EXHIBIT 10.2
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of March 18, 1999 (this
"AGREEMENT"), among AUDIO COMMUNICATIONS NETWORK, LLC, a Delaware limited
liability company ("COMPANY"), MUZAK HOLDINGS LLC, a Delaware limited liability
company ("HOLDINGS"), and CERTAIN PRESENT AND FUTURE DOMESTIC SUBSIDIARIES OF
COMPANY (collectively, the "SUBSIDIARY GUARANTORS"), whether as an original
signatory hereto or as an Additional Grantor (as herein defined) (Company,
Holdings and each Subsidiary Guarantor are each a "GRANTOR"), and CANADIAN
IMPERIAL BANK OF COMMERCE, as agent for the benefit of Lenders and Lender
Counterparties (as herein defined) and Indemnitees (as defined in the Credit
Agreement) (in such capacity, "ADMINISTRATIVE AGENT").
RECITALS:
WHEREAS, Company is a party to the Credit and Guaranty Agreement of even
date herewith (as it may be from time to time amended, supplemented or otherwise
modified, the "CREDIT AGREEMENT") among Company, Holdings, certain Subsidiaries
of Company, the financial institutions listed therein as Lenders, Goldman Sachs
Credit Partners L.P. ("GSCP"), as Syndication Agent, Canadian Imperial Bank of
Commerce, as Administrative Agent, and GSCP and CIBC Oppenheimer Corp., as Co-
Lead Arrangers;
WHEREAS, Company will change its name to Muzak LLC and Holdings will change
its name to Muzak Holdings LLC on the Closing Date;
WHEREAS, subject to the terms and conditions of the Credit Agreement,
Company may enter into one or more Interest Rate Agreements pursuant to Section
5.11 of the Credit Agreement (collectively, the "HEDGE AGREEMENTS") with one or
more Lenders or Affiliates thereof (in such capacity, collectively, "LENDER
COUNTERPARTIES");
WHEREAS, Holdings and each Subsidiary Guarantor in existence on the date
hereof have guaranteed the obligations of Company and the other Grantors under
the Credit Documents and the Hedge Agreements as provided in the Credit
Agreement;
WHEREAS, it is a condition precedent to the obligations of Lenders to
extend credit (including the issuance of Letters of Credit) to Company under the
Credit Agreement that the obligations of Company and the other Grantors under
the Credit Documents and the Hedge Agreements be secured for the benefit of
Lenders, Lender Counterparties and Indemnitees as provided herein;
WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders and Lender Counterparties as set forth in the Credit
Agreement and the Hedge Agreements,
respectively, and to induce Lenders to enter into the Credit Agreement and to
extend credit thereunder and to induce Lender Counterparties to enter into the
Hedge Agreements, each Grantor has agreed, subject to the terms and conditions
hereof, and of each other Credit Document and each Hedge Agreement, to secure
Grantors' obligations under the Credit Documents and the Hedge Agreements as set
forth herein; and
WHEREAS, capitalized terms used herein (including the recitals hereto) not
otherwise defined herein shall have the meanings ascribed thereto in the Credit
Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and Administrative Agent
agree as follows:
SECTION 1. GRANT OF SECURITY
Each Grantor hereby pledges, assigns and grants to Administrative Agent, as
agent for the benefit of Lenders, Lender Counterparties and Indemnitees, a
continuing first priority security interest in and lien on and right of set-off
against all of Grantor's right, title and interest in and to and under the
following, in each case whether now or hereafter existing or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located
(collectively, the "COLLATERAL"):
(a) all "INVESTMENT PROPERTY", which term means:
(i) all right, title and interest of such Grantor, whether now
owned or hereafter acquired, in all shares of Capital Stock (other than
partnership interests and limited liability interests which are covered by
subsections (iii) and (iv) below) owned by such Grantor (other than the Capital
Stock of Muzak Holdings Finance Corp. and Muzak Finance Corp.), including
without limitation, all shares of Capital Stock (other than partnership
interests and limited liability interests, which are covered by subsections
(iii) and (iv) below) described on Schedule 1(a), the certificates representing
such shares, any security entitlements with respect to such shares and any
interest of such Grantor in the entries on the books of any securities
intermediary pertaining to such shares, and all dividends, Cash, warrants,
rights, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares (all of the foregoing being referred to herein collectively as
the "PLEDGED STOCK");
(ii) all right, title and interest of such Grantor, whether now
owned or hereafter acquired, of all Indebtedness owed to such Grantor,
including, without limitation, all Indebtedness described on Schedule 1(a)
(which includes all Indebtedness owing to such Grantor evidenced by a promissory
note), issued by the obligors named therein, the instruments evidencing such
Indebtedness, any security entitlements with respect to such Indebtedness and
all interest, Cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Indebtedness (all of the foregoing being referred to herein
collectively as the "PLEDGED DEBT");
2
(iii) all of such Grantor's right, title and interest as a limited
and/or general partner in all partnerships, including, without limitation, the
partnerships described on Schedule 1(a) (the "PARTNERSHIPS"), whether now owned
or hereafter acquired, including, without limitation, all of such Grantor's
right, title and interest in, to and under the partnership agreements described
on Schedule 1(a) (as such agreements have heretofore been and may hereafter be
amended, restated, supplemented or otherwise modified from time to time,
collectively, the "PARTNERSHIP AGREEMENTS") to which it is a party (including,
if such Grantor is a general partner of any Partnership, the right to vote with
respect to and to manage and administer the business of such Partnership)
together with all other rights, interests, claims and other property of such
Grantor in any manner arising out of or relating to its limited and/or general
partnership interest in the Partnerships, whatever their respective kind or
character, whether they are tangible or intangible property, and wheresoever
they may exist or be located, and further including, without limitation, (1) all
of the rights of such Grantor as a limited and/or general partner: (A) (I) to
receive money due and to become due (including without limitation dividends,
distributions, interest, income from partnership properties and operations,
proceeds of sale of partnership assets and returns of capital) under or pursuant
to the Partnership Agreements, (II to receive payments upon termination of the
Partnership Agreements, and (II to receive any other payments or distributions,
whether Cash or non-Cash, in respect of such Grantor's limited and/or general
partnership interest evidenced by the Partnership Agreements; (B) in and with
respect to claims and causes of action arising out of or relating to the
Partnerships; and (C) to have access to the Partnerships' books and records and
to other information concerning or affecting the Partnerships; (2) any
"CERTIFICATE OF INTEREST" or "CERTIFICATES OF INTEREST" (or other certificates
or instruments however designated or titled) issued by the Partnerships and
evidencing such Grantor's interest as a limited and/or general partner in the
Partnerships (collectively, the "PARTNERSHIP CERTIFICATES") and (3) to the
extent not included in the foregoing, all proceeds of any and all of the
foregoing, any security entitlements with respect to such interests, and any
interest of such Grantor in the entries on the books of any securities
intermediary pertaining to such Grantor's interest as a limited and/or general
partner in the Partnership (all of the foregoing being referred to herein
collectively as the "PARTNERSHIP INTERESTS");
(iv) all of such Grantor's right, title and interest as a member of
all limited liability companies (the "LLCS"), including, without limitation,
all of such Grantor's right, title and interest in, to and under the limited
liability company interests set forth on Schedule 1(a), whether now owned or
hereafter acquired, including, without limitation, all of such Grantor's right,
title and interest in, to and under the operating agreements with respect to any
such LLC (as such agreements have heretofore been and may hereafter be amended,
restated, supplemented or otherwise modified from time to time, collectively,
each, an "LLC AGREEMENT") to which it is a party (including any right to vote
with respect to and to manage and administer the business of such LLC) together
with all other rights, interests, claims and other property of such Grantor in
any manner arising out of or relating to its interest in the LLCs, whatever
their respective kind or character, whether they are tangible or intangible
property, and wheresoever they may exist or be located, and further including,
without limitation, (1) all of the rights of such Grantor (A)(I) to receive
money due and to become due (including without limitation dividends,
distributions, interest, income from LLC properties and operations, proceeds of
sale of LLC assets and returns of capital) under or pursuant to the LLC
3
Agreements, (II) to receive payments upon termination of the LLC Agreements, and
(III) to receive any other payments or distributions, whether Cash or non-Cash,
in respect of such Grantor's interest evidenced by the LLC Agreements; (B) in
and with respect to claims and causes of action arising out of or relating to
the LLCs; and (C) to have the access to the LLCs' books and records and to other
information concerning or affecting the LLCs; and (2) any "CERTIFICATE OF
INTEREST" or "CERTIFICATES OF INTEREST" (or other certificates or instruments
however designated or titled) issued by the LLCs and evidencing such Grantor's
interest in the LLCs (collectively, the "LLC CERTIFICATES") and (3) to the
extent not included in the foregoing, all proceeds of any and all of the
foregoing, any security entitlements with respect to such interests, and any
interest of such Grantor in the entries on the books of any securities
intermediary pertaining to such Grantor's interest in the LLC (all of the
foregoing being referred to herein collectively as the "LLC INTERESTS"; the
Pledged Stock, the Pledged Debt, the Partnership Interests and the LLC Interests
being herein collectively referred to as the "PLEDGED SECURITIES");
(v) all of such Grantor's right, title and interest in all
additional shares of, limited and/or general partnership interests in and
limited liability company interests in, and all securities convertible into, and
warrants, options and other rights to purchase or otherwise acquire, Capital
Stock of any issuer of the Pledged Stock, the Partnership Interests, and the LLC
Interests, from time to time acquired by such Grantor in any manner (which
shares or interests shall be deemed to be part of the Pledged Securities), the
certificates or other instruments representing such additional shares or
interests, securities, warrants, options or other rights and any interest of
such Grantor in the entries on the books of any securities intermediary
pertaining to such additional shares or interests, any security entitlements
with respect to any of the foregoing, and all dividends, distributions, Cash,
warrants, rights, instruments, payments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing (all of the foregoing being referred to
herein as the "ADDITIONAL PLEDGED STOCK");
(vi) all additional Indebtedness from time to time owed to such
Grantor by any obligor on the Pledged Debt and the instruments evidencing such
Indebtedness (which Indebtedness shall be deemed to be part of the Pledged
Securities), any security entitlements with respect to such Indebtedness and all
interest, Cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Indebtedness (all of the foregoing being referred to
collectively as the "ADDITIONAL PLEDGED DEBT");
(vii) all of such Grantor's right, title and interest in all shares
of, limited and/or general partnership interests in, and limited liability
company interests in, and all securities convertible into and warrants, options
and other rights to purchase or otherwise acquire, Capital Stock of, limited
and/or general partnership interests in, or limited liability company interests
in any Person that, after the date of this Agreement, becomes, as a result of
any occurrence, a Subsidiary of such Grantor (which shares or interests shall be
deemed to be part of the Pledged Securities), the certificates or other
instruments representing such shares, interests, securities, warrants, options
or other rights, any security entitlements with respect to any of the foregoing,
any interest of such Grantor in the entries on the books of any securities
intermediary pertaining to such shares or
4
interests and all dividends, distributions, Cash, warrants, rights, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
shares, interests, securities, warrants, options or other rights (all of the
foregoing being referred to as the "NEW PLEDGED STOCK"); provided, in no event
shall the Pledged Stock, the Additional Pledged Stock or the New Pledged Stock
include more than 65% of the issued and outstanding shares of the Capital Stock
of any Foreign Subsidiary;
(viii) all other Indebtedness from time to time owed to such Grantor
by any Person (other than any Indebtedness owed to such Grantor resulting from
extensions of trade credit by such Grantor in the ordinary course of business)
and the instruments evidencing such Indebtedness (which Indebtedness shall be
deemed to be part of the Pledged Securities), any security entitlements with
respect to any of the foregoing, and all interest, Cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Indebtedness
(all of the foregoing being referred to herein collectively as the "NEW PLEDGED
DEBT"; the Additional Pledged Stock, the Additional Pledged Debt, the New
Pledged Stock and the New Pledged Debt being herein collectively referred to as
the "ADDITIONAL PLEDGED SECURITIES"); and
(ix) all investment property (as defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York (the "UCC")).
