulgence (including, without limitation, the release or substitution of Collateral) permitted by the Administrative Agent, the Collateral Agent and/or the Lender with respect to this Term Note and/or any Security Document or any extension or other indulgence with respect to any other liability or any other collateral given under the Loan Documents to secure any other liability of the U.S. Borrower or any other Person obligated on account of this Term Note.

 

This Term Note shall be binding upon the U.S. Borrower and upon its permitted successors, assigns, and representatives, and shall inure to the benefit of the Lender and its permitted successors, endorsees and assigns. There are certain restrictions on the assignment and transfer of this Term Note and the obligations evidenced by this Term Note in the Credit Agreement (including, without limitation, in Section 9.04 of the Credit Agreement).

 

Each of the U.S. Borrower and, by its acceptance hereof, the Lender, hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court of any thereof, in any action or proceeding arising out of or relating to this Term Note or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the U.S. Borrower and, by its acceptance hereof, the Lender, hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by the law, in such Federal court. Each of the U.S Borrower and, by its acceptance hereof, the Lender, agrees that a final judgment in any such action 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 Term Note shall affect any right that the Administrative Agent, the Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Term Note or the other Loan Documents against the U.S. Borrower, the Cayman Borrower or their respective properties in the courts of any jurisdiction. Each of the U.S. Borrower and, by its acceptance hereof, the Lender, irrevocably and unconditionally waives, to the fullest extent that it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action or proceeding arising out of, or relating to, this Term Note in any court located in the City of New York, Borough of Manhattan, or the United States of America sitting in the Southern District of New York.  Each of the U.S. Borrower and, by its acceptance hereof, the Lender, hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

Each of the U.S. Borrower and, by its acceptance hereof, the Lender, makes the following waiver knowingly, voluntarily, and intentionally, and understands that the Administrative Agent and the Lender or the U.S. Borrower, as applicable, are each relying thereon.  EACH OF THE U.S. BORROWER AND,

 

B-2

 

BY ITS ACCEPTANCE HEREOF, THE LENDER, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS TERM NOTE.

 

[Remainder of page intentionally left blank]

 

B-3

 

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

 

 

	
 
    	
RIGHTSIDE GROUP, LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[SIGNATURE PAGE TO FORM OF NOTE (U.S. BORROWER)]

 

B-4

 

LOANS AND PAYMENTS

 

	
Date
    	
 
    	
Amount
   of Term
   Loan
    	
 
    	
Maturity
   Date
    	
 
    	
Payments of Principal/Interest
    	
 
    	
Principal
   Balance of
   Term Note
    	
 
    	
Name of
   Person
   Making this
   Notation
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

B-5

 

EXHIBIT B-2

 

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS TERM NOTE WAS ISSUED WITH “ORIGINAL ISSUE DISCOUNT.” UNITED TLD HOLDCO, LTD. WILL PROMPTLY MAKE AVAILABLE TO THE HOLDER HEREOF INFORMATION REGARDING THE ISSUE PRICE, ISSUE DATE, YIELD TO MATURITY, AMOUNT OF ORIGINAL ISSUE DISCOUNT (AND ANY OTHER INFORMATION REQUIRED TO BE MADE AVAILABLE TO SUCH HOLDER PURSUANT TO U.S. TREASURY REGULATIONS), UPON THE WRITTEN REQUEST OF SUCH HOLDER DIRECTED TO 2951 28TH STREET, SUITE 1000, SANTA MONICA, CA 90405.

 

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF AUGUST 6, 2014 AMONG SILICON VALLEY BANK (“SENIOR LENDER”), OBSIDIAN AGENCY SERVICES, INC., AS AGENT FOR THE LENDERS (AS DEFINED BELOW), AND RIGHTSIDE GROUP LTD. ON BEHALF OF THE BORROWERS (“BORROWERS”) OF THE INDEBTEDNESS (INCLUDING INTEREST) OWED PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF AUGUST 1, 2014 BY AND AMONG BORROWERS AND SENIOR LENDER, AS SUCH CREDIT AGREEMENT (SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT) HAS BEEN AND HEREAFTER MAY BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME AND (SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT) TO INDEBTEDNESS REFINANCING THE INDEBTEDNESS UNDER THAT AGREEMENT AS CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

 

FORM OF TERM NOTE (CAYMAN BORROWER)

 

	
$[·]
    	
 
    	
[·], 2014
    

 

FOR VALUE RECEIVED, the undersigned, UNITED TLD HOLDCO, LTD., an exempted company limited by shares incorporated under the laws of the Cayman Islands (the “Cayman Borrower”, together with all successors and assigns), promises to pay [·] (hereinafter, together with all successors in title and permitted assigns, the “Lender”), the principal sum of $[·] or such lesser amount as is outstanding from time to time, on the dates and in the amounts set forth in the Credit Agreement (as hereafter defined), with interest, fees, expenses and costs at the rate and payable in the manner stated in the Credit Agreement.  As used herein, the “Credit Agreement” means and refers to that certain Credit Agreement, dated as of August 6, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time), by and among the Cayman Borrower, RIGHTSIDE GROUP, LTD., a Delaware corporation (the “U.S. Borrower”), the lenders from time to time party thereto (the “Lenders”) and OBSIDIAN AGENCY SERVICES, INC., as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent”) for the Lenders. Capitalized terms used herein and not otherwise defined herein are used herein as defined in the Credit Agreement.

 

This Term Note is a “Term Note” to which reference is made in the Credit Agreement and is subject to all terms and provisions thereof.  This Term Note is also entitled to the benefits of the Guarantee and Collateral Agreement and is secured by the Collateral.  The principal of, and interest on, this Term Note shall be payable at the times, in the manner and in the amounts provided in the Credit Agreement and shall be subject to prepayment and acceleration as provided therein.  The Administrative

 

B-5

 

Agent’s books and records concerning the Term Loans, the accrual of interest and fees thereon, and the repayment of such Term Loans shall be prima facie evidence of the indebtedness to the Lender hereunder, absent manifest error.

 

No delay or omission by the Administrative Agent, the Collateral Agent or the Lender in exercising or enforcing any of the Administrative Agent’s, the Collateral Agent’s or the Lender’s respective powers, rights, privileges, remedies or discretions hereunder shall operate as a waiver thereof on that occasion nor on any other occasion.  No waiver of any Event of Default shall operate as a waiver of any other Event of Default, nor as a continuing waiver.

 

The Cayman Borrower waives presentment, demand, notice and protest, and any delay on the part of the holder hereof.  The Cayman Borrower assents to any extension or other indulgence (including, without limitation, the release or substitution of Collateral) permitted by the Administrative Agent, the Collateral Agent and/or the Lender with respect to this Term Note and/or any Security Document or any extension or other indulgence with respect to any other liability or any other collateral given under the Loan Documents to secure any other liability of the Cayman Borrower or any other Person obligated on account of this Term Note.

 

This Term Note shall be binding upon the Cayman Borrower and upon its permitted successors, assigns, and representatives, and shall inure to the benefit of the Lender and its permitted successors, endorsees and assigns. There are certain restrictions on the assignment and transfer of this Term Note and the obligations evidenced by this Term Note in the Credit Agreement (including, without limitation, in Section 9.04 of the Credit Agreement).

 

Each of the Cayman Borrower and, by its acceptance hereof, the Lender, hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court of any thereof, in any action or proceeding arising out of or relating to this Term Note or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the Cayman Borrower and, by its acceptance hereof, the Lender, hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the Cayman Borrower and, by its acceptance hereof, the Lender, agrees that a final judgment in any such action 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 Term Note shall affect any right that the Administrative Agent, the Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Term Note or the other Loan Documents against the Cayman Borrower, the U.S. Borrower or their respective properties in the courts of any jurisdiction. Each of the Cayman Borrower and, by its acceptance hereof, the Lender, irrevocably and unconditionally waives, to the fullest extent that it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action or proceeding arising out of, or relating to, this Term Note in any court located in the City of New York, Borough of Manhattan, or the United States of America sitting in the Southern District of New York.  Each of the Cayman Borrower and, by its acceptance hereof, the Lender, hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

Each of the Cayman Borrower and, by its acceptance hereof, the Lender, makes the following waiver knowingly, voluntarily, and intentionally, and understands that the Administrative Agent and the

 

B-6

 

Lender or the Cayman Borrower, as applicable, are each relying thereon.  EACH OF THE CAYMAN BORROWER AND, BY ITS ACCEPTANCE HEREOF, THE LENDER, HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS TERM NOTE.

 

[Remainder of page intentionally left blank]

 

B-6

 

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

 

	
 
    	
UNITED TLD HOLDCO, LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[SIGNATURE PAGE TO FORM OF NOTE (CAYMAN BORROWER)

 

B-7

 

LOANS AND PAYMENTS

 

	
Date
    	
 
    	
Amount
   of Term
   Loan
    	
 
    	
Maturity
   Date
    	
 
    	
Payments of Principal/Interest
    	
 
    	
Principal
   Balance of
   Term Note
    	
 
    	
Name of
   Person
   Making this
   Notation
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

B-8

 

EXHIBIT C

 

[RESERVED]

 

C-1

 

EXHIBIT D

 

[AGENT LOGO]

 

FORM OF ADMINISTRATIVE QUESTIONNAIRE

 

[RIGHTSIDE GROUP, LTD.][UNITED TLD HOLDCO, LTD.]

 

	
Agent Address:
    	
 
    	
 
    	
Return form to:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Obsidian Agency Services, Inc.
    	
 
    	
 
    	
 
    
	
 
    	
c/o Tennenbaum Capital
    	
 
    	
Telephone:
    	
(310) 889-4950
    
	
 
    	
Partners, LLC
    	
 
    	
Facsimile:
    	
 
    
	
 
    	
2951 28th Street, Suite 1000
    	
 
    	
E-mail:
    	
 
    
	
 
    	
Santa Monica, CA 90405
    	
 
    	
 
    	
 
    

 

It is very important that all of the requested information be completed accurately and that this administrative questionnaire be returned promptly.  If your institution is sub-allocating its allocation, please fill out an administrative questionnaire for each legal entity.

 

Legal Name of Lender to appear in Documentation:

 

	
 
    	
 
    	
 
    

 

	
Tax ID Number:
    	
 
    	
 
    
	
 
    
	
Signature Block Information:
    	
 
    	
 
    
					

 

	
·
    	
 
    	
Signing Credit Agreement
    	
o
    	
Yes
    	
o
    	
No
    
	
·
    	
 
    	
Coming in via Assignment
    	
o
    	
Yes
    	
o
    	
No
    

 

Type of Lender:

 

Bank ; Asset Manager ; Broker/Dealer ; CLO/CDO ; Finance Company ; Hedge Fund ; Insurance ; Mutual Fund ; Pension Fund ; Other Regulated Investment Fund ; Special Purpose Vehicle ; Other (please specify) ; 

 

	
Lender Parent (if any):
    	
 
    

 

	
Address
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

D-1

 

Credit Contact(s)/Notification Methods:  Borrowings, Paydowns, Interest, Fees, etc.

 

	
 
    	
Primary Credit Contact
    	
 
    	
Secondary Credit Contact
    

 

Syndicate-level information (which may contain material non-public information about the Borrower and its related parties or their respective securities) will be made available to the Credit Contact(s) below.  The Credit Contact(s) must be able to receive such information in accordance with his/her institution’s compliance procedures and applicable laws, including Federal and state securities laws.

 

	
Name:
    	
 
    	
 
    	
 
    
	
Company:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Telephone:
    	
 
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
 
    	
 
    
	
E-Mail Address:
    	
 
    	
 
    	
 
    

 

	
 
    	
Primary Operations Contact
    	
 
    	
Secondary Operations Contact
    

 

	
Name:
    	
 
    	
 
    	
 
    
	
Company:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Telephone:
    	
 
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
 
    	
 
    
	
E-Mail Address:
    	
 
    	
 
    	
 
    

 

D-1

 

Lender’s Domestic Wire Instructions

 

	
Bank Name:
    	
 
    
	
ABA/Routing No.:
    	
 
    
	
Account Name:
    	
 
    
	
Account No.:
    	
 
    
	
FFC Account Name:
    	
 
    
	
FFC Account No.:
    	
 
    
	
Attention:
    	
 
    
	
Reference:
    	
 
    

 

Lender’s Foreign Wire Instructions

 

	
Currency:
    	
 
    
	
Bank Name:
    	
 
    
	
Swift/Routing No.:
    	
 
    
	
Account Name:
    	
 
    
	
Account No.:
    	
 
    
	
FFC Account Name:
    	
 
    
	
FFC Account No.:
    	
 
    
	
Attention:
    	
 
    
	
Reference:
    	
 
    

 

Administrative Agent’s Wire Instructions

 

	
Bank Name:
    	
 
    
	
ABA/Routing No.:
    	
 
    
	
Account Name:
    	
 
    
	
Account No.:
    	
 
    
	
FFC Account Name:
    	
 
    
	
FFC Account No.:
    	
 
    
	
Attention:
    	
 
    
	
Reference:
    	
 
    

 

D-3

 

Tax Documents

 

NON-U.S. LENDER INSTITUTIONS:

 

I. Corporations:

 

If your institution is incorporated outside of the United States for U.S. federal income tax purposes and is the beneficial owner of the interest and other income it receives, you must complete one of the following three tax forms, as applicable to your institution: a.) Form W-8BEN (Certificate of Foreign Status of Beneficial Owner), b.) Form W-8ECI (Income Effectively Connected to a U.S. Trade or Business), or c.) Form W-8EXP (Certificate of Foreign Government or Governmental Agency).