(b) the restricted deposit account established and maintained by
Administrative Agent pursuant to Section 5.3 (the "COLLATERAL ACCOUNT"),
together with (i) all amounts on deposit from time to time in such deposit
accounts; and (ii) all interest, Cash, instruments, securities and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing;
(c) all "INTELLECTUAL PROPERTY" which term means U.S. and foreign rights
of each Grantor, whether now owned or hereafter acquired, in all of the
following; provided, however, that the following shall not include any item of
non-U.S. intellectual property in those jurisdictions outside of the U.S. where
the granting of a security interest in such item of intellectual property is not
permissible under the laws of such jurisdiction:
(i) trademarks, service marks, trade names, Internet domain names,
designs, logos, slogans and general intangibles of like nature, together with
goodwill, registrations and applications relating to the foregoing;
(ii) patents, industrial designs, certificates of invention, and all
similar rights and all applications therefor;
(iii) copyrights (including registrations and applications therefor),
authors and composers rights and rights of attribution;
5
(iv) rights in sound recordings and musical compositions, whether
published or unpublished, including but not limited to rights of copyright;
(v) computer programs, including any and all software
implementations of algorithms, models and methodologies whether in source code
or object code form;
(vi) databases and compilations, including any and all data and
collections of data;
(vii) all documentation relating to computer programs, including user
manuals and training materials, related to any of the foregoing (subsections
(v), (vi) and (vii), collectively "PROPRIETARY SOFTWARE");
(viii) confidential information, technology, know-how, inventions,
processes, formulae, algorithms, models and methodologies (such confidential
items, collectively "TRADE SECRETS");
(ix) rights of publicity and privacy, including but not limited to
the right to use names, likenesses, voices, signatures and biographical
information related to real persons;
(x) any licenses to use any of the foregoing owned by third parties
and any licenses of each Grantor to third parties with respect to any of the
foregoing (collectively "LICENSE AGREEMENTS");
(xi) extensions and renewals of the foregoing, all income, fees,
royalties and other payments at any time due or payable with respect to the
foregoing, including, without limitation, payments under all licenses at any
time entered into in connection therewith;
(xii) causes of action, the right to sue for past, present and future
infringements thereof;
(xiii) all rights corresponding thereto throughout the world; and
(xiv) any and all other proceeds and products of any of the
foregoing, including without limitation, all damages and payments or claims by
each Grantor against third parties for past or future infringement.
(d) all of such Grantor's right, title and interest in, to and under any
equipment (as defined in Article 9 of the UCC in all of its forms (including,
but not limited to, all machinery, all computers, all data processing, computer
or office equipment, all furniture, all fixtures (as defined in Article 9 of the
UCC) and all trucks, tractors, trailers and other motor vehicles), all
accessions or additions thereto, all parts thereof, whether or not at any time
of determination incorporated or installed therein or attached thereto, and all
replacements therefor, wherever located, now or hereafter existing (all of the
foregoing being referred to herein collectively as the "EQUIPMENT");
6
(e) all of such Grantor's right, title and interest in, to and under any
inventory (as defined in Article 9 of the UCC), in all of its forms, including,
but not limited to, (i) all goods held by such Grantor for sale or lease or to
be furnished under contracts of service or so leased or furnished, (ii all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in such Grantor's
business, (ii all goods in which such Grantor has an interest in mass or a joint
or other interest or right of any kind, (iv all goods which are returned to or
repossessed by such Grantor, and all accessions thereto and products thereof
(all of the foregoing being referred to herein collectively as the
"INVENTORY"), and (v) all negotiable and non-negotiable documents of title,
documents (as defined in Article 9 of the UCC), including, without limitation,
warehouse receipts, dock receipts and bills of lading issued by any Person
covering any Inventory;
(f) all of such Grantor's right, title and interest in, to and under any
accounts, contract rights, chattel paper, documents, instruments, general
intangibles and other rights and obligations of any kind (as accounts, chattel
paper, documents, instruments and general intangibles are each defined in the
UCC) (all of the foregoing being referred to herein collectively as the
"ACCOUNTS") and all of such Grantor's rights in, to and under all security
agreements, leases and other contracts securing or otherwise relating to any
Accounts (all of the foregoing being referred to herein collectively as the
"RELATED CONTRACTS");
(g) all of such Grantor's right, title and interest in, to and under all
agreements and contracts to which such Grantor is a party as of the date hereof,
or to which such Grantor becomes a party after the date hereof, as each such
agreement may be amended, supplemented or otherwise modified from time to time
(all of the foregoing being referred to herein collectively as the "ASSIGNED
AGREEMENTS"), including, without limitation: (i) all rights of such Grantor to
receive moneys due or to become due under or pursuant to the Assigned
Agreements, (ii all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements, (ii all
claims of such Grantor for damages arising out of any breach of or default under
the Assigned Agreements, and (iv all rights of such Grantor to terminate, amend,
supplement, modify or exercise rights or options under the Assigned Agreements,
to perform thereunder and to compel performance and otherwise exercise all
remedies thereunder;
(h) all permits, licenses or authorizations (including, without
limitation, licenses issued by the Federal Communications Commission (the
"FCC"), or any other successor agency of the United States Government,
permitting any transmission of telecommunications services through fixed
wireless networks) (collectively, "LICENSES"), including all rights to receive
payment or other consideration upon assignment or transfer of any Licenses, to
the extent permitted by law (including, without limitation, the Communications
Action of 1934) or applicable governmental agencies (including, without
limitation, the FCC);
7
(i) to the extent not otherwise included in any other paragraph of this
Section 1, all other general intangibles, including tax refunds, rights to
payment or performance, choses in action and judgments taken on any rights or
claims included in the Collateral;
(j) all books, records, ledger cards, files, correspondence, computer
programs, computer printouts, customer lists, blue prints, manuals, tapes, disks
and related data processing software and any similar items that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon;
(k) all Cash, money (as defined in the UCC), currency and deposit accounts
(as defined in the UCC), including, without limitation, demand, time, savings,
passbooks or similar accounts maintained with Lenders or other banks, savings
and loan associations or other financial institutions, and any other deposit or
securities accounts, together with funds, instruments or other items credited to
any such account from time to time and all interest thereon;
(l) all goodwill;
(m) all plant fixtures, business fixtures and other fixtures (as defined
in Article 9 of the UCC) and storage and office facilities, and all accessions
thereto and products thereof; and
(n) to the extent not covered by Sections 1(a) through 1(m), all other
personal property of such Grantor, all proceeds, products, rents and profits of
or from any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Administrative Agent is
the loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "PROCEEDS" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in, any of such Grantor's rights or interests in any license, contract
or agreement to which such Grantor is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would, under
the terms of such license, contract or agreement or otherwise, result in a
breach of the terms of, or constitute a default under any license, contract or
agreement to which such Grantor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to Section 9-318(4) of the
Uniform Commercial Code of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Collateral shall include, and such Grantor shall be deemed to have granted a
security interest in, all such rights and interests as if such provision had
never been in effect.
8
SECTION 2. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE
(a) This Agreement secures, and the Collateral is collateral security for,
the prompt and complete payment and performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S)362(a)), of all Secured Obligations with respect to each Grantor.
"SECURED OBLIGATIONS" means:
(i) with respect to Company, all obligations and liabilities of
every nature of Company now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Credit Documents and any
Hedge Agreements; and
(ii) with respect to each other Grantor, all obligations and
liabilities of every nature of such Grantor now or hereafter existing under or
arising out of or in connection with the Guaranty, this Agreement and any other
Credit Documents to which it is or may become a party;
in each case, together with all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Company, would accrue on such
obligations, whether or not a claim is allowed against Company for such interest
in the related bankruptcy proceeding), payments for early termination of Hedge
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Administrative Agent or any Lender, Lender Counterparty or
Indemnitee as a preference, fraudulent transfer or otherwise, all reasonable
attorneys' fees and other reasonable expenses incurred by Administrative Agent
in collecting, realizing, and foreclosing on any of the Collateral, and all
obligations of every nature of the Grantors now or hereafter existing under this
Agreement; and
(b) Anything contained herein to the contrary notwithstanding, (i) each
Grantor shall remain liable under any Partnership Agreement, LLC Agreement and
any other Assigned Agreements 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; (ii) the exercise by
Administrative Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the Assigned Agreements
included in the Collateral; and (iii) Administrative Agent shall not have any
obligation or liability under any Partnership Agreement, LLC Agreement or any
other Assigned Agreements included in the Collateral by reason of this
Agreement, nor shall Administrative Agent be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder. Without limiting the
generality of any of the foregoing, this Agreement shall not in any way be
deemed to obligate Administrative Agent, any Lender, Lender Counterparty or
Indemnitee
9
or any purchaser at a foreclosure sale under this Agreement to assume any of any
Grantor's obligations, duties, expenses or liabilities under any LLC Agreement
or Partnership Agreement (including any Grantor's obligations as a general
partner for the debts and obligations of a Partnership) or to manage the
business and affairs of any Partnership or LLC or any of such Grantor's
obligations for the debts and obligations of an LLC, or under any and all other
agreements now existing or hereafter drafted or executed (collectively, the
"GRANTOR OBLIGATIONS") unless Administrative Agent, any Lender, Lender
Counterparty or Indemnitee or any such purchaser otherwise expressly agrees in
writing to assume any or all of said Grantor Obligations. In the event of
foreclosure by Administrative Agent, each Grantor shall remain bound and
obligated to perform its Grantor Obligations arising during or otherwise related
to its ownership of the Collateral, and neither Administrative Agent nor any
Lender, Lender Counterparty or Indemnitee shall be deemed to have assumed any of
such Grantor Obligations except as provided in the preceding sentence. Without
limiting the generality of the foregoing, neither the grant of the security
interest in the Collateral in favor of Administrative Agent as provided herein
nor the exercise by Administrative Agent of any of its rights hereunder nor any
action by the Administrative Agent in connection with a foreclosure on the
Collateral shall be deemed to constitute Administrative Agent or any Lender,
Lender Counterparty or Indemnitee a partner of any Partnership or a member of
any LLC; provided, in the event Administrative Agent or any purchaser of
Collateral at a foreclosure sale elects to become a substituted general partner
of any Partnership or manager of any LLC in place of any Grantor, then
Administrative Agent or such purchaser, as the case may be, shall adopt in
writing the applicable Partnership Agreement or LLC Agreement, as the case may
be, and agree to be bound by the terms and provisions thereof.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Each Grantor hereby represents and warrants to Administrative Agent and
each Lender, which representations and warranties shall survive execution and
delivery of this Agreement, as follows:
3.1. GENERALLY. Each of the representations and warranties set forth in
Section 4 of the Credit Agreement is true and correct as if fully set forth
herein.
3.2. NO OTHER LIENS. (a) Except for the Lien granted to Administrative
Agent hereunder, such Grantor owns, licenses or leases and, as to all Collateral
whether now existing or hereafter acquired will continue to own, license or
lease each item of the Collateral pledged by it free and clear of any and all
Liens of all other Persons other than Permitted Liens, and such Grantor shall
defend the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to Administrative Agent.
(b) No effective financing statement or other evidence of Lien covering
or purporting to cover any of the Collateral is on file in any public office
other than (i) financing statements filed or to be filed in connection with the
security interests granted to Administrative Agent hereunder, (ii) financing
statements for which proper termination statements have been delivered to
Administrative
10
Agent for filing and (iii) financing statements filed in connection with
Permitted Liens. Such Grantor has not consented to any Person other than
Administrative Agent having "control" (within the meaning of Section 8-106 of
the UCC) over the Collateral Account or any other Collateral.
3.3. PERFECTED LIENS; PRIORITY. (a) The security interests in the
Collateral granted to Administrative Agent hereunder constitute valid security
interests in the Collateral.
(b) (i) Upon the filing of financing statements naming such Grantor, as
"debtor" and Administrative Agent as "secured party" and describing the
Collateral in the filing offices set forth on Schedule 3.4 hereto and (ii) to
the extent not subject to Article 9 of the UCC, (x) in the case of registered
and applied for Intellectual Property, upon the recordation of the security
interests granted hereunder in patents, trademarks and copyrights and such
registrations and applications therefor in the applicable patent, trademark, and
copyright registries (with respect to non-U.S. Intellectual Property, only to
the extent that the security interest in such Intellectual Property can be
perfected in such jurisdictions outside the U.S.), (y) with respect to
copyrights upon the registration of such copyrights and the taking of the
actions set forth in item (x) above and (z) in the case of motor vehicles, upon
the notation of the Lien created hereby upon the certificate of title for such
motor vehicle if required by applicable law, the security interests in the
Collateral granted to Administrative Agent hereunder will constitute perfected
security interests therein superior and prior to all Liens other than Permitted
Liens.
3.4. INVESTMENT PROPERTY. (a) All of the Pledged Stock, Additional Pledged
Stock and New Pledged Stock owned by such Grantor has been duly authorized and
validly issued and is fully paid and non-assessable; (b) the Pledged Stock,
Partnership Interests and LLC Interests owned by such Grantor constitute the
percentage of the issued and outstanding equity securities of each issuer
thereof set forth on Schedule 1(a), and there are no outstanding warrants,
options or other rights to purchase, or other agreements outstanding with
respect to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any of the Pledged Stock, Partnership
Interests or LLC Interests; (c) the certificates delivered to Administrative
Agent hereunder constitute all certificates representing the Pledged Securities
and include any Partnership Certificates and LLC Certificates; (d) all of the
Pledged Debt, Additional Pledged Debt and New Pledged Debt owned by such Grantor
has been duly authorized, authenticated or issued, and delivered and is the
legal, valid and binding obligation of the issuers thereof and is not in default
and the Pledged Debt, Additional Pledged Debt and New Pledged Debt delivered to
Administrative Agent hereunder constitutes all of the issued and outstanding
Indebtedness evidenced by an instrument or promissory note owing to such
Grantor; (e) the security interest of Administrative Agent hereunder has been
registered on the books and records of any issuer of uncertificated securities
included in the Collateral; and (f) with respect to any Investment Property, no
consent of any Person, including any other limited or general partner of the
Partnerships, any other member of any LLC, or any creditor of any Grantor, is
required for either (i) the grant by any Grantor of the security interests
granted hereby, (ii the execution, delivery or performance of this Agreement by
any Grantor, or (ii the perfection of or the exercise by Administrative Agent of
its rights and remedies hereunder (except as may have been taken by or at the
direction of any Grantor).
11
3.5. INTELLECTUAL PROPERTY. (a) (i) As of the date hereof, Schedule
3.5(a)(i) sets forth, for all Intellectual Property owned by each Grantor, a
complete and accurate list, of all U.S. and foreign: (A) patents and patent
applications; (B) trademark and service mark registrations (including Internet
domain name registrations), trademark and service mark applications and material
unregistered trademarks and service marks; and (C) copyright registrations,
copyright applications and material unregistered copyrights and all exclusively
licensed copyrights. As of the date hereof, none of the Grantors owns or
exclusively licenses either individually or in the aggregate (i) any material
copyrights, or (ii) any material sound recordings or musical compositions,
whether published or not published. All sound recordings or musical
compositions used or necessary for each Grantor's business (other than non-
material sound recordings and musical compositions as are owned by MLP or MLP
Environmental Music, LLC) are utilized solely pursuant to non-exclusive License
Agreements with third parties, true and complete copies of each such non-
exclusive License Agreement in effect on the Closing Date have been provided to
Administrative Agent.
(ii) As of the date hereof, Schedule 3.5(a)(ii) lists all contracts
for material Proprietary Software which is owned, licensed, leased or otherwise
used by each Grantor (other than Proprietary Software purchased or licensed for
less than a total cost of $1,000), and identifies which Proprietary Software is
owned or licensed.
(iii) As of the date hereof, Schedule 3.5(a)(iii) sets forth a
complete and accurate list of all License Agreements to which any Grantor is a
party or otherwise bound, as licensee or licensor thereunder, and which are
material to the operation of any Grantor's business.
(b) (i) Each Grantor owns or has the right to use all material
Intellectual Property used in or necessary to its business, free and clear of
all Liens other than Permitted Liens; (ii) except as would not, individually or
in the aggregate, have a Material Adverse Effect, any Intellectual Property
owned by any Grantor is in full force and effect and has not been cancelled,
expired or abandoned and to the best of each Grantor's knowledge is valid; (iii)
as of the date hereof, except as set forth on Schedule 3.5(b)(iii), no Grantor
has received written notice from any third party regarding any actual or
potential infringement by it of any intellectual property of such third party,
and to the best of each Grantor's knowledge, the conduct of its business as
currently conducted does not infringe on the intellectual property of any third
party; (iv) as of the date hereof, except as set forth on Schedule 3.5(b)(iv) no
Grantor has received written notice from any third party regarding any assertion
or claim challenging the validity of any Intellectual Property owned or used by
such Grantor and no Grantor has any knowledge of any basis for such a claim; (v)
as of the date hereof, no Grantor has licensed or sublicensed any material
rights in any Intellectual Property, or received or been granted any such
rights, other than pursuant to the License Agreements; (vi) except as set forth
on Schedule 3.5(b)(vi), to the best of each Grantor's knowledge, no third party
is misappropriating, infringing, diluting or violating any Intellectual Property
owned by any Grantor; (vii) the License Agreements are valid and binding
obligations of the applicable Grantor, enforceable in accordance with their
terms, and there exists no event or condition which will result in a violation
or breach of, or constitute a default by such Grantor or, to the knowledge of
any Grantor, the other party thereto, under any such License Agreement; (viii)
each of the Grantors takes reasonable measures to protect the confidentiality of
material Trade Secrets including requiring third parties
12
having access thereto to execute written nondisclosure agreements and no
material Trade Secret of any Grantor has been authorized to be disclosed to any
third party or to the best of each Grantor's knowledge disclosed to any third
party, other than pursuant to a written nondisclosure agreement that adequately
protects the Grantor's proprietary interests in and to such material Trade
Secrets; (ix) the consummation of the Transactions will not result in the loss
or impairment of any Grantor to own or use any of the Intellectual Property
which are material to the operation of such Grantor's business, nor, except as
set forth on Schedule 3.5(b)(ix), will such consummation require the consent of
any third party in respect of any Intellectual Property which, individually or
in the aggregate, are material to the operation of such Grantor's business; and
(x) all Proprietary Software owned by any Grantor set forth in Schedule
3.5(a)(ii) was either developed (A) by employees of a Grantor within the scope
of their employment; or (B) by independent contractors who have assigned all of
their rights to a Grantor pursuant to written agreement.
(c) No Grantor employs any employee, contractor or consultant who, to any
Grantor's knowledge, is in violation of any material term of any written
employment contract, patent disclosure agreement or any other written contract
or agreement relating to the relationship of any such employee, consultant or
contractor with such Grantor or, to such Grantor's knowledge, with another party
that could reasonably be expected to negatively affect such Grantor's rights in
any material Intellectual Property.
3.6. LOCATION OF EQUIPMENT AND INVENTORY. All of the Equipment and
Inventory is, as of the date hereof, located in the jurisdictions specified in
Schedule 3.6.
3.7. OFFICE LOCATIONS. As of the date hereof the chief place of business,
the chief executive office and the offices where such Grantor keeps its records
regarding the Accounts and all originals of all chattel paper that evidence
Accounts is, and, except as otherwise indicated on Schedule 3.7, has been for
the four month period preceding the date hereof, located at the places indicated
on Schedule 3.7.
3.8. OTHER NAMES. No Grantor has in the past ten years done, and does not
now do, business under any other name (including any trade-name or fictitious
business name) except for those names set forth on Schedule 3.8.
SECTION 4. FURTHER ASSURANCES; ADDITIONAL GRANTORS
4.1. GENERALLY. Each Grantor agrees that from time to time, at the
expense of Grantors, such Grantor will promptly execute and deliver all further
agreements, instruments and documents, and take all further action, that may be
necessary or desirable, or that Administrative Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, each Grantor will (a) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary, or as Administrative Agent may
13
reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby; (b) at any reasonable time, upon
request by Administrative Agent, exhibit the Collateral to and allow inspection
of the Collateral by Administrative Agent, or persons designated by
Administrative Agent; (c) use commercially reasonable efforts to obtain any
necessary consents of third parties to the assignment and perfection of a
security interest to Administrative Agent with respect to any Collateral; and
(d) at Administrative Agent's request, appear in and defend any action or
proceeding that may affect Grantor's title to or Administrative Agent's security
interest in all or any part of the Collateral. Each Grantor hereby authorizes
Administrative Agent to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Collateral without
the signature of Grantor. Each Grantor agrees that a carbon, photographic or
other reproduction of this Agreement or of a financing statement signed by
Grantor shall be sufficient as a financing statement and may be filed as a
financing statement in any and all jurisdictions. Each Grantor will furnish to
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Administrative Agent may reasonably request, all in
reasonable detail and in form reasonably satisfactory to Administrative Agent.
4.2. INVESTMENT PROPERTY. (a) Each Grantor agrees that it will, upon
obtaining any additional shares of stock or other securities or Indebtedness
required to be pledged hereunder as Additional Pledged Securities, promptly (and
in any event within five Business Days) deliver to Administrative Agent a Pledge
Supplement, duly executed by Grantor, in substantially the form of Exhibit A (a
"PLEDGE SUPPLEMENT"), in respect of the Additional Pledged Securities to be
pledged pursuant to this Agreement. All certificates, instruments or promissory
notes representing or evidencing the Collateral shall be delivered to and held
by or on behalf of Administrative Agent pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Administrative Agent. Each Grantor hereby authorizes
Administrative Agent to attach each Pledge Supplement to this Agreement and
agrees that all Additional Pledged Securities of Grantor listed on any Pledge
Supplement shall for all purposes hereunder be considered Collateral of Grantor;
provided, the failure of any Grantor to execute a Pledge Supplement with respect
to any Additional Pledged Securities pledged pursuant to this Agreement shall
not impair the security interest of Administrative Agent therein or otherwise
adversely affect the rights and remedies of Administrative Agent hereunder with
respect thereto.
(b) Each Grantor shall cause each Person which is an issuer of an
uncertificated security included in the Collateral to execute and deliver all
instruments and documents in order to perfect and protect any security interest
granted or purported to be granted in such uncertificated securities, to
establish "CONTROL" (as such term is defined in the UCC) by Administrative
Agent over such Collateral or to enable Administrative Agent to exercise and
enforce its rights and remedies hereunder with respect to such Collateral,
including (i) register the security interest granted hereby upon the books of
such Person in accordance with Article 8 of the UCC, and (ii deliver to
Administrative Agent an Acknowledgment of Pledge, duly executed by such the
issuer of the applicable uncertificated security, in substantially the form of
Exhibit B (an "ACKNOWLEDGMENT OF
14
PLEDGE"). Each Grantor shall take all further action Administrative Agent may
reasonably request to give effect to the foregoing.