 

A U.S. taxpayer identification number is required for any institution submitting Form W-8ECI.  It is also required on Form W-8BEN for certain institutions claiming the benefits of a tax treaty with the United States.  Please refer to the instructions of the form applicable to your institution when completing it.  In addition, please be advised that U.S. tax regulations do not permit the acceptance of faxed tax forms.  An original tax form must be submitted.

 

II. Flow-Through Entities:

 

If your institution is organized outside the United States and is classified for U.S. federal income tax purposes as either a Partnership, Trust, Qualified or Non-Qualified Intermediary, or other non-U.S. flow-through entity, an original Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding) must be completed by your institution together with a withholding statement.  Flow-through entities other than Qualified Intermediaries are required to include tax forms for each of the underlying beneficial owners.

 

Please refer to the instructions of this form when completing it.  In addition, please be advised that U.S. tax regulations do not permit the acceptance of faxed tax forms.  Original tax form(s) must be submitted.

 

U.S. LENDER INSTITUTIONS:

 

If your institution is incorporated or organized within the United States, you must complete and return Form W-9 (Request for Taxpayer Identification Number and Certification).  Please be advised that we request that you submit an original Form W-9.

 

Pursuant to the language contained in the tax section of the Credit Agreement, the applicable tax form for your Non-U.S. or U.S. institution must be completed and returned on or prior to the date on which your institution becomes a Lender under the Credit Agreement.  Failure to provide the proper tax form when requested may subject your institution to U.S. tax withholding.

 

D-4

 

EXHIBIT E

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

This Assignment and Acceptance (this “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is entered into by and between [the][each](1) Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each](2) Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees](3) hereunder are several and not joint.](4) Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.

 

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and[the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty (express or implied) by [the][any] Assignor.

 

	
1.
    	
Assignor[s]:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
2.
    	
Assignee[s]:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[for each Assignee identify Lender]
    
	
 
    	
 
    	
 
    
	
3.
    	
Borrower:  [RIGHTSIDE GROUP,   LTD.][UNITED TLD HOLDCO, LTD.]
    
					

 

(1)  For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

(2)  For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

(3)  Select as appropriate.

(4)  Include bracketed language if there are either multiple Assignors or multiple Assignees.

 

E-1

 

4.                                      Administrative Agent:  Obsidian Agency Services, Inc., including any successor thereto, as the administrative agent under the Credit Agreement

 

5.                                      Credit Agreement:  The Credit Agreement, dated as of August 6, 2014 (as the same may be amended, restated, supplemented or otherwise modified from time to time), by and among RIGHTSIDE GROUP, LTD., a Delaware corporation, as the U.S. Borrower, UNITED TLD HOLDCO, LTD., an exempted company limited by shares incorporated under the laws of the Cayman Islands, as the Cayman Borrower, the lenders from time to time party thereto (the “Lenders”), and OBSIDIAN AGENCY SERVICES, INC., as administrative agent and as collateral agent for the Lenders.

 

6.                                      Assigned Interest:

 

	
Assignor[s](5)
    	
 
    	
Assignee[s](6)
    	
 
    	
Aggregate
   Amount of
    Term Loans
   for all
    Lenders(7)
    	
 
    	
Amount of
    Term Loans
   Assigned
    	
 
    	
Percentage
    Assigned of
   Term Loans(8)
    	
 
    	
CUSIP
    Number
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    

 

[7.                                  Trade Date:                (9)

 

Effective Date:                         , 20         [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

[Remainder of page intentionally left blank]

 

(5)  List each Assignor, as appropriate.

(6)  List each Assignee, as appropriate.

(7)  Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

(8)  Set forth, to at least 9 decimals, as a percentage of the Loans of all Lenders thereunder.

(9)  To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

E-2

 

The terms set forth in this Assignment and Acceptance are hereby agreed to:

 

	
 
    	
ASSIGNOR
    
	
 
    	
 
    
	
 
    	
[NAME OF ASSIGNOR]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
ASSIGNEE
    
	
 
    	
 
    
	
 
    	
[NAME OF ASSIGNEE]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

	
[Consented to and]   Accepted:
    
	
 
    	
 
    
	
OBSIDIAN AGENCY SERVICES, INC., as Administrative Agent
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
[Consented to:   [RIGHTSIDE GROUP, LTD.][UNITED TLD HOLDCO, LTD.]
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:  ]
    	
 
    

 

[SIGNATURE PAGE TO FORM OF ASSIGNMENT AND ACCEPTANCE]

 

E-3

 

Annex 1

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ACCEPTANCE

 

1.                                      Representations and Warranties.

 

1.1.                            Assignor.  [The][Each] Assignor (a) represents and warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim; and (b) except as set forth in (a) above, makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant to the Credit Agreement, or the financial condition of Holdings, the Borrower or any Subsidiary or the performance or observance by Holdings, the Borrower or any Subsidiary of any of its obligations under the Credit Agreement, any other Loan Document or any other instrument or document furnished pursuant to the Credit Agreement.

 

1.2.                            Assignee.  [The][Each] Assignee (a) represents and warrants that (i) it is legally authorized to enter into such Assignment and Acceptance; (ii) it meets all the requirements to be an assignee under Section 9.04(b) and (c) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.04(b) of the Credit Agreement); (iii) from and after the Effective Date referred to in this Assignment and Acceptance, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder; (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type; (v) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such] Assigned Interest and (vi) attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, including but not limited to any documentation required pursuant to Section 2.17 of the Credit Agreement, duly completed and executed by [the][such] Assignee; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a) and Section 3.05(b) of the Credit Agreement or delivered pursuant to Section 5.04 of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (c) will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents; (d) appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms of the Credit Agreement, together with such powers as are reasonably incidental thereto; and (e) agrees that it will perform in accordance with their terms all the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

2.                                      Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

 

E-i

 

3.                                      General Provisions.  This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Acceptance may be executed in any number of counterparts (and by different parties hereto indifferent counterparts), each of which shall constitute an original, but all of which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.  This Assignment and Acceptance shall be governed by, and construed in accordance with, the internal laws of the State of New York.

 

E-iiExhibit 10.4

 

	
 
    

GUARANTEE AND COLLATERAL AGREEMENT

 

(U.S. Entities)

 

Dated as of August 6, 2014,

 

made by

 

RIGHTSIDE GROUP, LTD.,

 

and the other Grantors referred to herein,

 

in favor of

 

OBSIDIAN AGENCY SERVICES, INC.,
 as Collateral Agent

	
 
    

 

 

TABLE OF CONTENTS

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1
    	
DEFINED TERMS
    	
2
    
	
 
    	
 
    
	
1.1                                                            Definitions
    	
2
    
	
1.2                                                            Other Definitional Provisions
    	
6
    
	
 
    	
 
    
	
SECTION 2
    	
GUARANTEE
    	
6
    
	
 
    	
 
    
	
2.1                                                            Guarantee
    	
6
    
	
2.2                                                            Right of Contribution
    	
7
    
	
2.3                                                            No Subrogation
    	
8
    
	
2.4                                                            Amendments, etc. with respect to the Secured Obligations
    	
8
    
	
2.5                                                            Guarantee Absolute and Unconditional; Guarantor Waivers; Guarantor   Consents
    	
8
    
	
2.6                                                            Reinstatement
    	
12
    
	
2.7                                                            Payments
    	
12
    
	
 
    	
 
    
	
SECTION 3
    	
GRANT OF SECURITY INTEREST
    	
12
    
	
 
    	
 
    
	
3.1                                                            Grant of Security Interests
    	
12
    
	
3.2                                                            Grantors Remains Liable
    	
13
    
	
3.3                                                            Perfection and Priority
    	
13
    
	
 
    	
 
    
	
SECTION 4
    	
REPRESENTATIONS AND WARRANTIES
    	
15
    
	
 
    	
 
    
	
4.1                                                            Title; No Other Liens
    	
15
    
	
4.2                                                            Perfected Liens
    	
16
    
	
4.3                                                            Jurisdiction of Organization; Chief Executive Office and Locations of   Books
    	
16
    
	
4.4                                                            Inventory and Equipment
    	
16
    
	
4.5                                                            Farm Products
    	
16
    
	
4.6                                                            Pledged Collateral
    	
16
    
	
4.7                                                            Investment Accounts
    	
17
    
	
4.8                                                            Receivable
    	
18
    
	
4.9                                                            Intellectual Property
    	
18
    
	
4.10                                                     Instruments
    	
18
    
	
4.11                                                     Letter-of-Credit Rights
    	
18
    
	
4.12                                                     Commercial Tort Claims
    	
18
    
	
 
    	
 
    
	
SECTION 5
    	
COVENANTS
    	
18
    
	
 
    	
 
    
	
5.1                                                            Reserved
    	
18
    
	
5.2                                                            Maintenance of Perfected Security Interest; Further Documentation
    	
18
    
	
5.3                                                            Changes in Locations, Name, Etc.
    	
19
    
	
5.4                                                            Notices
    	
19
    
	
5.5                                                            Instruments; Investment Property
    	
19
    

 

i

 

TABLE OF CONTENTS
 (Continued)

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
5.6                                                            Securities Accounts; Deposit Accounts
    	
20
    
	
5.7                                                            Intellectual Property
    	
21
    
	
5.8                                                            Defense of Collateral
    	
22
    
	
5.9                                                            Preservation of Collateral
    	
22
    
	
5.10                                                     Compliance with Laws, Etc.
    	
23
    
	
5.11                                                     Location of Books and Chief Executive Office
    	
23
    
	
5.12                                                     Location of Collateral
    	
23
    
	
5.13                                                     Disposition of Collateral
    	
23
    
	
5.14                                                     Liens
    	
23
    
	
5.15                                                     Expenses
    	
23
    
	
5.16                                                     Reserved
    	
23
    
	
5.17                                                     Commercial Tort Claims
    	
23
    
	
5.18                                                     Shareholder Agreements and Other Agreements
    	
24
    
	
 
    	
 
    
	
SECTION 6
    	
REMEDIAL PROVISIONS
    	
24
    
	
 
    	
 
    
	
6.1                                                            Certain Matters Relating to Receivables
    	
24
    
	
6.2                                                            Communications with Obligors; Grantors Remain Liable
    	
25
    
	
6.3                                                            Investment Property
    	
25
    
	
6.4                                                            Proceeds to be Turned Over To The Collateral Agent
    	
26
    
	
6.5                                                            Application of Proceeds
    	
27
    
	
6.6                                                            Code and Other Remedies
    	
27
    
	
6.7                                                            Private Sales
    	
27
    
	
6.8                                                            Intellectual Property License
    	
28
    
	
6.9                                                            Deficiency
    	
28
    
	
 
    	
 
    
	
SECTION 7
    	
THE COLLATERAL AGENT AS ATTORNEY-IN-FACT; DUTY; AUTHORITY
    	
28
    
	
 
    	
 
    
	
7.1                                                            The Collateral Agent’s Appointment as Attorney-in-Fact, etc.
    	
28
    
	
7.2                                                            Duty of The Collateral Agent
    	
30
    
	
7.3                                                            Authority of The Collateral Agent
    	
30
    
	
 
    	
 
    
	
SECTION 8
    	
MISCELLANEOUS
    	
31
    
	
 
    	
 
    
	
8.1                                                            Amendments in Writing
    	
31
    
	
8.2                                                            Notices
    	
31
    
	
8.3                                                            No Waiver by Course of Conduct; Cumulative Remedies
    	
31
    
	
8.4                                                            Enforcement Expenses; Indemnification
    	
31
    
	
8.5                                                            Successors and Assigns
    	
32
    
	
8.6                                                            Set Off
    	
32
    
	
8.7                                                            Counterparts
    	
32
    
	
8.8                                                            Severability
    	
32
    
	
8.9                                                            Section Headings
    	
33
    
				

 

ii

 

TABLE OF CONTENTS
 (Continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
8.10                                                     Integration
    	
33
    
	
8.11                                                     GOVERNING LAW
    	
33
    
	
8.12                                                     WAIVER OF JURY TRIAL
    	
33
    
	
8.13                                                     Jurisdiction; Consent to Service of Process
    	
33
    
	
8.14                                                     Acknowledgements
    	
34
    
	
8.15                                                     Additional Grantors
    	
34
    
	
8.16                                                     Releases
    	
34
    

 

iii

 

TABLE OF CONTENTS
 (Continued)

 

SCHEDULES TO DISCLOSURE LETTER

 

Schedule 1                                     Notice Addresses
 Schedule 2                                     Investment Property
 Schedule 3                                     Perfection Matters
 Schedule 4                                     Jurisdictions of Organization and Chief Executive Offices, etc.
 Schedule 5                                     Equipment and Inventory Locations
 Schedule 6                                     Intellectual Property
 Schedule 7                                     Letter-of-Credit Rights
 Schedule 8                                     Commercial Tort Claims

 

ANNEXES

 

Annex 1                                                  Form of Assumption Agreement
 Annex 2                                                  Form of Disclosure Letter Supplement

 

iv

 

GUARANTEE AND COLLATERAL AGREEMENT

 

(U.S. Entities)

 

This GUARANTEE AND COLLATERAL AGREEMENT (U.S. Entities) (this “Agreement”), dated as of August 6, 2014, is made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, each a “Grantor” and, collectively, the “Grantors”), in favor of OBSIDIAN AGENCY SERVICES, INC., as Collateral Agent (in such capacity, the “Collateral Agent”) for the Secured Parties pursuant to that certain Credit Agreement, dated as of the date hereof (as amended, amended and restated, supplemented, restructured or otherwise modified, renewed or replaced from time to time, the “Credit Agreement”), by and among RIGHTSIDE GROUP, LTD., a Delaware corporation (the “U.S. Borrower”), UNITED TLD HOLDCO LTD., an exempted company limited by shares incorporated under the laws of the Cayman Islands (the “Cayman Borrower”, and together with the U.S. Borrower, the “Borrowers”), the Lenders and the Collateral Agent, as administrative agent and collateral agent for the Lenders.

 

INTRODUCTORY STATEMENTS

 

WHEREAS, the Loan Parties are members of an affiliated group of companies that includes each other Grantor;

 

WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used (i) to finance, in part, the acquisition of new gTLDs, (ii) to pay fees and expenses incurred in connection with the Transactions and (iii) for general corporate purposes.;

 

WHEREAS, the Borrowers and the other Grantors are engaged in related businesses, and each Grantor derives substantial direct and indirect benefit from the extensions of credit under the Credit Agreement; and

 

WHEREAS, it is a condition precedent to the Closing Date and the extension of credit under the Credit Agreement that the Grantors shall have executed and delivered this Agreement in favor of the Collateral Agent.

 

NOW, THEREFORE, in consideration of the above premises, the parties hereto hereby agree as follows:

 

 

SECTION 1                            Defined Terms.Definitions.Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the respective meanings given to such terms in the Credit Agreement, and the following terms are used herein as defined in the UCC (and if defined in more than one Article of the UCC, shall have the meaning given in Article 9 thereof):  Certificated Security, Chattel Paper, Commercial Tort Claim, Commodity Account, Document, Equipment, Farm Products, Fixtures, General Intangible, Goods, Instrument, Inventory, Letter-of-Credit Rights, Money, Securities Account and Supporting Obligation.

 

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

 

“Accounts”:  all “accounts” (as defined in the UCC) of a Person, including, without limitation, accounts, accounts receivable, monies due or to become due and obligations in any form (whether arising in connection with contracts, contract rights, instruments, general intangibles, or chattel paper), in each case whether arising out of goods sold or services rendered or from any other transaction and whether or not earned by performance, now or hereafter in existence, and all documents of title or other documents representing any of the foregoing, and all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.  Unless otherwise stated, the term “Account,” when used herein, shall mean an Account of a Borrower.

 

“Agreement”:  as defined in the preamble hereto.

 

“Books”:  all books, records and other written, electronic or other documentation in whatever form maintained now or hereafter by or for any Grantor in connection with the ownership of its assets or the conduct of its business or evidencing or containing information relating to the Collateral, including:  (a) ledgers; (b) records indicating, summarizing, or evidencing such Grantor’s assets (including Inventory and Rights to Payment), business operations or financial condition; (c) computer programs and software; (d) computer discs, tapes, files, manuals, spreadsheets; (e) computer printouts and output of whatever kind; (f) any other computer prepared or electronically stored, collected or reported information and equipment of any kind; and (g) any and all other rights now or hereafter arising out of any contract or agreement between such Grantor and any service bureau, computer or data processing company or other Person charged with preparing or maintaining any of such Grantor’s books or records or with credit reporting, including with regard to any of such Grantor’s Accounts.

 

“Borrower”:  as defined in the preamble hereto.

 

“Collateral”:  as defined in Section 3.1.

 

“Collateral Account”:  any collateral account established by the Collateral Agent as provided in Section 6.1 or 6.4.

 

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

 

“CFC”: a “controlled foreign corporation” as defined in the Code.

 

2

 

“Copyright License”:  any written agreement which (a) names a Grantor as licensor or licensee (including those listed on Schedule 6), and (b) grants any right under any Copyright to a Grantor, including any rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

 

“Copyrights”:  (a) all copyrights arising under the laws of the United States, any other country or any political subdivision thereof, together with the underlying works of authorship (including titles), whether registered or unregistered and whether published or unpublished (including those listed on Schedule 6), all computer programs, computer databases, computer program flow diagrams, source codes, object codes and all tangible property embodying or incorporating any copyrights, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the USCRO, and (b) the right to obtain any renewals thereof.

 

“Encumbered Account”: as defined in the definition of “Excluded Assets”.

 

“Excluded Account”:  (i) any Deposit Account exclusively used for payroll, payroll taxes and other employee wage and benefits payments to or for the benefit of a Grantor’s employees and identified to the Collateral Agent as such.

 

“Excluded Assets”:  collectively,

 

(a)                                 any Collateral with respect to which the Collateral Agent has determined, in consultation with the applicable Borrower, that the costs of obtaining a security interest, pledge or perfection in such Collateral (including, but not limited to such actions under the laws of a jurisdiction outside of the United States) are excessive in relation to the benefits provided to the Collateral Agent by such security interest;

 

(b)                                 any leasehold interests of any Grantor;

 

(c)                                  any real property the fee to which is owned by any Grantor (i) located in the United States with a value of less than $2,500,000; and (ii) located in a jurisdiction outside of the United States;

 

(d)                                 any property to the extent that such grant of a security interest is prohibited by any Requirement of Law of a Governmental Authority or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property, except to the extent that such Requirement of Law or the term in such contract, license, agreement, instrument or other document providing for such prohibition, breach, default or termination or requiring such consent is rendered ineffective under Section 9406, 9407, 9408 or 9409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity; provided, however, that such security interest shall attach immediately at such time as such Requirement of Law is not effective or applicable, or such prohibition, breach, default or termination is no longer applicable or is waived, and to the extent severable, shall attach immediately to any portion of the Collateral that does not result in such consequences;

 

3

 

(e)                                  motor vehicles and other equipment covered by certificates of title;

 

(f)                                   any Deposit Account or Securities Account encumbered by a lien permitted by Section 6.02(xi) of the Credit Agreement (an “Encumbered Account”);

 

(g)                                  any outstanding Equity Interests of a CFC in excess of 65% of the voting power of all classes of Equity Interests of such CFC entitled to vote;

 

(h)                                 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;

 

(i)                                     any Equity Interests of DMIH Limited, a limited liability company organized under the laws of Ireland, which has been charged in favour of the Collateral Agent as security for the Secured Obligations pursuant to an Irish Law Share Charge;

 

(j)                                    any Equity Interest of AboutUs, Inc., a Delaware corporation (“AboutUs”), held by any Grantor, so long as such Equity Interest is subject to restrictions on transfer pursuant to (i) that certain Investors’ Rights Agreement among AboutUs and the Investors party thereto; (ii) that certain Right of First Refusal and Co-Sale Agreement among AboutUs and the Investors and Stockholders party thereto; and (iii) that certain Voting and Drag Along Agreement among AboutUs and the Investors and Stockholders party thereto, each dated as of November 26, 2008, and, in each case, as amended;

 

(k)                                 any Capital Stock of NameJet, LLC, a Delaware limited liability corporation, held by any Grantor, so long as such Capital Stock is subject to restrictions on transfer pursuant to that certain Limited Liability Company Operating Agreement, by and between Network Solutions, LLC and eNom, dated as of October 4, 2007; and

 

(l)                                     any Capital Stock of Afilias Limited, a limited liability company organized under the laws of Ireland (“Afilias”), held by any Grantor, so long as Afilias is not a Subsidiary of any Grantor;

 

provided, however, that any Proceeds, substitutions or replacements of any Excluded Assets shall not be Excluded Assets (unless such Proceeds, substitutions or replacements are otherwise, in and of themselves, Excluded Assets).

 

“Grantor”:  as defined in the preamble hereto.

 

“Guarantor”:  as defined in Section 2.1(a).

 

“Investment Account”:  any of a Securities Account, a Commodity Account or a Deposit Account.

 

4

 

“Investment Property”:  the collective reference to (a) all “investment property” as such term is defined in Section 9-102(a)(49) of the UCC (other than any voting Equity Interests or other ownership interests of a Material First-Tier Foreign Subsidiary excluded from the definition of “Pledged Stock”), and (b) whether or not constituting “investment property” as so defined, all Pledged Notes and all Pledged Collateral.

 

“Issuer”:  with respect to any Investment Property, the issuer of such Investment Property.

 

“Patent License”:  any written agreement which (a) names a Grantor as licensor or licensee and (b) grants to such Grantor any right under a Patent, including the right to manufacture, use or sell any invention covered in whole or in part by such Patent, including any such agreements referred to on Schedule 6.

 

“Patents”:  (a) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to on Schedule 6, (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to on Schedule 6, and (c) all rights to obtain any reissues or extensions of the foregoing.

 

“Pledged Collateral”:  (a) any and all Pledged Stock; (b) all other Investment Property of any Grantor; (c) all warrants, options or other rights entitling any Grantor to acquire any interest in Equity Interests or other securities of the direct or indirect Subsidiaries of such Grantor or of any other Person; (d) all Instruments; (e) all securities, property, interest, dividends and other payments and distributions issued as an addition to, in redemption of, in renewal or exchange for, in substitution or upon conversion of, or otherwise on account of, any of the foregoing; (f) all certificates and instruments now or hereafter representing or evidencing any of the foregoing; (g) all rights, interests and claims with respect to the foregoing, including under any and all related agreements, instruments and other documents; and (h) all cash and non-cash proceeds of any of the foregoing, in each case whether presently existing or owned or hereafter arising or acquired and wherever located, and as from time to time received or receivable by, or otherwise paid or distributed to or acquired by, any Grantor; provided that in no event shall Pledged Collateral include any Excluded Assets.

 

“Pledged Collateral Agreements”:  as defined in Section 5.18.

 

“Pledged Notes”:  all promissory notes listed on Schedule 2 and all other promissory notes issued to or held by any Grantor; provided that in no event shall Pledged Notes include any Excluded Assets.

 

“Pledged Stock”:  all of the issued and outstanding Equity Interests, whether certificated or uncertificated, of any Grantor’s direct Subsidiaries now or hereafter owned by any such Grantor and including the Equity Interests listed on Schedule 2 hereof (as amended or supplemented from time to time); provided that in no event shall Pledged Stock include any Excluded Assets.

 

5

 

“Proceeds”:  all “proceeds” as such term is defined in Section 9102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from any Investment Property constituting Collateral and all collections thereon or distributions or payments with respect thereto.

 

“Receivable”:  any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including any Account).

 

“Rights to Payment”:  any and all of any Grantor’s Accounts and any and all of any Grantor’s rights and claims to the payment or receipt of money or other forms of consideration of any kind in, to and under or with respect to its Chattel Paper, Documents, General Intangibles, Instruments, Investment Property, Letter-of-Credit Rights, Proceeds and Supporting Obligations.

 

“Secured Obligations”:  collectively, the “Obligations”, as such term is defined in the Credit Agreement, of each Borrower.

 

“Secured Parties”: (a) the Lenders, (b) the Administrative Agent, (c) the Collateral Agent, (d) the other beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (e) the successors and assigns of each of the foregoing.

 

“Trademark License”:  any written agreement which (a) names a Grantor as licensor or licensee and (b) grants to such Grantor any right to use any Trademark, any such agreement referred to on Schedule 6.

 

“Trademarks”:  (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, Internet domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the USPTO or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to on Schedule 6, and (b) the right to obtain all renewals thereof.

 

“USCRO”: the United States Copyright Office.

 

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

 

1.2                               Other Definitional Provisions.  The rules of interpretation set forth in Section 1.02 of the Credit Agreement are by this reference incorporated herein, mutatis mutandis, as if set forth herein in full.

 

SECTION 2                            Guarantee.