(c) Each Grantor shall notify Administrative Agent promptly upon
obtaining any security entitlement or securities account. Upon the request of
Administrative Agent, each Grantor shall enter into, and shall cause each Person
which is a securities intermediary with respect to any security entitlement or
securities account of such Grantor to enter into, a control agreement, in
substantially the form of Exhibit C (a "CONTROL AGREEMENT"), and shall take all
further action Administrative Agent may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted in such
security entitlement or securities account, to establish "CONTROL" (as such term
is defined in the UCC) by Administrative Agent over such Collateral or to enable
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to such Collateral, and shall deliver to Administrative Agent a
Control Agreement, duly executed by such Grantor and such securities
intermediary.
4.3. INTELLECTUAL PROPERTY COLLATERAL. If any Grantor shall hereafter
obtain rights to any new Intellectual Property or become entitled to the benefit
of any new Intellectual Property the provisions of this Agreement shall
automatically apply thereto. Following the filing, registration or acquisition
by Grantor of any registration or application for any Intellectual Property,
each Grantor shall promptly (but in no event more than 30 days thereafter)
notify Administrative Agent in writing of any of the foregoing and shall execute
and deliver to Administrative Agent and record in all places where the security
interests in Intellectual Property granted hereunder are recorded a Pledge
Supplement or, as reasonably requested by Administrative Agent, where otherwise
necessary to record, pursuant to which Grantor shall confirm the grant to
Administrative Agent a security interest to the extent of its interest in such
Intellectual Property. In addition to the foregoing, each Grantor hereby
authorizes Administrative Agent to modify this Agreement without obtaining
Grantor's approval of or signature to such modification by amending Schedules
3.5(a)(i), 3.5(a)(ii) and 3.5(a)(iii), as applicable, to include reference to
any right, title or interest in any existing Intellectual Property or any
Intellectual Property acquired or developed by Grantor after the execution
hereof or to delete any reference to any right, title or interest in any
Intellectual Property in which Grantor no longer has or claims any right, title
or interest.
4.4. ACCOUNTS. Each Grantor shall (a) mark conspicuously each item of
chattel paper included in the Accounts, each Related Contract and, at the
reasonable request of Administrative Agent, each of its records pertaining to
the Collateral, with a legend, in form and substance reasonably satisfactory to
Administrative Agent, indicating that such Collateral is subject to the security
interest granted hereby, and (b) deliver and pledge to Administrative Agent
hereunder all promissory notes and other instruments (excluding checks) and all
original counterparts of chattel paper constituting Collateral, duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance reasonably satisfactory to Administrative Agent.
4.5. EQUIPMENT. Each Grantor shall (a) promptly after the acquisition by
such Grantor of any item of Equipment which is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition
15
of perfection thereof, notify Administrative Agent and upon the reasonable
request of Administrative Agent, execute and file with the registrar of motor
vehicles or other appropriate authority in such jurisdiction an application or
other document requesting the notation or other indication of the security
interest created hereunder on such certificate of title, and (b) upon the
reasonable request of Administrative Agent, deliver to Administrative Agent
copies of all such applications or other documents filed during such calendar
quarter and copies of all such certificates of title issued during such calendar
quarter indicating the security interest created hereunder in the items of
Equipment covered thereby.
4.6. ADDITIONAL GRANTORS. From time to time subsequent to the date hereof,
additional Persons may, and shall if required by Section 5.9 of the Credit
Agreement, become parties hereto as additional Grantors (each, an "ADDITIONAL
GRANTOR"), by executing a Counterpart Agreement. Upon delivery of any such
Counterpart Agreement to Administrative Agent, notice of which is hereby waived
by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a
party hereto as if Additional Grantor were an original signatory hereto. Each
Grantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Administrative Agent not to cause any
Subsidiary of Company to become an Additional Grantor hereunder. This Agreement
shall be fully effective as to any Grantor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Grantor hereunder.
SECTION 5. COVENANTS OF GRANTORS
5.1. GENERALLY. Each Grantor shall (a) except for the security interest
created by this Agreement, not create or suffer to exist any Lien upon or with
respect to any of the Collateral, except Permitted Liens; (b) not use or permit
any Collateral to be used unlawfully or in violation of any provision of this
Agreement or any applicable statute, regulation or ordinance or any policy of
insurance covering the Collateral; (c) notify Administrative Agent of any change
in Grantor's name, identity or corporate structure within 15 days after such
change; (d) give Administrative Agent 15 days' prior written notice of any
change in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts; (e)
hereafter use commercially reasonable efforts so as not to permit the inclusion
in any contract to which it hereafter becomes a party of any provision that
could or might in any way materially impair or prevent the creation of a
security interest in, or the assignment of, such contract by such Grantor; (f)
if Administrative Agent gives value to enable Grantor to acquire rights in or
the use of any Collateral, use such value for such purposes; (g) pay promptly
when due all property and other taxes, assessments and governmental charges or
levies imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Collateral, except to the extent permitted by the Credit
Agreement; and (h) upon any officer of such Grantor obtaining knowledge thereof,
promptly notify Administrative Agent in writing of any event that may materially
and adversely affect the value of a material portion of the Collateral, the
ability of Grantor or Administrative Agent to dispose of the Collateral or any
material portion thereof, or the rights and remedies of Administrative Agent in
relation thereto, including,
16
without limitation, the levy of any legal process against the Collateral or any
material portion thereof. No Grantor shall sell, transfer or assign (by
operation of law or otherwise) any Collateral except as permitted by Section 6
of the Credit Agreement (a "PERMITTED SALE"). So long as (i) no Event of Default
shall have occurred and is then continuing or would occur after giving effect to
a Permitted Sale, and (ii the Net Asset Sale Proceeds with respect to such
Permitted Sale are delivered to Administrative Agent contemporaneously with such
Permitted Sale to the extent required by the Credit Agreement or are otherwise
applied as required by the Credit Agreement, Administrative Agent shall release
the Lien hereof encumbering the Collateral that is the subject of such Permitted
Sale. Administrative Agent shall execute each and every appropriate filing
statement and/or recording document reasonably requested by any Grantor in
connection with the foregoing. Any reasonable expense or cost incurred by
Administrative Agent in connection with any such release shall be for the
account of the applicable Grantor.
5.2. INVESTMENT PROPERTY.
(a) DELIVERY. (i) All certificates, notes or instruments representing or
evidencing the Investment Property shall be delivered to and held by or on
behalf of Administrative Agent pursuant hereto and shall be in suitable form for
transfer by delivery or, as applicable, shall be accompanied by Grantor's
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Administrative
Agent. Upon the occurrence and during the continuation of an Event of Default,
Administrative Agent shall have the right, without notice to any Grantor, to
transfer to or to register in the name of Administrative Agent or any of its
nominees any or all of the Investment Property. For the better perfection of
Administrative Agent's rights in and to the Investment Property, if requested by
Administrative Agent during the continuance of an Event of Default such Grantor
shall forthwith, upon the pledge of any Investment Property hereunder, cause
such Investment Property to be registered in the name of such nominee or
nominees as Administrative Agent shall direct. In addition, Administrative
Agent shall have the right at any time during the continuance of an Event of
Default to exchange certificates or instruments representing or evidencing
Investment Property for certificates or instruments of smaller or larger
denominations.
(ii) Each Grantor hereby consents to the pledge of the Partnership
Interests by each other Grantor in each Partnership pursuant to the terms
hereof, and, subject to Section 7, to the transfer of such Partnership Interests
to Administrative Agent or its nominee and to the substitution of Administrative
Agent or its nominee as a substituted Partner of each such Partnership with all
the rights, powers and duties of a general partner or a limited partners, as the
case may be. Each Grantor hereby agrees it shall never vote for any amendment
to any Partnership/LLC Agreement which causes its interest to become a
"security" (as defined in the Article 8 of the UCC) that is not a "certificated
security" (as defined in Article 8).
(iii) Each Grantor hereby consents to the pledge of the LLC
Interests by each other Grantor in each LLC pursuant to the terms hereof, and,
subject to Section 7, to the transfer of such LLC Interests to Administrative
Agent or its nominee and to the substitution of Administrative Agent or its
nominee as a substituted member of the LLC with all the rights, powers and
duties of
17
a member of the LLC in question. Each Grantor hereby agrees it shall never vote
for any amendment to any Partnership/LLC Agreement which causes its interest to
become a "security" (as defined in the Article 8 of the UCC) that is not a
"certificated security" (as defined in Article 8).
(b) COVENANTS. Each Grantor shall (i) not permit any issuer of Pledged
Securities to merge or consolidate unless all the outstanding Capital Stock of
the surviving or resulting corporation is, upon such merger or consolidation,
pledged hereunder and no Cash, securities or other property is distributed in
respect of the outstanding shares of any other constituent corporation; (ii
cause each issuer of Pledged Securities that is a Subsidiary of such Grantor not
to issue any stock or other securities in addition to or in substitution for the
Pledged Securities issued by such issuer, except to such Grantor; (iii) deliver
to Administrative Agent, immediately upon their issuance, any and all
instruments or promissory notes or other evidences of Additional Pledged Debt
and New Pledged Debt; (iv) promptly deliver to Administrative Agent all written
notices received by it with respect to the Investment Property; (v) deliver to
Administrative Agent, immediately upon its acquisition (directly or indirectly)
thereof, any and all certificates evidencing Additional Pledged Stock and any
and all New Pledged Stock evidenced by a certificate; provided, notwithstanding
anything contained in this clause (v) to the contrary, in no event shall the
Additional Pledged Stock or New Pledged Stock (when added to the other Pledged
Stock) include more than 65% of the issued and outstanding shares of the Capital
Stock of any Foreign Subsidiary; (vi) register the Administrative Agent as the
registered owner of all uncertificated securities constituting part of the
Additional Pledged Stock or New Pledged Stock hereunder in the books and records
of each issuer and deliver to Administrative Agent an Acknowledgment and Pledge
with respect thereto; (vii) promptly deliver to Administrative Agent notice of
the conversion of any partnership interests in a Partnership Agreement or any
membership interests in a LLC to certificated form; (viii) not (A) cancel or
terminate any of the Partnership Agreements or LLC Agreements or consent to or
accept any cancellation or termination thereof, (B) sell, assign (by operation
of law or otherwise) or otherwise dispose of any part of its Partnership
Interests or its LLC Interests, (C) amend, supplement or otherwise modify any of
the Partnership Agreements or any of the LLC Agreements (as in effect on the
date hereof or the date of execution thereof), (D) waive any default under or
breach of any of the Partnership Agreements or any of the LLC Agreements or
waive, fail to enforce, forgive or release any right, interest or entitlement of
any kind, howsoever arising, under or in respect of any of the Partnership
Agreements or any of the LLC Agreements or vary or agree to the variation in any
respect of any of the provisions of any of the Partnership Agreements or any of
the LLC Agreements or the performance of any other Person under any of the
Partnership Agreements or any of the LLC Agreements, or (E) petition, request or
take any other legal or administrative action which seeks, or may reasonably be
expected, to rescind, to terminate or to suspend any of the Partnership
Agreements or any of the LLC Agreements or to amend or modify any of the
Partnership Agreements or any of the LLC Agreements; (ix) at its expense (A)
perform and comply in all material respects with all terms and provisions of the
Partnership Agreements and the LLC Agreements required to be performed or
complied with by it, (B) maintain the Partnership Agreements and the LLC
Agreements to which it is a party in full force and effect, and (C) enforce each
of the Partnership Agreements and each of the LLC Agreements to which it is a
party in accordance with its terms; and (x) not vote to permit the Partnerships
or the LLCs to enter into any transaction of merger or consolidation, or
liquidate, wind up or dissolve itself (or suffer any
18
liquidation or dissolution); provided that the foregoing clauses (viii), (ix)
and (x) shall also apply to any subsequent partnership and limited liability
company agreements to which any Grantor becomes a party.