 

2.1                               Guarantee.

 

(a)                                 Each Grantor, other than the U.S. Borrower, who has executed this Agreement as of the date hereof, together with each Material Domestic Subsidiary of any

 

6

 

Grantor who accedes to this Agreement as a Grantor after the date hereof pursuant to Section 5.12 of the Credit Agreement (each a “Guarantor” and, collectively, the “Guarantors”), hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Collateral Agent for its benefit and the benefit of the other Secured Parties and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by each Borrower and the other Loan Parties when due (whether at the stated maturity, by acceleration or otherwise) of the Secured Obligations.  In furtherance of the foregoing, and without limiting the generality thereof, each Guarantor agrees as follows:

 

(i)                                     each Guarantor’s liability hereunder shall be the immediate, direct, and primary obligation of such Guarantor and shall not be contingent upon the Collateral Agent’s or any other Secured Party’s exercise or enforcement of any remedy it or they may have against any Borrower, any other Guarantor, any other Person, or all or any portion of the Collateral; and

 

(ii)                                  The Collateral Agent may enforce this guarantee notwithstanding the existence of any dispute between any Secured Party and any Borrower or any other Guarantor with respect to the existence of any Event of Default.

 

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

 

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

 

(d)                                 The guarantee contained in this Section 2 shall remain in full force and effect until the Discharge of Obligations, notwithstanding that from time to time during the term of the Credit Agreement the outstanding amount of the Secured Obligations may be zero.

 

(e)                                  No payment made by any Borrower, any Guarantor, any other guarantor or any other Person or received or collected by the Collateral Agent or any other Secured Party from any Borrower, any Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any setoff or appropriation or application at any time or from time to time in reduction of or in payment of the Secured Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Secured Obligations or any payment received or collected from such Guarantor in respect of the Secured Obligations), remain liable for the Secured Obligations up to the maximum liability of such Guarantor hereunder until the Discharge of Obligations.

 

2.2                               Right of Contribution.  If in connection with any payment made by any Guarantor hereunder any rights of contribution arise in favor of such Guarantor against one or more other Guarantors, such rights of contribution shall be subject to the terms and conditions of

 

7

 

Section 2.3.  The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Guarantor to the Collateral Agent, and each Guarantor shall remain liable to the Collateral Agent for the full amount guaranteed by such Guarantor hereunder.

 

2.3                               No Subrogation.  Notwithstanding any payment made by any Guarantor hereunder or any setoff or application of funds of any Guarantor by the Collateral Agent, no Guarantor shall be entitled to be subrogated to any of the rights of the Collateral Agent against any Borrower or any other Guarantor or any Collateral or guarantee or right of offset held by the Collateral Agent for the payment of the Secured Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from any Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, in each case, until the Discharge of Obligations.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time prior to the Discharge of Obligations, such amount shall be held by such Guarantor in trust for the Collateral Agent, shall be segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Collateral Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Collateral Agent, if required), to be applied in such order as set forth in Section 6.5 hereof irrespective of the occurrence or the continuance of any Event of Default.

 

2.4                               Amendments, etc. with respect to the Secured Obligations.  Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Secured Obligations made by the Collateral Agent may be rescinded by the Collateral Agent and any of the Secured Obligations continued, and the Secured Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Collateral Agent, and the Credit Agreement, the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, the Collateral Agent may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Collateral Agent for the payment of the Secured Obligations may be sold, exchanged, waived, surrendered or released.  The Collateral Agent shall not have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Secured Obligations or for the guarantee contained in this Section 2 or any property subject thereto.

 

2.5                               Guarantee Absolute and Unconditional; Guarantor Waivers; Guarantor Consents.  Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Secured Obligations and notice of or proof of reliance by the Collateral Agent upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Secured Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between any Borrower and any of the Guarantors on the one hand, and the Collateral Agent or any other Secured Party, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2.  Each Guarantor further waives:

 

8

 

(a)                                 diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any Borrower or any of the other Guarantors with respect to the Secured Obligations;

 

(b)                                 any right to require the Collateral Agent or any other Secured Party to marshal assets in favor of any Borrower, such Guarantor, any other Guarantor or any other Person, to proceed against any Borrower, any other Guarantor or any other Person, to proceed against or exhaust any of the Collateral, to give notice of the terms, time and place of any public or private sale of personal property security constituting the Collateral or other collateral for the Secured Obligations or to comply with any other provisions of Section 9611 of the UCC (or any equivalent provision of any other applicable law) or to pursue any other right, remedy, power or privilege of the Collateral Agent or any other Secured Party whatsoever;

 

(c)                                  the defense of the statute of limitations in any action hereunder or for the collection or performance of the Secured Obligations;

 

(d)                                 any defense arising by reason of any lack of corporate or other authority or any other defense of any Borrower, such Guarantor or any other Person;

 

(e)                                  any defense based upon the Collateral Agent’s or any other Secured Party’s errors or omissions in the administration of the Secured Obligations;

 

(f)                                   any rights to setoffs and counterclaims;

 

(g)                                  any defense based upon an election of remedies (including, if available, an election to proceed by nonjudicial foreclosure) which destroys or impairs the subrogation rights of such Guarantor or the right of such Guarantor to proceed against any Borrower or any other obligor of the Secured Obligations for reimbursement;

 

(h)                                 the benefit of California Civil Code Section 2815 permitting the revocation of this Agreement as to future transactions and the benefit of California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 1432 with respect to certain suretyship defenses; and

 

(i)                                     without limiting the generality of the foregoing, to the fullest extent permitted by law, any defenses or benefits that may be derived from or afforded by applicable law that limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Agreement.

 

Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (i) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Secured Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Collateral Agent, (ii) any defense, setoff or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Borrower or any other Person against the Collateral Agent or any other Secured Party, (iii) any other circumstance whatsoever (with or without notice to or knowledge of any Borrower or such Guarantor) which constitutes, or might

 

9

 

be construed to constitute, an equitable or legal discharge of any Borrower and the Guarantors for the Secured Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance, (iv) any Insolvency Proceeding with respect to any Borrower, any Guarantor or any other Person, (v) any merger, acquisition, consolidation or change in structure of any Borrower, any Guarantor or any other Person, or any sale, lease, transfer or other disposition of any or all of the assets or Voting Stock of any Borrower, any Guarantor or any other Person, (vi) any assignment or other transfer, in whole or in part, of the Collateral Agent’s interests in and rights under this Agreement or the other Loan Documents, including the Collateral Agent’s or any other Secured Party’s right to receive payment of the Secured Obligations, or any assignment or other transfer, in whole or in part, of the Collateral Agent’s or any other Secured Party’s interests in and to any of the Collateral, (vii) the Collateral Agent’s or any other Secured Party’s vote, claim, distribution, election, acceptance, action or inaction in any Insolvency Proceeding related to any of the Secured Obligations, and (viii) any other guaranty, whether by such Guarantor or any other Person, of all or any part of the Secured Obligations or any other indebtedness, obligations or liabilities of any Guarantor to the Collateral Agent or any other Secured Party.

 

When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Collateral Agent may, but shall be under no obligation to make a similar demand on or otherwise pursue such rights and remedies as it may have against the applicable Borrower(s), any other Guarantor or any other Person or against any collateral security or guarantee for the Secured Obligations or any right of offset with respect thereto.  Any failure by the Collateral Agent to make any such demand, to pursue such other rights or remedies or to collect any payments from the applicable Borrower(s), any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Collateral Agent against any Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

 

Each Guarantor further unconditionally consents and agrees that, without notice to or further assent from any Guarantor:  (a) the principal amount of the Secured Obligations may be increased or decreased and additional indebtedness or obligations of any Borrower or any other Persons under the Loan Documents may be incurred, by one or more amendments, modifications, renewals or extensions of any Loan Document or otherwise; (b) the time, manner, place or terms of any payment under any Loan Document may be extended or changed, including by an increase or decrease in the interest rate on any Secured Obligation or any fee or other amount payable under such Loan Document, by an amendment, modification or renewal of any Loan Document or otherwise; (c) the time for any Borrower’s (or any other Loan Party’s) performance of or compliance with any term, covenant or agreement on its part to be performed or observed under any Loan Document may be extended, or such performance or compliance waived, or failure in or departure from such performance or compliance consented to, all in such manner and upon such terms as the Collateral Agent may deem proper; (d) in addition to the Collateral, the Collateral Agent may take and hold other security (legal or equitable) of any kind, at any time, as collateral for the Secured Obligations, and may, from time to time, in whole or in

 

10

 

part, exchange, sell, surrender, release, subordinate, modify, waive, rescind, compromise or extend such security and may permit or consent to any such action or the result of any such action, and may apply such security and direct the order or manner of sale thereof; (e) the Collateral Agent may discharge or release, in whole or in part, any other Guarantor or any other Loan Party or other Person liable for the payment and performance of all or any part of the Secured Obligations, and may permit or consent to any such action or any result of such action, and shall not be obligated to demand or enforce payment upon any of the Collateral, nor shall the Collateral Agent or any other Secured Party be liable to any Guarantor for any failure to collect or enforce payment or performance of the Secured Obligations from any Person or to realize upon the Collateral; and (f) the Collateral Agent may request and accept other guaranties of the Secured Obligations and any other indebtedness, obligations or liabilities of any Borrower or any other Loan Party to the Collateral Agent and may, from time to time, in whole or in part, surrender, release, subordinate, modify, waive, rescind, compromise or extend any such guaranty and may permit or consent to any such action or the result of any such action; in each case of (a) through (f), as the Collateral Agent may deem advisable, and without impairing, abridging, releasing or affecting this Agreement.

 

Each Guarantor acknowledges that all or any portion of the Secured Obligations may now or hereafter be secured by a Lien or Liens upon real property owned or leased by any Borrower or any Guarantor and evidenced by certain documents including, without limitation, deeds of trust and assignments of rents. The Collateral Agent may, pursuant to the terms of said real property security documents and applicable law, foreclose under all or any portion of one or more of said Liens by means of judicial or nonjudicial sale or sales.  Each Guarantor agrees that the Collateral Agent may exercise whatever rights and remedies it may have with respect to said real property security, all without affecting the liability of any Guarantor hereunder, except to the extent the Collateral Agent realizes payment by such action or proceeding.  No election to proceed in one form of action or against any party, or on any obligation shall constitute a waiver of the Collateral Agent’s or any other Secured Party’s right to proceed in any other form of action or against any Guarantor or any other Person, or diminish the liability of any Guarantor, or affect the right of the Collateral Agent or any other Secured Party to proceed against any Guarantor for any deficiency, except to the extent the Collateral Agent or such other Secured Party realizes payment by such action, notwithstanding the effect of such action upon any Guarantor’s rights of subrogation, reimbursement or indemnity, if any, against any Borrower, any other Guarantor or any other Person.  Without limiting the generality of the foregoing, each Guarantor expressly waives all rights, benefits and defenses, if any, applicable or available to such Guarantor under either California Code of Civil Procedure Sections 580a or 726, which provide, among other things, that the amount of any deficiency judgment which may be recovered following either a judicial or nonjudicial foreclosure sale is limited to the difference between the amount of any Indebtedness owed and the greater of the fair value of the security or the amount for which the security was actually sold.  Without limiting the generality of the foregoing, each Guarantor further expressly waives all rights, benefits and defenses, if any, applicable or available to such Guarantor under either California Code of Civil Procedure Sections 580b, providing that no deficiency may be recovered on a real property purchase money obligation, or 580d, providing that no deficiency may be recovered on a note secured by a deed of trust on real property if the real property is sold under a power of sale contained in the deed of trust.

 

11

 

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

 

2.7                               Payments.  Each Guarantor hereby guarantees that payments hereunder will be paid to the Collateral Agent without setoff or counterclaim in Dollars at the applicable Funding Office.

 

SECTION 3                            GRANT OF SECURITY INTEREST

 

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

 

(a)                                 all Accounts;

 

(b)                                 all Chattel Paper;

 

(c)                                  all Commercial Tort Claims;

 

(d)                                 all Deposit Accounts;

 

(e)                                  all Documents;

 

(f)                                   all Equipment;

 

(g)                                  all Fixtures;

 

(h)                                 all General Intangibles;

 

(i)                                     all Goods;

 

(j)                                    all Instruments;

 

(k)                                 all Intellectual Property;

 

(l)                                     all Inventory;

 

(m)                             all Investment Property (including all Pledged Collateral);

 

12

 

(n)                                 all Letter-of-Credit Rights;

 

(o)                                 all Money;

 

(p)                                 all Books and records pertaining to the Collateral;

 

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

 

(r)                                    to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing.

 

Notwithstanding any of the other provisions of this Section 3, this Agreement shall not constitute a grant of a security interest in or attach to nor shall the term “Collateral” (including all individual items comprising Collateral) include any Excluded Assets.

 

3.2                               Grantors Remains Liable.  Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under any contracts, agreements and other documents included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Collateral Agent or any other Secured Party of any of the rights granted to the Collateral Agent or any other Secured Party hereunder shall not release any Grantor from any of its duties or obligations under any such contracts, agreements and other documents included in the Collateral, and (c) neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any such contracts, agreements and other documents included in the Collateral by reason of this Agreement, nor shall the Collateral Agent or any other Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any such contract, agreement or other document included in the Collateral hereunder.

 

3.3                               Perfection and Priority.

 

(a)                                 Financing Statements.  Pursuant to any applicable law, each Grantor authorizes the Collateral Agent (and its counsel and its agents) to file or record at any time and from time to time any financing statements and other filing or recording documents or instruments with respect to the Collateral and each Grantor shall execute and deliver to the Collateral Agent and each Grantor hereby authorizes the Collateral Agent (and its counsel and its agents) to file (with or without the signature of such Grantor) at any time and from time to time, all amendments to financing statements, continuation financing statements, termination statements, security agreements relating to the Intellectual Property, collateral assignments, fixture filings, and all other documents and instruments, in such form and in such offices as the Collateral Agent determines appropriate to perfect and continue perfected, maintain the priority of or provide notice of the Collateral Agent’s security interest in the Collateral under and to accomplish the purposes of this Agreement.  Each Grantor authorizes the Collateral Agent to use the collateral description “all personal property, whether now owned or hereafter acquired” or any other similar collateral description in any such financing statements.  Each Grantor hereby ratifies and authorizes the filing by the Collateral Agent (and its counsel and its agents) of any financing statement with respect to the Collateral made prior to the date hereof.

 

13

 

(b)                                 Filing of Financing Statements.  Each Grantor shall deliver to the Collateral Agent, from time to time, such completed UCC-1 financing statements, amendments to financing statements, continuation financing statements, and termination statements, as applicable, for filing or recording in the appropriate filing offices as may be reasonably requested by the Collateral Agent.

 

(c)                                  Transfer of Security Interest Other Than by Delivery.  If for any reason Pledged Collateral cannot be delivered to or for the account of the Collateral Agent as provided in Section 5.5(b), each applicable Grantor shall promptly take such other steps as may be necessary or as shall be reasonably requested from time to time by the Collateral Agent to effect a transfer of a perfected first priority (or, if the Revolving Loan Agreement remains outstanding, second priority) security interest, subject in the case of priority to Liens permitted under the Credit Agreement, in and pledge of the Pledged Collateral to the Collateral Agent pursuant to the UCC.  To the extent practicable (but subject to the terms of the Intercreditor Agreement), each such Grantor shall thereafter deliver the Pledged Collateral to or for the account of the Collateral Agent as provided in Section 5.5(b).

 

(d)                                 Intellectual Property.

 

(i)                                     Each Grantor shall, in addition to executing and delivering this Agreement, take such other action as may be necessary, or as the Collateral Agent may reasonably request, to perfect the Collateral Agent’s security interest in the Intellectual Property.

 

(ii)                                  Following the creation or other acquisition of any Intellectual Property by any Grantor after the date hereof which is registered or becomes registered or the subject of an application for registration with the USCRO or the USPTO or, in each case, any similar office or agency in any other country or political subdivision thereof, as applicable, such Grantor shall, in the timeframe set forth in Section 5.04(f) of the Credit Agreement for disclosure of such registered Intellectual Property, modify this Agreement by amending Schedule 6 to include any Intellectual Property which becomes part of the Collateral and which was not included on Schedule 6 as of the date hereof and record an amendment to the applicable Intellectual Property Security Agreement with the USCRO or the USPTO, as applicable, and take such other action as may be necessary, or as the Collateral Agent may reasonably request, to perfect the Collateral Agent’s security interest in such Intellectual Property; provided that Grantor shall not be required to file a Copyright security agreement with the USCRO against registered Copyrights in media content consisting of any articles and videos with an aggregate value of $25,000 or less and that no Grantor shall be required to file any intellectual property security agreement in any foreign jurisdiction unless such filing is reasonable in the discretion of the Collateral Agent given the value of the Collateral or revenue associated therewith.

 

(e)                                  Bailees.  Any Person (other than the Collateral Agent) at any time and from time to time holding all or any portion of the Collateral shall be deemed to, and shall, hold the Collateral as the agent of, and as pledge holder for, the Collateral Agent.  At any time and from time to time, the Collateral Agent may give notice to any such Person holding all or any portion of the Collateral that such Person is holding the Collateral as the agent and bailee of, and as pledge holder for, the Collateral Agent, and obtain such Person’s written acknowledgment thereof.  Without limiting the generality of the foregoing, each Grantor will join with the

 

14

 

Collateral Agent in notifying any Person who has possession of any Collateral (other than collateral out for repair or in transit in the ordinary course of business) in excess of $250,000 of the Collateral Agent’s security interest therein and shall use commercially reasonable efforts to obtain an acknowledgment from such Person that it is holding the Collateral for the benefit of the Collateral Agent.

 

(f)                                   Control.  To the extent required by the Loan Documents, each Grantor will cooperate with the Collateral Agent in obtaining “control” (as defined in the UCC) of Collateral consisting of any Deposit Accounts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, including delivery of control agreements, to perfect and continue perfected, maintain the priority of or provide notice of the Collateral Agent’s security interest in such Collateral.

 

(g)                                  Additional Subsidiaries.  In the event that any Grantor acquires rights in any Subsidiary (other than an Immaterial Subsidiary or Foreign Subsidiary which is not a Material First-Tier Foreign Subsidiary) after the date hereof, it shall deliver to the Collateral Agent a completed Disclosure Letter supplement, substantially in the form of Annex 2 (the “Disclosure Letter Supplement”), together with all schedules thereto, reflecting the pledge of the Equity Interests of such new Subsidiary (except to the extent such Equity Interests consists of Excluded Assets).  Notwithstanding the foregoing, it is understood and agreed that the security interest of the Collateral Agent shall attach to the Pledged Collateral (except to the extent such Pledge Collateral consists of Excluded Assets) related to such Subsidiary immediately upon any Grantor’s acquisition of rights therein and shall not be affected by the failure of any Grantor to deliver a Disclosure Letter Supplement.

 

SECTION 4                            REPRESENTATIONS AND WARRANTIES

 

In addition to the representations and warranties of the Grantors set forth in the Credit Agreement, and to induce the Collateral Agent to enter into the Credit Agreement and to make extensions of credit to the Borrowers thereunder, each Grantor hereby represents and warrants to the Collateral Agent that:

 

4.1                               Title; No Other Liens.  Except for the Liens permitted to exist on the Collateral by Section 6.02 of the Credit Agreement, such Grantor owns or has rights in each item of the Collateral in which a Lien is granted by it free and clear of any and all Liens and other claims of others.  No effective financing statement, fixture filing or other public notice with respect to all or any part of the Collateral is on file or of record or will be filed in any public office, except such as have been filed with respect to Liens permitted by the Credit Agreement.  For the avoidance of doubt, it is understood and agreed that each Grantor may, as part of its business, grant licenses to third parties to use Intellectual Property owned or developed by such Grantor.  For purposes of this Agreement and the other Loan Documents, such licensing activity shall not constitute a “Lien” on such Intellectual Property.  Lender understands that any such licenses may be exclusive to the applicable licensees to the extent permitted under Section 6.05(vi) of the Credit Agreement, and such exclusivity provisions may limit the ability of Lender to utilize, sell, lease or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto.

 

15

 

4.2                               Perfected Liens.  The security interests granted to the Collateral Agent pursuant to this Agreement upon completion of the filings and other actions specified on Schedule 3 (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Collateral Agent in completed and duly (if applicable) executed form) (a) will constitute valid perfected security interests in all of the Collateral to the extent such security interest can be perfected by filing under the UCC or recordation in the applicable intellectual property registries, in each case, in favor of the Collateral Agent as collateral security for the Secured Obligations, enforceable in accordance with the terms hereof against any creditors of any Grantor and any Persons purporting to purchase any Collateral from any Grantor, and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for Liens permitted by the Credit Agreement which have priority over the Liens of the Collateral Agent on the Collateral by operation of law, and in the case of Collateral other than Pledged Collateral, Liens permitted by Section 6.02 of the Credit Agreement.

 

4.3                               Jurisdiction of Organization; Chief Executive Office and Locations of Books.  On the date hereof, such Grantor’s jurisdiction of organization, identification number from the jurisdiction of organization (if any), and the location of such Grantor’s chief executive office or sole place of business, as the case may be, are specified on Schedule 4.  On the date hereof, all locations where Books pertaining to the Rights to Payment of such Grantor are kept, including all equipment necessary for accessing such Books and the names and addresses of all service bureaus, computer or data processing companies and other Persons keeping any Books or collecting Rights to Payment for such Grantor, are set forth in Schedule 4.

 

4.4                               Inventory and Equipment.  On the date hereof (a) the Inventory and (b) the Equipment (other than mobile goods and Inventory and Equipment in an aggregate amount less than $200,000) are kept at the locations listed on Schedule 5.

 

4.5                               Farm Products.  None of the Collateral constitutes, or is the Proceeds of, Farm Products.

 

4.6                               Pledged Collateral.  (a) All of the Pledged Stock held by such Grantor has been duly and validly issued, and is fully paid and non-assessable, subject in the case of Pledged Stock constituting partnership interests or limited liability company membership interests to future assessments required under applicable law and any applicable partnership or operating agreement, (b) such Grantor is or, in the case of any such additional Pledged Collateral will be, the legal record and beneficial owner thereof, (c) in the case of Pledged Stock of a Subsidiary of such Grantor or Pledged Collateral of such Grantor constituting Instruments issued by a Subsidiary of such Grantor, there are no restrictions on the transferability of such Pledged Collateral or such additional Pledged Collateral to the Collateral Agent or with respect to the foreclosure, transfer or disposition thereof by the Collateral Agent, except as may be required in connection with the disposition of any Investment Property, by laws generally affecting the offer and sale of securities, (d) the Pledged Stock pledged by such Grantor constitute all of the issued and outstanding Equity Interests of each Issuer owned by such Grantor (except for Excluded Assets), and such Grantor owns no securities convertible into or exchangeable for any Equity Interests of any such Issuer that do not constitute Pledged Stock hereunder (except for Excluded Assets), (e) any and all Pledged Collateral Agreements which affect or relate to the voting or giving of written consents with respect to any of the Pledged Stock pledged by such Grantor

 

16

 

have been disclosed to the Collateral Agent, and (f) as to each such Pledged Collateral Agreement relating to the Pledged Stock pledged by such Grantor, (i) to the best knowledge of such Grantor, such Pledged Collateral Agreement contains the entire agreement between the parties thereto with respect to the subject matter thereof and is in full force and effect in accordance with its terms, (ii) to the best knowledge of such Grantor party thereto, there exists no material violation or material default under any such Pledged Collateral Agreement by such Grantor or the other parties thereto, and (iii) such Grantor has not knowingly waived or released any of its material rights under or otherwise consented to a material departure from the terms and provisions of any such Pledged Collateral Agreement.

 

4.7                               Investment Accounts.

 

(a)                                 Schedule 2 sets forth under the headings “Securities Accounts” and “Commodity Accounts”, respectively, all of the Securities Accounts and Commodity Accounts in which such Grantor has an interest as of the date hereof.  Except as disclosed to the Collateral Agent, such Grantor is the sole entitlement holder of each such Securities Account and Commodity Account, and such Grantor has not consented to, and is not otherwise aware of, any Person (other than the Revolving Loan Lender and the Collateral Agent) having “control” (within the meanings of Sections 8106 and 9106 of the UCC) over, or any Person (other than the Revolving Loan Lender, the Collateral Agent or the securities intermediaries with whom such Securities Accounts are maintained) having any other interest in, any such Securities Account or Commodity Account or any securities or other property credited thereto;

 

(b)                                 Schedule 2 sets forth under the heading “Deposit Accounts” all of the Deposit Accounts in which such Grantor has an interest as of the date hereof and, except as otherwise disclosed to the Collateral Agent, such Grantor is the sole account holder of each such Deposit Account and such Grantor has not consented to, and is not otherwise aware of, any Person (other than the Revolving Loan Lender and the Collateral Agent) having either sole dominion and “control” (within the meaning of common law) or “control” (within the meaning of Section 9104 of the UCC) over, or any Person (other than the Revolving Loan Lender, the Collateral Agent or the banks with whom such Deposit Accounts are maintained) having any other interest in, any such Deposit Account or any money or other property deposited therein; and

 

(c)                                  In each case to the extent requested by the Collateral Agent and subject to Section 4.02 of the Credit Agreement, such Grantor has taken all actions necessary to:  (i) establish the Collateral Agent’s “control” (within the meanings of Sections 8106 and 9106 of the UCC) over any Certificated Securities (as defined in Section 9102 of the UCC); (ii) establish the Collateral Agent’s “control” (within the meanings of Sections 8106 and 9106 of the UCC) over any portion of the Investment Accounts constituting Securities Accounts other than Excluded Accounts, Commodity Accounts, Securities Entitlements or Uncertificated Securities (each as defined in Section 9102 of the UCC); (iii) establish the Collateral Agent’s “control” (within the meaning of Section 9104 of the UCC) over all Deposit Accounts other than Excluded Accounts; and (iv) deliver all Instruments (as defined in Section 9102 of the UCC) with a face value in excess of $100,000 individually to the Collateral Agent (or, subject to the terms of the Intercreditor Agreement, the Revolving Loan Lender) to the extent required hereunder.