(c) VOTING AND DISTRIBUTIONS. (i) So long as no Event of Default shall
have occurred and be continuing, each Grantor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Investment Property
or any part thereof for any purpose not inconsistent with the terms of this
Agreement or the Credit Agreement. Grantor shall be entitled to receive and
retain, and to utilize free and clear of the Lien of this Agreement, any and all
dividends and interest paid in respect of the Investment Property; provided, any
and all (A) dividends and interest paid or payable other than in Cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Investment Property, (B)
dividends and other distributions paid or payable in Cash in respect of any
Investment Property in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and (C) Cash paid, payable or otherwise distributed in respect
of principal or in redemption of or in exchange for any Investment Property,
shall be, and shall forthwith be delivered to Administrative Agent to hold as,
Investment Property and shall, if received by Grantor, be received in trust for
the benefit of Administrative Agent, be segregated from the other property or
funds of Grantor and be forthwith delivered to Administrative Agent as
Investment Property in the same form as so received (with all necessary
endorsements). Administrative Agent shall promptly execute and deliver (or
cause to be executed and delivered) to Grantor all such proxies, dividend
payment orders and other instruments as Grantor may from time to time reasonably
request for the purpose of enabling Grantor to exercise the voting and other
consensual rights when and to the extent which it is entitled to exercise
pursuant to clause (i) above and to receive the dividends, principal or interest
payments which it is authorized to receive and retain pursuant to the preceding
sentence.
(ii) Upon the occurrence and during the continuation of an Event of
Default, (A) upon written notice from Administrative Agent to any Grantor, all
rights of Grantor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall cease, and all
such rights shall thereupon become vested in Administrative Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights; (B) all rights of Grantor to receive the dividends and interest payments
which it would otherwise be authorized to receive and retain pursuant hereto
shall cease, and all such rights shall thereupon become vested in Administrative
Agent who shall thereupon have the sole right to receive and hold as Investment
Property such dividends and interest payments; (C) all payments which are
received by Grantor contrary to the provisions of clause (B) above shall be
received in trust for the benefit of Administrative Agent, shall be segregated
from other funds of Grantor and shall forthwith be paid over to Administrative
Agent as Investment Property in the same form as so received (with any necessary
endorsements); and (D) all rights of such Grantor or receive any and all
payments under or in connection with the Partnership Agreements and/or the LLC
Agreements, including but not limited to the profits, dividends, and other
distributions which it would otherwise be authorized to receive and retain
pursuant hereto, shall cease, and all such rights shall thereupon become vested
in
19
Administrative Agent who shall thereupon have the sole right to receive and hold
such payments as Collateral.
(iii) IN ORDER TO PERMIT ADMINISTRATIVE AGENT TO EXERCISE THE VOTING
AND OTHER CONSENSUAL RIGHTS WHICH IT MAY BE ENTITLED TO EXERCISE PURSUANT HERETO
AND TO RECEIVE ALL DIVIDENDS AND OTHER DISTRIBUTIONS WHICH IT MAY BE ENTITLED TO
RECEIVE HEREUNDER, (A) EACH GRANTOR SHALL PROMPTLY EXECUTE AND DELIVER (OR CAUSE
TO BE EXECUTED AND DELIVERED) TO ADMINISTRATIVE AGENT ALL SUCH PROXIES, DIVIDEND
PAYMENT ORDERS AND OTHER INSTRUMENTS AS ADMINISTRATIVE AGENT MAY FROM TIME TO
TIME REASONABLY REQUEST, AND (B) WITHOUT LIMITING THE EFFECT OF CLAUSE (A)
ABOVE, EACH GRANTOR HEREBY GRANTS TO ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY
TO VOTE THE PLEDGED SECURITIES AND TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED SECURITIES WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS), WHICH
PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY PLEDGED SECURITIES ON THE RECORD BOOKS OF THE
ISSUER THEREOF) BY ANY OTHER PERSON (INCLUDING THE ISSUER OF THE PLEDGED
SECURITIES OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE
CONTINUATION OF AN EVENT OF DEFAULT, AND WHICH PROXY SHALL ONLY TERMINATE UPON
THE PAYMENT IN FULL OF THE SECURED OBLIGATIONS.
5.3. COLLATERAL ACCOUNT. Administrative Agent is hereby authorized to
establish and maintain at its office at Canadian Imperial Bank of Commerce, as a
blocked account in New York in the name of Administrative Agent and under the
sole dominion and control of Administrative Agent, a restricted deposit account
designated as "Muzak LLC Collateral Account". Amounts shall, without
limitation, be deposited in the Collateral Account pursuant to Sections 5.6 and
7 hereof and pursuant to Section 2.2A of the Credit Agreement and as set forth
in each other Collateral Document. All amounts at any time held in the
Collateral Account shall be beneficially owned by Company but shall be held in
the name of Administrative Agent hereunder, for the benefit of Lenders, Lender
Counterparties and Indemnitees, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Company shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account. Anything
contained herein to the contrary notwithstanding, the Collateral Account shall
be subject to such applicable laws, and such applicable regulations of the Board
of Governors of the Federal Reserve System and of any other appropriate banking
or governmental authority, as may now or hereafter be in effect. All deposits
of funds in the Collateral Account shall be made by wire transfer (or, if
applicable, by intra-bank transfer from another account of Company) of
immediately available funds in accordance with written wire transfer
instructions provided to Company by Administrative Agent. Company shall,
promptly after initiating a transfer of funds to the Collateral Account, give
notice to Administrative Agent by telefacsimile of the date, amount and method
of delivery of such
20
deposit. Cash held by Administrative Agent in the Collateral Account shall not
be invested by Administrative Agent but instead shall be maintained as a Cash
deposit in the Collateral Account pending application thereof as elsewhere
provided in this Agreement. To the extent permitted under Regulation Q of the
Board of Governors of the Federal Reserve System, any Cash held in the
Collateral Account shall bear interest at the standard rate paid by
Administrative Agent to its customers for deposits of like amounts and terms.
Subject to Administrative Agent's rights hereunder, any interest earned on
deposits of Cash in the Collateral Account shall be deposited directly in, and
held in the Collateral Account.
5.4. INTELLECTUAL PROPERTY COLLATERAL.
(a) COVENANTS. Each Grantor shall hereafter use commercially reasonable
efforts to prohibit the inclusion in any contract to which it hereafter becomes
a party of any provision that could in any way materially impair or prevent the
creation of a security interest in, or the assignment of, Grantor's rights and
interests therein or in any Intellectual Property acquired under such contracts.
Each Grantor shall also take all steps reasonably necessary to (i) protect the
secrecy of all material Trade Secrets relating to their respective business and
the products and services sold or delivered under or in connection with the
Intellectual Property; (ii) use proper statutory notice and marking practices in
connection with its use of any of the Intellectual Property to the extent
necessary for the enforcement of such Intellectual Property without loss of any
rights; (iii) use consistent standards of quality (which may be consistent with
Grantor's past practices) in the manufacture, sale and delivery of products and
services sold or delivered under or in connection with the Intellectual
Property; (iv) furnish to Administrative Agent from time to time statements and
schedules further identifying and describing any Intellectual Property and such
other reports in connection with such Collateral as Administrative Agent may
reasonably request, all in reasonable detail; and (v) diligently keep records
respecting the material Intellectual Property and at all times keep at least one
complete set of its records concerning such Collateral at its chief executive
office or principal place of business. Each Grantor shall not do any act or
omit to do any act whereby any of the Intellectual Property which is material to
the business of such Grantor would reasonably be expected to lapse, or become
abandoned, dedicated to the public, or unenforceable, or which would adversely
affect the validity, grant, or enforceability of the security interest granted
herein in such material Intellectual Property, other than with the prior written
consent of Administrative Agent. Each Grantor shall (a) provide Administrative
Agent with copies of each written notice from any third party regarding any
actual or potential infringement by it of any intellectual property of such
third party and (b) shall notify Administrative Agent if, to the best of each
Grantor's knowledge, the conduct of its business as then conducted infringes on
the intellectual property of any third party. Each Grantor shall provide
Administrative Agent with copies of each written notice from any third party
regarding any assertion or claim challenging the validity of any Intellectual
Property owned or used by such Grantor and shall notify Administrative Agent if
any Grantor has knowledge of any basis for such a claim. No Grantor shall
license or sublicense any material rights in any Intellectual Property or
receive or be granted any such rights, other than pursuant to License
Agreements.
(b) COLLECTIONS. Except as otherwise provided in this Section 5.4, each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to Grantor in respect of
21
the Intellectual Property or any portion thereof. In connection with such
collections, each Grantor may take (and, at Administrative Agent's reasonable
direction, shall take) such action as Grantor or Administrative Agent may deem
reasonably necessary or advisable to enforce collection of such amounts;
provided, Administrative Agent shall have the right at any time, upon the
occurrence and during the continuation of an Event of Default and upon written
notice to Grantor of its intention to do so, to notify the obligors with respect
to any such amounts of the existence of the security interest created hereby and
to direct such obligors to make payment of all such amounts directly to
Administrative Agent, and, upon such notification and at the expense of Grantor,
to enforce collection of any such amounts and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as
Grantor might have done. After receipt by any Grantor of the notice from
Administrative Agent referred to in the proviso to the preceding sentence and
during the continuation of any Event of Default, (i) all amounts and proceeds
(including checks and other instruments) received by Grantor in respect of
amounts due to Grantor in respect of the Collateral or any portion thereof shall
be received in trust for the benefit of Administrative Agent hereunder, shall be
segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Administrative Agent in the same form as so received (with any
necessary endorsement) to be held as Cash Collateral and applied as provided by
Section 7.5, and (ii) Grantor shall not adjust, settle or compromise the amount
or payment of any such amount or release wholly or partly any obligor with
respect thereto or allow any credit or discount thereon.
(c) APPLICATIONS AND REGISTRATIONS. Each Grantor shall have the duty
diligently, through counsel reasonably acceptable to Administrative Agent, to
prosecute, file and/or make, (i) any application relating to any of the
Intellectual Property owned by Grantor and identified on Schedules 3.5(a)(i),
3.5(a)(ii) or 3.5(a)(iii), that is pending as of the date of this Agreement,
(ii) any applications for registration of any existing or future unregistered
but material copyrightable works owned by any Grantor (except for works of
nominal commercial value), (iii) any existing patent application or applications
for future patentable but unpatented invention owned by any Grantor and included
in the Intellectual Property,(iv) any Intellectual Property opposition and
cancellation proceedings, reexaminations or similar challenges to the extent
reasonably necessary to maintain and protect the material Intellectual Property,
and (v) renew Intellectual Property registrations and do any and all acts which
are necessary or desirable, as determined in such Grantor's commercially
reasonable judgment, to preserve and maintain all rights in all Intellectual
Property. Notwithstanding the foregoing, none of the Grantors shall be required
to take the foregoing actions with respect to an item of Intellectual Property
in the event such Grantor determines, in its reasonable business judgment, that
the relevant item of Intellectual Property is no longer used in or proposed for
use in the conduct of its business or is of nominal commercial value. Any
expenses incurred in connection therewith shall be borne solely by Grantor.