 

17

 

4.8                               Receivable.  No amount payable to such Grantor under or in connection with any Receivable or other Right to Payment in excess of $100,000 is evidenced by any Instrument (other than checks, drafts or other Instruments that will be promptly deposited in an Investment Account) or Chattel Paper which has not been delivered to the Collateral Agent.  None of the account debtors or other obligors in respect of any Receivable in excess of $150,000 in the aggregate is the government of the United States or any agency or instrumentality thereof.

 

4.9                               Intellectual Property.  Schedule 6 lists all registrations and applications for Intellectual Property (including registered Copyrights, Patents, Trademarks and all applications therefor) as well as all Copyright Licenses, Patent Licenses and Trademark Licenses, in each case owned by such Grantor in its own name on the date hereof.  Except as set forth in Schedule 6, on the date hereof, none of the Intellectual Property material to the business of the Grantor is the subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor.

 

4.10                        Instruments.  No Person other than Grantor owns an interest in any Instruments (whether as joint holders, participants or otherwise) held by such Grantor.

 

4.11                        Letter-of-Credit Rights.  Such Grantor does not have any Letter-of-Credit Rights having a face value in excess of $200,000 individually except as set forth in Schedule 7 or as have been notified to the Collateral Agent in accordance with Section 5.5.

 

4.12                        Commercial Tort Claims.  Such Grantor does not have any Commercial Tort Claims with claimed damages in excess of $200,000 individually except as set forth in Schedule 8 or as have been notified to the Collateral Agent in accordance with Section 5.17.

 

SECTION 5                            COVENANTS

 

In addition to the covenants of the Grantors set forth in the Credit Agreement, each Grantor covenants and agrees with the Collateral Agent that, from and after the date of this Agreement until the Discharge of Obligations:

 

5.1                               Reserved.

 

5.2                               Maintenance of Perfected Security Interest; Further Documentation.

 

(a)                                 Such Grantor shall maintain the security interest of the Collateral Agent created by this Agreement as perfected security interest, to the extent required hereunder, having at least the priority described in Section 4.2 and shall defend such security interest against the claims and demands of all Persons whomsoever, subject to the Intercreditor Agreement, the rights of holders of Liens permitted by Section 6.02 of the Credit Agreement and the rights of such Grantor under the Loan Documents to dispose of the Collateral.

 

(b)                                 Such Grantor will furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the assets and property of such Grantor and such other reports in connection therewith as the Collateral Agent may reasonably request, all in reasonable detail.

 

18

 

(c)                                  At any time and from time to time, upon the written request of the Collateral Agent, and at the sole expense of such Grantor, such Grantor will promptly duly execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Collateral Agent may reasonably request for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, without limitation, (i) filing any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in any jurisdiction with respect to the security interests created hereby and (ii) in the case of Investment Property, Investment Accounts, Letter-of-Credit Rights and any other relevant Collateral, taking any actions necessary to enable the Collateral Agent to obtain “control” (within the meaning of the UCC) with respect thereto to the extent required hereunder.

 

5.3                               Changes in Locations, Name, Etc.  Such Grantor will not, except upon 5 Business Days’ (or such shorter period as may be agreed to by the Collateral Agent) prior written notice to the Collateral Agent and delivery to the Collateral Agent of (a) all additional executed financing statements and other documents reasonably requested by the Collateral Agent to maintain the validity, perfection and priority of the security interests provided for herein, and (b) if applicable, a written supplement to Schedule 4 showing the relevant new jurisdiction of organization, location of chief executive office or sole place of business, or new name, as appropriate:

 

(i)                                     change its jurisdiction of organization, identification number from the jurisdiction of organization (if any) or the location of its chief executive office or sole place of business, as appropriate, from that referred to in Schedule 4; or

 

(ii)                                  change its legal name.

 

5.4                               Notices.  Such Grantor will advise the Collateral Agent promptly, in reasonable detail, upon obtaining actual knowledge of:

 

(a)                                 any Lien (other than Liens permitted under Section 6.02 of the Credit Agreement) on any of the Collateral; and

 

(b)                                 the occurrence of any other event which could reasonably be expected to have a Material Adverse Effect on the aggregate value of the Collateral or on the security interests created hereby.

 

5.5                               Instruments; Investment Property.

 

(a)                                 Such Grantor will (i) immediately deliver to the Collateral Agent, or an agent designated by it, appropriately endorsed or accompanied by appropriate instruments of transfer or assignment, all Instruments, Documents, Chattel Paper and Certificated Securities with respect to any Investment Property (except the Certificated Securities of Immaterial Subsidiaries, which Grantors shall not be required to deliver to the Collateral Agent) held by such Grantor, all Letter-of-Credit Rights of such Grantor, and all other Rights to Payment held by such Grantor at any time evidenced by promissory notes, trade acceptances or other instruments, in each case with a face value in excess of $200,000 individually, for each such item of Collateral, and (ii) provide such notice, obtain such acknowledgments and take all such other

 

19

 

action, with respect to any Chattel Paper, Documents and Letter-of-Credit Rights with a face value in excess of $200,000 individually held by such Grantor, as the Collateral Agent shall reasonably request.

 

(b)                                 If such Grantor shall become entitled to receive or shall receive any certificate (including any certificate representing a dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of the Equity Interests of any Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any Pledged Collateral, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Collateral Agent, hold the same in trust for the Collateral Agent and deliver the same forthwith to the Collateral Agent (or, subject to the Intercreditor Agreement, the Revolving Loan Lender) in the exact form received, duly indorsed by such Grantor to the Collateral Agent (or, subject to the Intercreditor Agreement, the Revolving Loan Lender), if required, together with an undated stock power covering such certificate duly executed in blank by such Grantor, to be held by the Collateral Agent (or the Revolving Loan Lender, as the case may be), subject to the terms hereof, as additional collateral security for the Secured Obligations; provided that in no event shall this Section 5.5(b) apply to any Excluded Assets.  Any sums paid upon or in respect of the Investment Property upon the liquidation or dissolution of any Issuer shall, unless otherwise subject to a perfected security interest in favor of the Collateral Agent, be paid over to the Collateral Agent to be held by it hereunder as additional collateral security for the Secured Obligations, and in case any distribution of capital shall be made on or in respect of the Investment Property or any property shall be distributed upon or with respect to the Investment Property pursuant to the recapitalization or reclassification of the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed shall, unless otherwise subject to a perfected security interest in favor of the Collateral Agent, be delivered to the Collateral Agent to be held by it hereunder as additional collateral security for the Secured Obligations.  If any sums of money or property so paid or distributed in respect of such Investment Property shall be received by such Grantor, such Grantor shall, until such money or property is paid or delivered to the Collateral Agent, unless otherwise subject to a perfected security interest in favor of the Collateral Agent, hold such money or property in trust for the Collateral Agent, segregated from other funds of such Grantor, as additional collateral security for the Secured Obligations.

 

(c)                                  In the case of any Grantor which is an Issuer, such Issuer agrees that (i) it will be bound by the terms of this Agreement relating to the Equity Interests issued by it and will comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Collateral Agent promptly in writing of the occurrence of any of the events described in Section 5.5(a) and (b) with respect to the Pledged Collateral issued by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Equity Interests issued by it.

 

5.6                               Securities Accounts; Deposit Accounts.

 

(a)                                 With respect to any Securities Account other than an Excluded Account or an Encumbered Account, such Grantor shall, subject to Section 4.02 of the Credit Agreement, cause any applicable securities intermediary maintaining such Securities Account to enter into an

 

20

 

agreement in form and substance reasonably satisfactory to the Collateral Agent with respect to such Securities Account pursuant to which such securities intermediary shall agree to comply with the Collateral Agent’s “entitlement orders” without further consent by such Grantor, as requested by the Collateral Agent.

 

(b)                                 With respect to any Deposit Account other than an Excluded Account or an Encumbered Account, such Grantor shall, subject to Section 4.02 of the Credit Agreement, enter into and shall cause the depositary institution maintaining such account to enter into an agreement in form and substance reasonably satisfactory to the Collateral Agent pursuant to which such depositary institution shall agree to comply with the Collateral Agent’s instructions directing disposition of the funds in such Deposit Account without further consent by such Grantor in accordance with Section 9104 of the UCC.

 

(c)                                  The Collateral Agent agrees that it will only communicate instructions or “entitlement orders” with respect to the Deposit Accounts and Securities Accounts of the Grantors after the occurrence and during the continuance of an Event of Default.

 

(d)                                 Such Grantor shall provide the Collateral Agent 5 days prior written notice before establishing any new Deposit Account and of any new Securities Account established by such Grantor with respect to any Investment Property held by such Grantor.

 

5.7                               Intellectual Property.  In each case, except to the extent permitted by the Credit Agreement:

 

(a)                                 Such Grantor will and will use commercially reasonable efforts to cause its licensees and sublicensees to (i) continue to use each Trademark material to the business of such Grantor in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) maintain as in the past the quality of products and services offered under each such Trademark, (iii) use each such Trademark with the appropriate notice of registration and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use any mark which is confusingly similar or a colorable imitation of any such Trademark unless the Collateral Agent shall obtain, to the extent available, a perfected security interest in such mark pursuant to this Agreement, and (v) not (and not knowingly permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any such Trademark may become invalidated or impaired in any way.

 

(b)                                 Such Grantor will not do any act, or omit to do any act, whereby any Patent material to the business of such Grantor may become forfeited, abandoned or dedicated to the public.

 

(c)                                  Such Grantor will not (and will use commercially reasonable efforts to not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any Copyrights material to the business of such Grantor may become invalidated or otherwise impaired.  Such Grantor will not do any act whereby any material portion of such Copyrights may fall into the public domain.

 

(d)                                 Such Grantor will not and will use commercially reasonable efforts to not permit any licensee or sublicense to do any act that knowingly uses any Intellectual Property

 

21

 

material to the business of such Grantor to infringe the intellectual property rights of any other Person.

 

(e)                                  Such Grantor will notify the Collateral Agent promptly if it knows, or has reason to know, that any application or registration relating to any Intellectual Property material to the business of such Grantor may become forfeited, abandoned or dedicated to the public, or of any material adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the USPTO, the USCRO or any court or tribunal in any country) regarding such Grantor’s ownership of, or the validity of, any material Intellectual Property or such Grantor’s right to register the same or to own and maintain the same.

 

(f)                                   Whenever such Grantor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Patent or Trademark with the USPTO or of any Copyright with USCRO or, in each case, any similar office or agency in any other country or political subdivision thereof, such Grantor shall report (i) the initial application to and (ii) the corresponding grant, if any, of the Patent or Trademark from the USPTO or the Copyright from the USCRO or, in each case, any similar office or agency in any other country or political subdivision thereof, to the Collateral Agent, each within the time specified by Section 5.04(e) of the Credit Agreement.  Upon request of the Collateral Agent, other than in respect of Excluded Assets, such Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Collateral Agent may reasonably request to evidence the Collateral Agent’s security interest in any Copyright, Patent or Trademark and the goodwill and general intangibles of such Grantor relating thereto or represented thereby; provided that no Grantor shall be required to file any intellectual property security agreement in any foreign jurisdiction unless such filing is reasonable in the discretion of the Collateral Agent given the value of the Collateral or revenue associated therewith.

 

(g)                                  Such Grantor will take all reasonable and necessary steps consistent with its current business practices, including, without limitation, in any proceeding before the USPTO, the USCRO or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each material application (and to obtain the relevant registration) and to maintain each registration of the Intellectual Property material to such Grantor’s business, including filing of applications for renewal, affidavits of use and affidavits of incontestability.

 

(h)                                 In the event that any Grantor learns that any Intellectual Property material to the business of such Grantor is infringed, misappropriated or diluted by a third party, such Grantor shall take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property.

 

5.8                               Defense of Collateral.  Grantors will appear in and defend any action, suit or proceeding which may affect to a material extent its title to, or right or interest in, or the Collateral Agent’s right or interest in, any material portion of the Collateral.

 

5.9                               Preservation of Collateral.  Grantors will do and perform all reasonable acts that may be necessary and appropriate to maintain, preserve and protect the Collateral.

 

22

 

5.10                        Compliance with Laws, Etc.  Such Grantor will comply in all material respects with all laws, regulations and ordinances, and all policies of insurance, relating in a material way to the possession, operation, maintenance and control of the Collateral.