Subject to the foregoing, each Grantor shall give Administrative Agent prior
written notice of any abandonment of any material Intellectual Property or any
right to file an Intellectual Property application, or any pending Intellectual
Property application or any determination not to renew a registration or patent
included in the Intellectual Property.
(d) LITIGATION. Except as provided herein, each Grantor shall have the
right to commence and prosecute in its own name, as real party in interest, for
its own benefit and at its own expense,
22
such suits, proceedings or other actions for infringement, unfair competition,
dilution, misappropriation or other damage, or reexamination or reissue
proceedings as are in its commercially reasonable judgment necessary to protect
the Intellectual Property. Administrative Agent shall provide, at such Grantor's
expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall promptly, following its becoming aware thereof, notify
Administrative Agent of the institution of, or of any adverse determination in,
any proceeding (whether in the United States Patent and Trademark Office, the
United States Copyright Office or any federal, state, local or foreign court,
administrative agency or registry) or regarding Grantor's ownership, right to
use, or interest in any material Intellectual Property. Grantor shall provide to
Administrative Agent any information known by Grantor or its agents with respect
thereto reasonably requested by Administrative Agent.
(e) CERTAIN RIGHTS OF ADMINISTRATIVE AGENT. In addition to, and not by
way of limitation of, the granting of a security interest in the Collateral
pursuant hereto, each Grantor, hereby grants to Administrative Agent a non-
exclusive, fully paid, royalty free license in all of each Grantor's right,
title and interest in and to the Intellectual Property to the extent necessary
to enable Administrative Agent to use, possess and realize on the Collateral in
connection with the exercise of the Administrative Agent's rights and remedies
hereunder or as a matter of law or equity (to the extent Administrative Agent is
entitled to exercise its rights and remedies under law and equity). This license
shall inure to the benefit of all successors, assigns and transferees of
Administrative Agent and their successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed
in lieu of foreclosure, or otherwise. Each Grantor shall have such rights of
quality control and inspection which are reasonably necessary to preserve the
validity of the trademarks included in the Intellectual Property. In addition,
each Grantor hereby grants to Administrative Agent and its employees,
representatives and agents the right to visit each Grantor's and any of its
Affiliate's or subcontractor's plants, facilities and other places of business
that are utilized in connection with the manufacture, production, inspection,
storage or sale of products and services sold or delivered under any of the
Intellectual Property (or which were so utilized during the prior six month
period), and to inspect the quality control and all other records relating
thereto upon reasonable advance written notice to such Grantor and at reasonable
dates and times and as often as may be reasonably requested.
5.5. EQUIPMENT AND INVENTORY. (a) Each Grantor shall keep the Equipment
and Inventory in the jurisdictions specified on Schedule 3.6; provided that such
Grantor may establish a new location for such Inventory and Equipment only if
(i) it shall have given to Administrative Agent not less than 15 days' prior
written notice of its intention to do so, clearly describing such new location
and providing such other information in connection therewith as the
Administrative Agent may reasonably request, and (ii) with respect to such new
location, it shall have taken all action satisfactory to Administrative Agent as
may be necessary and as Administrative Agent may reasonably request to maintain
the security interest of Administrative Agent in the Collateral intended to be
granted hereby at all times fully perfected with the same or better priority and
in full force and effect.
23
(b) Each Grantor shall:
(i) cause the Equipment owned by such Grantor to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with such Grantor's past practices.
Each Grantor shall promptly furnish to Administrative Agent a statement
respecting any material loss or damage to any of the Equipment owned by such
Grantor;
(ii) keep correct and accurate records of the Inventory, itemizing
and describing the kind, type and quantity of Inventory, such Grantor's cost
therefor and (where applicable) the current list prices for the Inventory in
accordance with prudent business practices; and
(iii) if any Inventory is in possession or control of any of such
Grantor's agents or processors, upon the occurrence and during the continuance
of an Event of Default, instruct such agent or processor to hold all such
Inventory for the account of Administrative Agent and subject to the
instructions of Administrative Agent.
5.6. CHIEF EXECUTIVE OFFICE; ACCOUNTS AND RELATED CONTRACTS. (a) Each
Grantor shall keep its chief place of business and chief executive office and
the office where it keeps its records concerning the material Accounts and
Related Contracts, and all originals of all chattel paper that evidence
Accounts, at the location therefor specified on Schedule 3.7; provided that such
Grantor may establish a new location for its chief executive office only if (i)
it shall have given to Administrative Agent not less than 15 days' prior written
notice of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Administrative
Agent may reasonably request, and (ii) with respect to such new location, it
shall have taken all action satisfactory to Administrative Agent as may be
necessary and as Administrative Agent may reasonably request to maintain the
security interest of Administrative Agent in the Collateral intended to be
granted hereby at all times fully perfected with the same or better priority and
in full force and effect.
(b) Each Grantor shall:
(i) in accordance with prudent business practices, maintain (A)
complete records of all Accounts, including records of all payments received,
credits granted and merchandise returned, and (B) all documentation relating
thereto; and
(ii) except as otherwise provided in this subsection (ii), continue
to collect, at its own expense, all amounts due or to become due to such Grantor
under the Accounts and Related Contracts, and in connection with such
collections, such Grantor shall take such action as such Grantor or
Administrative Agent may deem necessary or advisable to enforce collection of
amounts due or to become due under the Accounts; provided, Administrative Agent
shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default and upon written notice to such Grantor of
its intention to do so, to notify the account debtors or obligors under any
Accounts of the assignment of such Accounts to Administrative Agent and to
direct such account debtors or
24
obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to Administrative Agent, to notify each Person maintaining a
lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Administrative Agent
and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Accounts and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as such Grantor
might have done. After receipt by any Grantor of the notice from Administrative
Agent referred to in the proviso to the preceding sentence, (A) any payments of
Accounts, received by such Grantor shall be forthwith (and in any event within
two Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to Administrative Agent if required, in the Collateral
Account, (B) until so turned over in accordance with the preceding subsection
(A), all amounts and proceeds (including checks and other instruments) received
by such Grantor in respect of the Accounts and the Related Contracts shall be
received in trust for the benefit of Administrative Agent hereunder and shall be
segregated from other funds of such Grantor and (C) such Grantor shall not
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
5.7. ASSIGNED AGREEMENTS. (a) Each Grantor shall at its expense:
(i) if consistent with sound business practices, perform and
observe all terms and provisions of the Assigned Agreements to be performed or
observed by it, maintain the Assigned Agreements in full force and effect,
enforce the Assigned Agreements in accordance with their terms, and take all
such action to such end as may be from time to time reasonably requested by
Administrative Agent; and
(ii) upon the reasonable request of Administrative Agent, furnish
to Administrative Agent, promptly upon receipt thereof, copies of all notices,
requests and other documents received by such Grantor under or pursuant to the
Assigned Agreements, and from time to time (A) furnish to Administrative Agent
such information and reports regarding the Assigned Agreements as Administrative
Agent may reasonably request and (B) upon the reasonable request of
Administrative Agent make to the parties to such Assigned Agreements such
demands and requests for information and reports for action as such Grantor is
entitled to make under such Assigned Agreements.
(b) Upon the occurrence and during the continuation of an Event of
Default, no Grantor shall:
(i) cancel or terminate any of the Assigned Agreements or consent
to or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give any
consent, waiver or approval thereunder;
25
(iii) waive any default under or breach of the Assigned Agreements;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with the Assigned Agreements, except as
expressly provided therein; or
(v) take any other action in connection with the Assigned
Agreements that would materially impair the value of the interest or rights of
such Grantor thereunder or that would materially impair the interest or rights
of the Administrative Agent.
5.8. DEPOSIT ACCOUNTS. Upon the occurrence and during the continuation of
an Event of Default, the Administrative Agent may exercise dominion and control
over, and refuse to permit further withdrawals (whether of money, securities,
instruments or other property) from any deposit accounts maintained with the
Administrative Agent constituting part of the Collateral.
SECTION 6. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT
Each Grantor hereby irrevocably appoints Administrative Agent as such
Grantor's attorney-in-fact, with full authority in the place and stead of
Grantor and in the name of Grantor, Administrative Agent or otherwise, from time
to time in Administrative Agent's discretion to take any action and to execute
any instrument that Administrative Agent may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement, including:
(a) to obtain and adjust insurance required to be maintained by Grantor
or paid to Administrative Agent pursuant to the Credit Agreement;
(b) upon the occurrence and during the continuation of any Event of
Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuation of any Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuation of any Event of
Default, to 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 Administrative Agent or as the Administrative Agent shall direct;
(e) upon the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings that
Administrative Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Administrative Agent
with respect to any of the Collateral;
26
(f) to defend any suit, action or proceeding brought against such Grantor
with respect to any Collateral;
(g) to settle, compromise or adjust any suit, action or proceeding
described in the preceding clause and, in connection therewith, to give such
discharges or releases as Administrative Agent may deem appropriate;
(h) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of such Grantor as such
Grantor;
(i) prepare, sign using any symbol that the Administrative Agent may
adopt to signify Grantor's intent to authenticate and file any Uniform
Commercial Code financing statements in the name of Grantor as debtor in any
form authorized by an applicable filing office, including, without limitation,
by facsimile or electronic data transmission;
(j) to pay or discharge taxes or Liens (other than Permitted Liens when
no Event of Default has occurred and is continuing) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Administrative Agent
in its sole discretion, any such payments made by Administrative Agent to become
obligations of Grantor to Administrative Agent, due and payable immediately
without demand;
(k) upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Administrative Agent were the absolute owner thereof for all purposes, and to
do, at Administrative Agent's option and Grantor's expense, at any time or from
time to time, all acts and things that Administrative Agent deems reasonably
necessary to protect, preserve or realize upon the Collateral and Administrative
Agent's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Grantor might do; and
(l) upon the occurrence and during the continuation of an Event of
Default, at any time and from time to time, to execute, in connection with any
foreclosure, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
SECTION 7. REMEDIES
7.1. GENERALLY. If any Event of Default shall have occurred and be
continuing, Administrative Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the Uniform Commercial Code as in effect in any relevant jurisdiction (the
"CODE") (whether or not the Code applies to the affected Collateral) and all
rights now or hereafter existing under all other applicable laws or in equity,
and also may (a) require any Grantor to, and
27
each Grantor hereby agrees that it will at its expense and upon request of
Administrative Agent forthwith, assemble all or part of the Collateral as
directed by Administrative Agent and make it available to Administrative Agent
at a place to be designated by Administrative Agent that is reasonably
convenient to both parties; (b) enter onto the property where any Collateral is
located and take possession thereof with or without judicial process; (c) prior
to the disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Administrative Agent deems appropriate; (d) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Administrative Agent's offices or
elsewhere, for Cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Administrative Agent may
deem commercially reasonable; and (e) exercise dominion and control over, and
refuse to permit further withdrawals (whether of money, securities, instruments
or other property) from any deposit account maintained with Administrative Agent
constituting part of the Collateral. Administrative Agent may in its sole
discretion restrict prospective bidders as to their number, nature of their
business and investment intention. Administrative Agent or any Lender, Lender
Counterparty or Indemnitee may be the purchaser of any or all of the Collateral
at any such sale and Administrative Agent, as agent for and representative of
Lenders, Lender Counterparties and Indemnitees (but not any Lender, Lender
Counterparty or Indemnitee in its or their respective individual capacities
unless Requisite Obligees (as defined below) 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 Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Administrative Agent
at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each
Grantor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Grantor agrees that, to the extent notice of sale shall be required by law,
at least ten days' notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Administrative Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given.
Administrative Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against Administrative Agent arising by reason
of the fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if Administrative Agent accepts the first offer received and does not
offer such Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be liable for the deficiency and the fees of any
attorneys employed by Administrative Agent to collect such deficiency. Each
Grantor further agrees that a breach of any of the covenants contained in this
Section will cause irreparable injury to Administrative Agent, that
Administrative Agent has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
shall be specifically enforceable against Grantor, and 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
28
default has occurred giving rise to the Secured Obligations becoming due and
payable prior to their stated maturities. Nothing in this Section shall in any
way alter the rights of Administrative Agent hereunder. As used herein,
"REQUISITE OBLIGEES" shall mean (a) prior to payment in full of all Obligations
under the Credit Agreement, Requisite Lenders or (b) after payment in full of
all Obligations under the Credit Agreement and the other Credit Documents, the
holders of a majority of the aggregate notional amount (or, with respect to any
Hedge Agreement that has been terminated in accordance with its terms, the
amount then due and payable (exclusive of expenses and similar payments but
including any early termination payments then due) under such Hedge Agreement)
under all Hedge Agreements.
7.2. INVESTMENT PROPERTY. (a) Each Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws, Administrative Agent may be compelled, with respect to any sale
of all or any part of the Investment Property conducted without prior
registration or qualification of such Investment Property under the Securities
Act and/or such state securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Investment Property for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sales may be at prices
and on terms less favorable than those obtainable through a public sale without
such restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances each
Grantor agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that Administrative Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Investment Property for the period of time necessary to permit the issuer
thereof to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it.
(b) If Administrative Agent determines to exercise its right to sell any
or all of the Investment Property, upon written request, each Grantor shall and
shall cause each issuer of any Pledged Securities to be sold hereunder from time
to time to furnish to Administrative Agent all such information as
Administrative Agent may request in order to determine the number and nature of
interest, shares or other instruments included in the Investment Property which
may be sold by Administrative Agent in exempt transactions under the Securities
Act and the rules and regulations of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.
(c) Administrative Agent shall have no responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Investment Property,
whether or not Administrative Agent has or is deemed to have knowledge of such
matters, (ii) taking any necessary steps (other than steps taken in accordance
with the standard of care set forth in Section 10 to maintain possession of the
Investment Property) to preserve rights against any parties with respect to any
Investment Property, (iii) taking any necessary steps to collect or realize upon
the Secured Obligations or any guarantee therefor, or any part thereof, or any
of the Investment Property, or (iv) initiating any action to protect the
Investment Property against the possibility of a decline in market value.
29
7.3. INTELLECTUAL PROPERTY. (a) Anything contained herein to the contrary
notwithstanding, upon the occurrence and during the continuation of an Event of
Default, (i) Administrative Agent shall have the right (but not the obligation)
to bring suit, in the name of any Grantor, Administrative Agent or otherwise, to
enforce any Intellectual Property, in which event such Grantor shall, at the
request of Administrative Agent, do any and all lawful acts and execute any and
all documents required by Administrative Agent in aid of such enforcement and
such Grantor shall promptly, upon demand, reimburse and indemnify Administrative
Agent as provided in Sections 10.2 and 10.3 of the Credit Agreement and Section
11 of this Agreement in connection with the exercise of its rights under this
Section, and to the extent that Administrative Agent shall elect not to bring
suit to enforce any Intellectual Property as provided in this Section, each
Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the Intellectual
Property by others and, for that purpose, agrees to diligently maintain any
action, suit or proceeding against any Person so infringing necessary to prevent
such infringement; (ii) upon written demand from Administrative Agent, each
Grantor shall execute and deliver to Administrative Agent an assignment or
assignments of the Intellectual Property and such other documents as are
necessary or appropriate to carry out the intent and purposes of this Agreement;
(iii) each Grantor agrees that such an assignment and/or recording shall be
applied to reduce the Secured Obligations outstanding only to the extent that
Administrative Agent (or any Lender) receives Cash proceeds in respect of the
sale of, or other realization upon, the Intellectual Property; and (iv) within
five (5) Business Days after written notice from Administrative Agent, Grantor
shall make available to Administrative Agent, to the extent within Grantor's
power and authority, such personnel in Grantor's employ on the date of such
Event of Default as Administrative Agent may reasonably designate, by name,
title or job responsibility, to permit Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services sold or
delivered by Grantor under or in connection with the Intellectual Property, such
persons to be available to perform their usual functions on Administrative
Agent's behalf and to be compensated by Administrative Agent at Grantor's
expense on a per diem, pro-rata basis consistent with the salary and benefit
structure applicable to each as of the date of such Event of Default.
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment to Administrative Agent of any rights, title and interests in and to
the Intellectual Property shall have been made and shall have become absolute
and effective, and (iv) the Secured Obligations shall not have become
immediately due and payable, then upon the written request of Grantor,
Administrative Agent shall promptly execute and deliver to Grantor such
assignments as may be necessary to reassign to Grantor any such rights, title
and interests as may have been assigned to Administrative Agent as aforesaid,
subject to any disposition thereof that may have been made by Administrative
Agent; provided, that after giving effect to such reassignment, Administrative
Agent's security interest granted pursuant hereto, as well as all other rights
and remedies of Administrative Agent granted hereunder, shall continue to be in
full force and effect until the indefeasible payment in full of all Secured
Obligations and the cancellation or termination of the Commitments and
cancellation or expiration of all outstanding Letters of Credit.
30
7.4. DEPOSIT OF PROCEEDS. If an Event of Default shall occur and be
continuing, upon request of the Administrative Agent, all proceeds received by
any Grantor consisting of Cash, checks and other near-cash items shall be held
by such Grantor in trust for the Administrative Agent and the Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required) and held by the Administrative Agent in the Collateral
Account. All proceeds while held by the Administrative Agent in the Collateral
Account (or by the Company in trust for the Administrative Agent and the Secured
Parties) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 7.5.
7.5. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Agreement, all proceeds received by Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied as provided in Section 2.14 of the Credit Agreement.
7.6. COLLATERAL ACCOUNT. Upon the occurrence and during the continuance of
an Event of Default at the request of Issuing Bank or Requisite Lenders, Company
shall deliver funds for deposit in the Collateral Account and pay to
Administrative Agent an amount equal to the Letter of Credit Usage at such time.
If for any reason the aggregate amount delivered by Company for deposit in the
Collateral Account as aforesaid is less than the Letter of Credit Usage at such
time, the aggregate amount so delivered by Company shall be apportioned among
all outstanding Letters of Credit for purposes of this Section in accordance
with the ratio of the maximum amount available for drawing under each such
Letter of Credit (as to such Letter of Credit, the "MAXIMUM AVAILABLE AMOUNT")
to the Letter of Credit Usage at such time. Upon any drawing under any
outstanding Letter of Credit in respect of which Company has deposited in the
Collateral Account any amounts described above, Administrative Agent shall apply
such amounts to reimburse Issuing Bank for the amount of such drawing. In the
event of cancellation or expiration of any Letter of Credit in respect of which
Company has deposited in the Collateral Account any amount described above, or
in the event of any reduction in the Maximum Available Amount under such Letter
of Credit, Administrative Agent shall apply the amount then on deposit in the
Collateral Account in respect of such Letter of Credit (less, in the case of
such a reduction, the Maximum Available Amount under such Letter of Credit
immediately after such reduction) first, to the payment of any amounts payable
to Administrative Agent pursuant to Section 9 of the Credit Agreement, second,
to the extent of any excess, to the cash collateralization pursuant to the terms
of this Agreement of any outstanding Letters of Credit in respect of which
Company has failed to pay all or a portion of the amounts described above (such
cash collateralization to be apportioned among all such Letters of Credit in the
manner described above), and third, to the extent of any further excess, to the
payment of any other outstanding Obligations in such order as directed by the
Lenders holding more than 50% of the sum of outstanding Revolving Commitments
and Revolving Loans.
31
SECTION 8. ADMINISTRATIVE AGENT AS AGENT
Each Grantor acknowledges that the rights and responsibilities of
Administrative Agent under this Agreement with respect to any action taken by
Administrative Agent or the exercise or non-exercise by Administrative Agent of
any option, voting right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Agreement shall, as between
Administrative Agent and Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between Administrative Agent and Grantors, Administrative Agent
shall be conclusively presumed to be acting as agent for Lenders with full and
valid authority so to act or refrain from acting, and no Grantor shall be under
any obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations and the cancellation or termination of the
Commitments and cancellation or expiration of all outstanding Letters of Credit,
(b) be binding upon each Grantor, its successors and assigns, and (c) inure,
together with the rights and remedies of Administrative Agent hereunder, to the
benefit of Administrative Agent and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to the
terms of the Credit Agreement, any Lender may assign or otherwise transfer any
Loans held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to Lenders herein
or otherwise. Upon the indefeasible payment in full of all Secured Obligations
and the cancellation or termination of the Commitments and cancellation or
expiration of all outstanding Letters of Credit, the security interest granted
hereby shall terminate hereunder and of record and all rights to the Collateral
shall revert to Grantor. Upon any such termination Administrative Agent will,
at Grantors' expense, execute and deliver to Grantors such documents as Grantors
shall reasonably request to evidence such termination.
SECTION 10. STANDARD OF CARE; ADMINISTRATIVE AGENT MAY PERFORM.
The powers conferred on Administrative Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Administrative Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which Administrative Agent
accords its own property of a similar kind. If any Grantor fails to perform any
agreement contained herein, Administrative
32
Agent may itself perform, or cause performance of, such agreement, and the
expenses of Administrative Agent incurred in connection therewith shall be
payable by each Grantor under Section 10.2 of the Credit Agreement.
SECTION 11. INDEMNITY AND EXPENSES
(a) Each Grantor agrees to:
(i) jointly and severally, with all other Grantors, indemnify
Administrative Agent and each Lender, Lender Counterparty and Indemnitee from
and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including without limitation enforcement of this
Agreement), except to the extent such claims, losses or liabilities result from
Administrative Agent's or such Lender's, Lender Counterparty's or Indemnitee's
gross negligence or willful misconduct as determined by a final, nonappealable
judgment of a court of competent jurisdiction; and
(ii) jointly and severally, with all other Grantors, pay to
Administrative Agent promptly upon demand the amount of any and all reasonable
costs and reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Administrative Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Administrative Agent hereunder, or (iv) the failure by any
Grantor to perform or observe any of the provisions hereof.
(b) The obligations of each Grantor in this Section 11 shall survive the
termination of this Agreement and the discharge of such Grantor's other
obligations under this Agreement, the Hedge Agreements, the Credit Agreement and
any other Credit Documents.
SECTION 12. AMENDMENTS AND WAIVERS
None of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument which (i) is
executed by Grantors and Administrative Agent and (ii) is otherwise made in
accordance with the Credit Agreement; provided that any amendment hereto
pursuant to Sections 4.2, 4.3 and 4.6 shall be effective upon execution by any
Grantor or any Additional Grantor, as applicable, and the Grantors hereby waive
any requirement of notice of or consent to any such amendment. Any such
amendment, supplement, modification or waiver shall be binding upon each Grantor
and Administrative Agent and all future holders of the Secured Obligations. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
33
SECTION 13. MISCELLANEOUS
Any notice required or permitted to be given under this Agreement shall be
given in accordance with Section 10.1 of the Credit Agreement. No failure or
delay on the part of Administrative Agent in the exercise of any power, right or
privilege hereunder or under any other Credit Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Credit Documents are cumulative to, and not exclusive of, any rights
or remedies otherwise available. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists. This Agreement shall be binding upon and
inure to the benefit of Administrative Agent and Grantors and their respective
successors and assigns. No Grantor shall, without the prior written consent of
Administrative Agent, assign any right, duty or obligation hereunder. This
Agreement and the other Credit Documents embody the entire agreement and
understanding between Grantors and Administrative Agent and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Credit Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties.