 

5.11                        Location of Books and Chief Executive Office.  Such Grantor will:  (a) keep all Books pertaining to the Rights to Payment of such Grantor at the locations set forth in Schedule 4 or at such other locations within the U.S. (or, if reasonably agreed by the Collateral Agent, outside the U.S.) as may be disclosed in writing to the Collateral Agent pursuant to clause (b); and (b) give written notice to the Collateral Agent within 5 Business Days of any changes in any location where Books pertaining to the Rights to Payment of such Grantor are kept, including any change of name or address of any service bureau, computer or data processing company or other Person preparing or maintaining any such Books or collecting Rights to Payment for such Grantor.

 

5.12                        Location of Collateral.  Such Grantor will:  (a) keep the Collateral held by such Grantor at the locations set forth in Schedule 5 or at such other locations as may be disclosed in writing to the Collateral Agent pursuant to clause (b) and will not remove any such Collateral from such locations (other than in connection with sales of Inventory in the ordinary course of such Grantor’s business, the movement of Collateral as part of such Grantor’s supply chain, Collateral out for repair and in the ordinary course of such Grantor’s business, other dispositions permitted by Section 5.13 of this Agreement and Section 6.05 of the Credit Agreement and movements of Collateral from one disclosed location to another disclosed location within the United States), except upon written notice within 5 Business Days of any removal to the Collateral Agent; and (b) give the Collateral Agent written notice within 5 Business Days of any change in the locations set forth in Schedule 5.

 

5.13                        Disposition of Collateral.  Such Grantor will not surrender or lose possession of (other than to the Collateral Agent (or, subject to the Intercreditor Agreement, the Revolving Loan Lender)), sell, lease, rent, or otherwise dispose of or transfer any of the Collateral held by such Grantor or any right or interest therein, except to the extent permitted by the Loan Documents.

 

5.14                        Liens.  Such Grantor will keep the Collateral held by such Grantor free of all Liens except Liens permitted under Section 6.02 of the Credit Agreement.

 

5.15                        Expenses.  Such Grantor will pay all expenses of protecting, storing, warehousing, insuring, handling and shipping the Collateral held by such Grantor, to the extent the failure to pay any such expenses could reasonably be expected to materially and adversely affect the value of the Collateral.

 

5.16                        Reserved.

 

5.17                        Commercial Tort Claims.  Such Grantor will give the Collateral Agent prompt notice if such Grantor shall at any time hold or acquire any Commercial Tort Claim with claimed damages in excess of $200,000.

 

23

 

5.18                        Shareholder Agreements and Other Agreements.

 

(a)                                 Such Grantor shall comply in all material respects with all of its obligations under any shareholders agreement, operating agreement, partnership agreement, voting trust, proxy agreement or other agreement or understanding (collectively, the “Pledged Collateral Agreements”) to which it is a party and shall enforce all of its rights thereunder, except, with respect to any such Pledged Collateral Agreement relating to any Pledged Collateral issued by a Person other than a Subsidiary of a Grantor, to the extent the failure to enforce any such rights could reasonably be expected to materially and adversely affect the value of the Pledged Collateral to which any such Pledged Collateral Agreement relates.

 

(b)                                 Such Grantor agrees that no Pledged Stock (i) shall be dealt in or traded on any securities exchange or in any securities market, (ii) shall constitute an investment company security, or (iii) shall be held by such Grantor in a Securities Account.

 

(c)                                  Subject to the terms and conditions of the Credit Agreement, including Sections 6.02 and 6.05 thereof, such Grantor shall not vote to enable or take any other action to:  (i) amend or terminate, or waive compliance with any of the terms of, any such Pledged Collateral Agreement, certificate or articles of incorporation, bylaws or other organizational documents in any way that materially and adversely affects the validity, perfection or priority of the Collateral Agent’s security interest therein.

 

SECTION 6                            REMEDIAL PROVISIONS

 

Each Grantor covenants and agrees with the Collateral Agent that, from and after the date of this Agreement until the Discharge of Obligations:

 

6.1                               Certain Matters Relating to Receivables.

 

(a)                                 The Collateral Agent hereby authorizes each Grantor to collect such Grantor’s Receivables, and the Collateral Agent may curtail or terminate said authority at any time after the occurrence and during the continuance of an Event of Default.  If required by the Collateral Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within 2 Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Collateral Agent if required, in a Collateral Account over which the Collateral Agent has control, subject to withdrawal by the Collateral Agent only as provided in Section 6.5, and (ii) until so turned over, shall be held by such Grantor in trust for the Collateral Agent, segregated from other funds of such Grantor.  After the occurrence and during the continuance of an Event of Default, each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

 

(b)                                 At the Collateral Agent’s request, after the occurrence and during the continuance of an Event of Default, each Grantor shall deliver to the Collateral Agent all original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables, including, without limitation, all original orders, invoices and shipping receipts.

 

24

 

6.2                               Communications with Obligors; Grantors Remain Liable.

 

(a)                                 The Collateral Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default communicate with obligors under the Receivables to verify with them to the Collateral Agent’s satisfaction the existence, amount and terms of any Receivables.

 

(b)                                 Upon the request of the Collateral Agent, at any time after the occurrence and during the continuance of an Event of Default, each Grantor shall notify obligors on the Receivables that the Receivables have been assigned to the Collateral Agent and that payments in respect thereof shall be made directly to the Collateral Agent.

 

(c)                                  Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto.  The Collateral Agent shall not have any obligation or liability under any Receivable (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent of any payment relating thereto, nor shall the Collateral Agent be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

 

6.3                               Investment Property.

 

(a)                                 Unless an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given written notice to the relevant Grantor of the Collateral Agent’s intent to exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Collateral and all payments made in respect of the Pledged Notes to the extent not prohibited by the Credit Agreement, and to exercise all voting and corporate or other organizational rights with respect to the Investment Property of such Grantor; provided, however, that no vote shall be cast or corporate or other organizational right exercised or other action taken which would materially impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, this Agreement or any other Loan Document.

 

(b)                                 If an Event of Default shall occur and be continuing and the Collateral Agent shall give written notice of its intent to exercise such rights to the relevant Grantor or Grantors, (i) the Collateral Agent shall have the right (A) to receive any and all cash dividends, payments or other Proceeds paid in respect of the Investment Property (including the Pledged Collateral) of any or all of the Grantors and make application thereof to the Secured Obligations in the order set forth in Section 6.5, and (B) to exchange uncertificated Pledged Collateral for certificated Pledged Collateral and to exchange certificated Pledged Collateral for certificates of larger or smaller denominations, for any purpose consistent with this Agreement (in each case to the extent such exchanges are permitted under the applicable Pledged Collateral Agreements or

 

25

 

otherwise agreed upon by the Issuer of such Pledged Collateral), and (ii) each Grantor shall execute and deliver to the Collateral Agent appropriate instruments as the Collateral Agent may reasonably request in order to permit the Collateral Agent or its nominee to thereafter exercise (x) all voting, corporate and other rights pertaining to such Investment Property at any meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Investment Property as if it were the absolute owner thereof (including, without limitation, the right to exchange at its discretion any and all of any such Investment Property upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate or other organizational structure of any Issuer, or upon the exercise by any Grantor or the Collateral Agent of any right, privilege or option pertaining to such Investment Property, and in connection therewith, the right to deposit and deliver any and all of such Investment Property with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Collateral Agent may determine), all without liability except to account for property actually received by it, but the Collateral Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible for any failure to do so or delay in so doing.

 

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

 

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

 

6.4                               Proceeds to be Turned Over To The Collateral Agent.  In addition to the rights of the Collateral Agent specified in Section 6.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash, checks, Cash Equivalents and other near-cash items shall be held by such Grantor in trust for the Collateral Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Collateral Agent (or, subject to the terms of the Intercreditor Agreement, the Revolving Loan Lender) in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if required).  All Proceeds received by the Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral Account over which it maintains “control” (within the meaning of the UCC).  All Proceeds while held by the Collateral Agent in a Collateral Account (or by such Grantor in trust for the Collateral Agent) shall continue to be held as collateral security for all the Secured Obligations and shall not constitute payment thereof until applied as provided in Section 6.5.

 

26

 

6.5                               Application of Proceeds.  If an Event of Default shall have occurred and be continuing, at any time at the Collateral Agent’s election, the Collateral Agent may apply all or any part of Proceeds constituting Collateral, whether or not held in any Collateral Account, in payment of the Secured Obligations in accordance with Article VII of the Credit Agreement.

 

6.6                               Code and Other Remedies.  If an Event of Default shall occur and be continuing, the Collateral Agent or any other Secured Party may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC or any other applicable law.  Without limiting the generality of the foregoing, the Collateral Agent or any other Secured Party, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Collateral Agent or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk.  The Collateral Agent shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released.  Each Grantor further agrees, at the Collateral Agent’s request, to assemble the Collateral and make it available to the Collateral Agent at places which the Collateral Agent shall reasonably select, whether at such Grantor’s premises or elsewhere.  The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to this Section 6.6, in accordance with the provisions of Section 6.5, only after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Collateral Agent or any other Secured Party hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations, in such order as is contemplated by Article VII of the Credit Agreement and only after such application and after the payment by the Collateral Agent of any other amount required by any provision of law, including Section 9615(a)(3) of the UCC, but only to the extent of the surplus, if any, owing to any Grantor.  To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against the Collateral Agent arising out of the exercise by any of them of any rights hereunder, except to the extent caused by the gross negligence or willful misconduct of the Collateral Agent or its agents.  If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition.

 

6.7                               Private Sales.

 

(a)                                 Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of any or all the Pledged Stock, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort

 

27

 

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

 

(b)                                 Each Grantor agrees to use commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and binding and in compliance with any applicable Requirement of Law.  Each Grantor further agrees that a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the Collateral Agent and the other Secured Parties, that the Collateral Agent and the other Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement.

 

6.8                               Intellectual Property License.  Solely for the purpose of enabling the Collateral Agent to exercise rights and remedies under this Section 6 and at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent an irrevocable, non-exclusive, worldwide license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use, operate under, license, or sublicense any Intellectual Property now owned or hereafter acquired by the Grantors.

 

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

 

SECTION 7                            THE COLLATERAL AGENT AS ATTORNEY-IN-FACT; DUTY; AUTHORITY

 

Each Grantor covenants and agrees with the Collateral Agent that:

 

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

 

(a)                                 Subject to the last paragraph of this Section 7.1(a), each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and

 

28

 

authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Collateral Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:

 

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

 

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

 

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

 

(iv)                              execute, in connection with any sale provided for in Section 6.6 or 6.7, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

 

(v)                                 (A) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Collateral Agent or as the Collateral Agent shall direct; (B) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (E) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (F) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Collateral Agent may deem appropriate; (G) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole discretion determine; and (H) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and do, at the Collateral Agent’s option and such Grantor’s expense, at any time, or from time to

 

29

 

time, all acts and things which the Collateral Agent deems necessary to protect, preserve or realize upon the Collateral and security interest therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

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

 

(b)                                 If any Grantor fails to perform or comply with any of its agreements contained herein, the Collateral Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement.

 

(c)                                  The expenses of the Collateral Agent or any other Secured Party incurred in connection with actions undertaken as provided in this Section 7.1, together with interest thereon at a rate per annum equal to the highest rate per annum at which interest would then be payable on any Term Loans under the Credit Agreement, from the date of payment by the Collateral Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Collateral Agent in accordance with the Credit Agreement.

 

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

 

7.2                               Duty of The Collateral Agent.  The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9207 of the UCC or otherwise, shall be to deal with it in the same manner as the Collateral Agent deals with similar property for its own account.  Neither the Collateral Agent nor any of its officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof.  The powers conferred on the Collateral Agent hereunder are solely to protect the Collateral Agent’s interests in the Collateral and shall not impose any duty upon the Collateral Agent to exercise any such powers.  The Collateral Agent shall be accountable only for amounts that the Collateral Agent actually receive as a result of the exercise of such powers, and neither the Collateral Agent nor any of its 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.

 

7.3                               Authority of The Collateral Agent.  The Collateral Agent shall act as the Collateral Agent for the Secured Parties under the Loan Documents for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations and shall be vested with such powers and discretion as are reasonably incidental thereto.  The Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Collateral Agent for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any

 

30

 

rights and remedies thereunder at the direction of the Collateral Agent, shall be entitled to the benefits of all provisions of this Section 7.3 and Article IX of the Credit Agreement (as though such co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the Loan Documents) as if set forth in full herein with respect thereto.  Without limiting the generality of the foregoing, the Collateral Agent shall be further authorized on behalf of all the Secured Parties, without the necessity of any notice to or further consent from the Secured Parties, from time to time to take any action, or permit the any co-agents, sub-agents and attorneys-in-fact appointed by the Collateral Agent to take any action, with respect to any Collateral or the Loan Documents which may be necessary to perfect and maintain perfected the Liens upon any Collateral granted pursuant to any Loan Document.

 

SECTION 8                            MISCELLANEOUS

 

8.1                               Amendments in Writing.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 9.08 of the Credit Agreement.

 

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

 

8.3                               No Waiver by Course of Conduct; Cumulative Remedies.  The Collateral Agent shall not by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default, as applicable.  No failure to exercise, nor any delay in exercising, on the part of the Collateral Agent, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Collateral Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Collateral Agent would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

8.4                               Enforcement Expenses; Indemnification.

 

(a)                                 Each Guarantor agrees to pay or reimburse the Collateral Agent for all its reasonable and documented out-of-pocket costs and expenses incurred in collecting against such Guarantor under the guaranty contained in Section 2 of this Agreement or otherwise enforcing or preserving any rights under this Agreement and the other Loan Documents to which such Guarantor is a party, including the fees and disbursements of counsel to the Collateral Agent.

 

(b)                                 Each Guarantor agrees to pay, and to save the Collateral Agent harmless from, any and all liabilities with respect to, or resulting from, any delay in paying any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with

 

31

 

respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

 

(c)                                  Each Guarantor agrees to pay, and to save the Collateral Agent harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent any Borrower would be required to do so pursuant to the Credit Agreement.

 

(d)                                 The agreements in this Section 8.4 shall survive repayment of the Secured Obligations and any other amounts payable under the Credit Agreement and the other Loan Documents.

 

8.5                               Successors and Assigns.  This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Collateral Agent and its successors and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Collateral Agent.

 

8.6                               Set Off.  Each Grantor hereby irrevocably authorizes the Collateral Agent and each of its Affiliates at any time and from time to time after the occurrence and during the continuance of an Event of Default, without notice to such Grantor or any other Grantor, any such notice being expressly waived by each Grantor, to setoff and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Collateral Agent or such Affiliate to or for the credit or the account of such Grantor, or any part thereof in such amounts as the Collateral Agent may elect, against and on account of the Secured Obligations and liabilities of such Grantor to the Collateral Agent hereunder and under the other Loan Documents and claims of every nature and description of the Collateral Agent against such Grantor, in any currency, whether arising hereunder, under the Credit Agreement, any other Loan Document or otherwise, as the Collateral Agent may elect, whether or not the Collateral Agent has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured.  The rights of the Collateral Agent under this Section 8.6 are in addition to other rights and remedies (including, without limitation, other rights of setoff) which the Collateral Agent may have.

 

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

 

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

 

32

 

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

 

8.10                        Integration.  This Agreement and the other Loan Documents represent the agreement of the Grantors and the Collateral Agent with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Collateral Agent relative to the subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents.

 

8.11                        GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

8.12                        WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12.

 

8.13                        Jurisdiction; Consent to Service of Process.

 

(a)                                 Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America, sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action 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 shall affect any right that the Collateral Agent, the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against any Grantor or its properties in the courts of any jurisdiction.

 

(b)                                 Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this

 

33

 

Agreement or the other Loan Documents in any court located in the City of New York, Borough of Manhattan, or of the United States of America sitting in the Southern District of New York.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)                                  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 7.01 under the Credit Agreement.  Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

8.14                        Acknowledgements.  Each Grantor hereby acknowledges that:

 

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

 

(b)                                 the Collateral Agent does not have any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Collateral Agent, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

 

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

 

8.15                        Additional Grantors.  Each Subsidiary of a Grantor that is required to become a party to this Agreement pursuant to Section 5.12 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of (a) an Assumption Agreement in the form of Annex 1 hereto and (b) a Disclosure Letter Supplement in the form of Annex 2 hereto.

 

8.16                        Releases.

 

(a)                                 Upon the Discharge of Obligations, the Collateral shall be automatically released from the Liens in favor of the Collateral Agent created hereby and all rights to the Collateral shall revert to the applicable Grantor, this Agreement shall terminate with respect to the Collateral Agent, and all obligations (other than those expressly stated to survive such termination) of each Grantor to the Collateral Agent hereunder shall terminate, all without delivery of any instrument or performance of any act by any party.  At the sole expense of any Grantor following any such termination, the Collateral Agent shall deliver such documents as such Grantor shall reasonably request to evidence such termination and shall otherwise authorize the filing of such documents as the Grantors shall reasonably request to terminate its liens.

 

(b)                                 If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction not prohibited by Article VI of the Credit Agreement, the Liens granted herein in such Collateral shall be deemed to be automatically released and such Collateral shall automatically revert to the applicable Grantor with no further action on the part of any Person, and the Collateral Agent, at the request and sole expense of such Grantor, shall promptly execute and deliver to such Grantor all releases or other documents reasonably

 

34

 

necessary or desirable for the release of the Liens created hereby on such Collateral, as applicable.  At the request and sole expense of the applicable Borrower, a Guarantor shall be released from its obligations hereunder in the event that all the Equity Interests of such Guarantor shall be sold, transferred or otherwise disposed of to a Person other than a Grantor in a transaction not prohibited by Article VI of the Credit Agreement; provided that such Borrower shall have delivered to the Collateral Agent, at least 5 Business Days, or such shorter period as the Collateral Agent may agree, prior to the date of the proposed release, a written request for release identifying the relevant Guarantor and the terms of the sale or other disposition in reasonable detail, including the price thereof and any expenses in connection therewith, together with a certification by such Borrower stating that such transaction is in compliance with terms and provisions of the Credit Agreement and the other Loan Documents.

 

NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIENS AND SECURITY INTERESTS GRANTED TO THE COLLATERAL AGENT PURSUANT TO THIS AGREEMENT AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY WITH RESPECT TO ANY COLLATERAL ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.  IN THE EVENT OF ANY CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.

 

[remainder of page intentionally left blank]

 

35

 

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

 

	
 
    	
GRANTORS:
    
	
 
    	
 
    
	
 
    	
RIGHTSIDE GROUP, LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Taryn Naidu
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Taryn   Naidu
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
CEO   and President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RIGHTSIDE OPERATING CO.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Taryn Naidu
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Taryn   Naidu
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
CEO   and President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ENOM, INCORPORATED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Taryn Naidu
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Taryn   Naidu
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
CEO   and President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HOT   MEDIA, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matthew Delgado
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Matthew   Delgado
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President
    

 

Signature Page 1 to Guarantee and Collateral Agreement

 

 

	
 
    	
ACQUIRE   THIS NAME, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matthew Delgado
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Matthew   Delgado
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President
    

 

Signature Page 2 to Guarantee and Collateral Agreement

 

 

	
 
    	
COLLATERAL   AGENT:
    
	
 
    	
 
    
	
 
    	
OBSIDIAN   AGENCY SERVICES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Howard Levkowitz
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Howard   Levkowitz
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President
    

 

Signature Page 3 to Guarantee and Collateral Agreement

 

 

ANNEX 1 To

GUARANTEE AND COLLATERAL AGREEMENT

(U.S. Entities)

 

FORM OF
 ASSUMPTION AGREEMENT

 

This ASSUMPTION AGREEMENT (the “Assumption Agreement”), dated as of [              ], 20    , is executed and delivered by [                                                            ] (the “Additional Grantor”), in favor of OBSIDIAN AGENCY SERVICES, INC., as Collateral Agent (together with its permitted successors, in such capacity, the “ Collateral Agent”) pursuant to that certain Credit Agreement, dated as of August 6, 2014 (as amended, amended and restated, supplemented, restructured or otherwise modified, renewed or replaced from time to time, the “Credit Agreement”), by and among RIGHTSIDE GROUP, LTD., a Delaware limited liability company (the “U.S. Borrower”), UNITED TLD HOLDCO LTD., an exempted company limited by shares incorporated under the laws of the Cayman Islands (the “Cayman Borrower”, and together with the U.S. Borrower, the “Borrowers”), the Lenders and the Collateral Agent, as administrative agent and collateral agent for the Lenders.  All capitalized terms not defined herein shall have the respective meanings ascribed to such terms in such Credit Agreement.

 

W I T N E S S E T H:

 

WHEREAS, in connection with the Credit Agreement, the Borrowers and certain of their Affiliates (other than the Additional Grantor) have entered into that certain Guarantee and Collateral Agreement, dated as of August 6, 2014, in favor of the Collateral Agent (the “Guarantee and Collateral Agreement”);

 

WHEREAS, [                        ] is required, pursuant to Section 5.12 of the Credit Agreement to cause the Additional Grantor to become a party to the Guarantee and Collateral Agreement in order to grant in favor of the Collateral Agent, for its benefit and the benefit of the other Secured Parties, the Liens and security interests therein specified and provide its guarantee of the Obligations as therein contemplated; and

 

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

 

NOW, THEREFORE, IT IS AGREED:

 

1.                                      Guarantee and Collateral Agreement.  By executing and delivering this Assumption Agreement, the Additional Grantor, as provided in Section 8.14 of the Guarantee and Collateral Agreement, (a) hereby becomes a party to the Guarantee and Collateral Agreement as both a “Grantor” and a “Guarantor” thereunder with the same force and effect as if originally named therein as a Grantor and a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Grantor and a Guarantor thereunder, and (b) hereby grants to the Collateral Agent, for its benefit and the benefit of the other Secured Parties, as security for the Secured Obligations, a security interest in all of the Additional Grantor’s right, title and interest in any and to all Collateral of the Additional

 

 

Grantor, in each case whether now owned or hereafter acquired or in which the Additional Grantor now has or hereafter acquires an interest and wherever the same may be located, but subject in all respects to the terms, conditions and exclusions set forth in the Guarantee and Collateral Agreement.  The Additional Grantor hereby represents and warrants that each of the representations and warranties contained in Section 4 of the Guarantee and Collateral Agreement (x) that is qualified by materiality is true and correct, and (y) that is not qualified by materiality, is true and correct in all material respects, in each case, on and as the date hereof (after giving effect to this Assumption Agreement) as if made on and as of such date (except to the extent any such representation and warranty expressly relates to an earlier date, in which case such representation and warranty was true and correct in all material respects as of such earlier date).

 

2.                                      Governing Law.  THIS ASSUMPTION AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

 

3.                                      Loan Document.  This Assumption Agreement shall constitute a Loan Document under the Credit Agreement.

 

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

 

	
 
    	
[ADDITIONAL   GRANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

ANNEX 2 TO
 GUARANTEE AND COLLATERAL AGREEMENT

 

FORM OF
 DISCLOSURE LETTER SUPPLEMENT

 

To:                             Obsidian Agency Services, Inc., as Collateral Agent

 

Re:                             Rightside Group, Ltd.

 

	
Date:
    	
 
    	
 
    

 

Ladies and Gentlemen:

 

This Disclosure Letter Supplement (this “Disclosure Letter Supplement”) is made and delivered pursuant to [Section 3.3(g)][ Section 8.14] of that certain Guarantee and Collateral Agreement, dated as of August 6, 2014 (as amended, modified, renewed or extended from time to time, the “Guarantee and Collateral Agreement”), among each Grantor party thereto (each a “Grantor” and collectively, the “Grantors”), and Obsidian Agency Services, Inc. (“Collateral Agent”).  All capitalized terms used in this Disclosure Letter Supplement and not otherwise defined herein shall have the meanings assigned to them in either the Guarantee and Collateral Agreement or the Credit Agreement (as defined in the Guarantee and Collateral Agreement), as the context may require.

 

[The undersigned,                                                        [insert name of Grantor], a                                            [corporation, partnership, limited liability company, etc.], confirms and agrees that all Pledged Collateral of the undersigned, including the property described on the supplemental schedule attached hereto, shall be and become part of the Pledged Collateral and shall secure all Secured Obligations.

 

Schedule 2 to the Disclosure Letter is hereby amended by adding to such Schedule 2 the information set forth in the supplement attached hereto.]

 

[The undersigned,                                                        [insert name of Grantor], a                                            [corporation, partnership, limited liability company, etc.], confirms and agrees that the information set forth in the schedules attached hereto is hereby added to the information set forth in the schedules to the Disclosure Letter.  [Schedule[s] [      ]] to the Disclosure Letter [is][are] hereby amended by adding to [each] such Schedule the information set forth in the supplement attached hereto.]

 

all Pledged Collateral of the undersigned, including the property described on the supplemental schedule attached hereto, shall be and become part of the Pledged Collateral and shall secure all Secured Obligations

 

This Disclosure Letter Supplement shall constitute a Loan Document under the Credit Agreement.

 

 

THIS DISCLOSURE LETTER SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES.

 

IN WITNESS WHEREOF, the undersigned has executed this Disclosure Letter Supplement, as of the date first above written.

 

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

 

 

[SUPPLEMENT TO ANNEX 2

 

TO GUARANTEE AND COLLATERAL AGREEMENT]

 

[SUPPLEMENT TO SCHEDULE 2]

 

[SUPPLEMENT TO SCHEDULE 1, 2, 3, 4, 5, 6, 7, and 8]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]