This Agreement may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
SECTION 14. APPLICABLE LAW; TERMS; RULES OF CONSTRUCTION
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UNIFORM
COMMERCIAL CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
34
defined. The rules of construction set forth in subsection 1.3 of the Credit
Agreement shall be applicable to this Agreement mutatis mutandis.
SECTION 15. SUBMISSION TO JURISDICTION
Any legal action or proceeding with respect to this Agreement and any
action for enforcement of any judgment in respect thereof may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
each Grantor hereby accepts for itself and in respect of its property, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof. Each Grantor irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such Grantor at its address set forth on Appendix B to the
Credit Agreement. Each Grantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement brought in
the courts referred to above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of Administrative Agent to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against any Grantor in any other jurisdiction.
SECTION 16. WAIVER OF TRIAL BY JURY
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GRANTOR AND ADMINISTRATIVE
AGENT HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY MATTER ARISING HEREUNDER.
[The remainder of this page is intentionally left blank.]
35
IN WITNESS WHEREOF, each Grantor and Administrative Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
AUDIO COMMUNICATIONS NETWORK, LLC,
as a Grantor
By____________________________________
Name:
Title:
MUZAK HOLDINGS LLC,
as a Grantor
By____________________________________
Name:
Title:
[SUBSIDIARIES]
By____________________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By____________________________________
Name:
Title:
36
SCHEDULE 1(a) TO
PLEDGE AND SECURITY AGREEMENT
PLEDGED STOCK:
=======================================================================================
Number of Percentage of
Stock Class of Stock Par Pledged Outstanding
Grantor Issuer Stock Certificate Nos. Value Stock Pledged Stock Pledged
=======================================================================================
=======================================================================================
INDEBTEDNESS:
=====================================
Debt Issuer Amount of Indebtedness
- ------------- ----------------------
=====================================
=====================================
PARTNERSHIP INTERESTS:
SCHEDULE 3.4 TO
PLEDGE AND SECURITY AGREEMENT
FILING OFFICES
SCHEDULE 3.5(a)(i) TO
PLEDGE AND SECURITY AGREEMENT
REGISTERED
TRADEMARKS, SERVICE MARKS AND APPLICATIONS
------------------------------------------
-----------------------------------------------------------------
Reg. No. / Issued /
Jurisdiction Trademark / Service Mark (App. No.) (Date App.)
------------ ------------------------ ---------- -----------
-----------------------------------------------------------------
REGISTERED
COPYRIGHTS AND APPLICATIONS
---------------------------
-----------------------------------------------------------------
Reg. No. / Issued /
Jurisdiction Copyright (App. No.) (Date App.)
------------ ------------------------ ---------- -----------
-----------------------------------------------------------------
REGISTERED
PATENTS AND APPLICATIONS
------------------------
-----------------------------------------------------------------
Patent No. / Issued /
Jurisdiction Patent (App. No.) (Date App.)
------------ ----------------------- ------------ -----------
-----------------------------------------------------------------
UNREGISTERED
TRADEMARKS AND SERVICE MARKS
----------------------------
UNREGISTERED
COPYRIGHTS AND EXCLUSIVELY LICENSED COPYRIGHTS
----------------------------------------------
SCHEDULE 3.5(a)(ii) TO
PLEDGE AND SECURITY AGREEMENT
PROPRIETARY SOFTWARE
SCHEDULE 3.5(a)(iii) TO
PLEDGE AND SECURITY AGREEMENT
LICENSE AGREEMENTS
SCHEDULE 3.5(b)(iii) TO
PLEDGE AND SECURITY AGREEMENT
INFRINGEMENT
SCHEDULE 3.5(b)(iv) TO
PLEDGE AND SECURITY AGREEMENT
VALIDITY
SCHEDULE 3.5(b)(ix) TO
PLEDGE AND SECURITY AGREEMENT
CONSENT
SCHEDULE 3.6 TO
PLEDGE AND SECURITY AGREEMENT
Locations of Equipment and Inventory:
SCHEDULE 3.7 TO
PLEDGE AND SECURITY AGREEMENT
Chief Place of Business
-----------------------
Chief Executive Office
----------------------
Office where Records are Kept
Regarding the Accounts and all Originals
of all Chattel Paper that evidence Accounts
-------------------------------------------
SCHEDULE 3.8 TO
PLEDGE AND SECURITY AGREEMENT
Other Names
-----------
EXHIBIT A TO
PLEDGE AND SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This PLEDGE SUPPLEMENT, dated _______, is delivered pursuant to the Pledge
and Security Agreement, dated as of March 18, 1999 (as it may be from time to
time amended, modified or supplemented, the "Security Agreement"), among Muzak
LLC (formerly known as Audio Communications Network, LLC), the other Grantors
named therein, and Canadian Imperial Bank of Commerce, as Administrative Agent.
Capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed thereto in the Security Agreement.
Subject to the terms and conditions of the Security Agreement, Grantor
hereby confirms the grant of a security interest pursuant to Section 1 of the
Security Agreement and also hereby grants to Administrative Agent a security
interest in all of Grantor's right, title and interest in and to [the Investment
Property listed on Supplemental Schedule 1(a) attached hereto] [and] [the
Intellectual Property listed on Supplemental Schedules [3.5(a)(i), 3.5(a)(ii)
and 3.5(a)(iii)] attached hereto] the following, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located. All such [Investment Property] [and]
[Intellectual Property] shall be deemed to be part of the Collateral and
hereafter subject to each of the terms and conditions of the Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly executed
and delivered by its duly authorized officer as of ______________.
[GRANTOR]
By: _______________________________
Name:
Title:
EXHIBIT B TO
PLEDGE AND SECURITY AGREEMENT
ACKNOWLEDGMENT OF PLEDGE
This ACKNOWLEDGMENT OF PLEDGE, dated _______, is delivered to Canadian
Imperial Bank of Commerce, as Administrative Agent ("Administrative Agent"),
pursuant to the Pledge and Security Agreement, dated as of March 18, 1999 (as it
may be from time to time amended, modified or supplemented, the "Security
Agreement"), among Muzak LLC (formerly known as Audio Communications Network,
LLC), the other Grantors named therein, and Administrative Agent. Capitalized
terms used herein not otherwise defined herein shall have the meanings ascribed
thereto in the Security Agreement.
[NAME OF ISSUER], a _________________ ("Issuer"), hereby acknowledges
receipt of a conformed copy of the Security Agreement and (a) consents to the
terms thereof, and (b) confirms that a pledge of all of [NAME OF APPLICABLE
GRANTOR]'s right, title and interest in, to and under the security referred to
below has been registered or otherwise duly noted in the books and records of
Issuer in the name of Administrative Agent as follows:
1. Security: [Describe Interest]
2. Number of Pledged Stock,
Units or other Interests Pledged: [______________]
3. Registered Owner: [Name of Grantor]
4. Registered Pledgee: Canadian Imperial Bank of
Commerce, as Administrative Agent
5. Date of Registration of Pledgee: [______________]
Issuer hereby represents and warrants that there are no Liens, restrictions
or adverse claims as to which Issuer has a duty pursuant to Section 8-403 of the
UCC to which such security is or may be subject, other than Permitted Liens.
Issuer hereby agrees, at the request of Administrative Agent and at the
sole cost and expense of Issuer, to register any further pledge or transfer of
such security effected in the manner contemplated by the Security Agreement and
to promptly furnish to Administrative Agent and any such pledgee or transferee
any statement contemplated by Section 8-408 of the UCC.
IN WITNESS WHEREOF, Issuer has caused this Acknowledgment of Pledge to be
duly executed and delivered by its duly authorized officer as of the date above
first written.
[ISSUER]
By: ________________________________
Name:
Title:
EXHIBIT C TO
PLEDGE AND SECURITY AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT
This Securities Account Control Agreement dated as of _________, ____ among
Muzak LLC (formerly known as Audio Communications Network, LLC) (the "Debtor"),
Canadian Imperial Bank of Commerce (the "Secured Party"), and ____________ (the
"Securities Intermediary"). Capitalized terms used but not defined herein shall
have the meaning assigned in the Pledge and Security Agreement dated as of March
18, 1999, among the Debtor, Muzak LLC (formerly known as Muzak Holdings LLC),
the Subsidiary Guarantors, and Administrative Agent (the "Security Agreement").
All references herein to the "UCC" shall mean the Uniform Commercial Code as in
effect in the State of New York.
Section 1. Establishment of Securities Account. The Securities
Intermediary hereby confirms and agrees that:
(a) The Securities Intermediary has established account number [identify
account number] in the name "[identify exact title of account]" (such account
and any successor account, the "Securities Account") and the Securities
Intermediary shall not change the name or account number of the Securities
Account without the prior written consent of the Secured Party;
(b) All securities or other property underlying any financial assets
credited to the Securities Account shall be registered in the name of the
Securities Intermediary, indorsed to the Securities Intermediary or in blank or
credited to another securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the Securities
Account be registered in the name of the Debtor, payable to the order of the
Debtor or specially indorsed to the Debtor except to the extent the foregoing
have been specially indorsed to the Securities Intermediary or in blank;
(c) All property delivered to the Securities Intermediary pursuant to the
Security Agreement will be promptly credited to the Securities Account; and
(d) The Securities Account is an account to which financial assets are or
may be credited, and the Securities Intermediary shall, subject to the terms of
this Agreement, treat the Debtor as entitled to exercise the rights that
comprise any financial asset credited to the account.
Section 2. "Financial Assets" Election. The Securities Intermediary hereby
agrees that each item of property (including, without limitation, any investment
property, financial assets, securities, instruments, general intangibles or
cash) credited to the Securities Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the UCC.
Section 3. Entitlement Orders. If at any time the Securities Intermediary
shall receive any order from the Secured Party directing transfer or redemption
of any financial asset relating to the Securities Account, the Securities
Intermediary shall comply with such entitlement order without further consent by
the Debtor or any other person. If the Debtor is otherwise entitled to issue
Entitlement Orders and such orders conflict with any Entitlement Order issued by
the Secured Party, the Securities Intermediary shall follow the orders issued by
the Secured Party.
Section 4. Subordination of Lien; Waiver of Set-Off. In the event that the
Securities Intermediary has or subsequently obtains by agreement, by operation
of law or otherwise a security interest in the Securities Account or any
security entitlement credited thereto, the Securities Intermediary hereby agrees
that such security interest shall be subordinate to the security interest of the
Secured Party. The financial assets and other items deposited to the Securities
Account will not be subject to deduction, set-off, banker's lien, or any other
right in favor of any person other than the Secured Party (except that the
Securities Intermediary may set off (i) all amounts due to the Securities
Intermediary in respect of customary fees and expenses for the routine
maintenance and operation of the Securities Account and (ii) the face amount of
any checks which have been credited to the Securities Account but are
subsequently returned unpaid because of uncollected or insufficient funds).
Section 5. Choice of Law. Both this Agreement and the Securities Account
shall be governed by the laws of the State of New York. Regardless of any
provision in any other agreement, for purposes of the UCC, New York shall be
deemed to be the Securities Intermediary's jurisdiction and the Securities
Account (as well as the securities entitlements related thereto) shall be
governed by the laws of the State of New York.
Section 6. Conflict with Other Agreements.
(a) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail;
(b) No amendment or modification of this Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing and is
signed by all of the parties hereto;
(c) The Securities Intermediary hereby confirms and agrees that:
(i) There are no other agreements entered into between the
Securities Intermediary and the Debtor with respect to the
Securities Account;
(ii) It has not entered into, and until the termination of this
agreement will not enter into, any agreement with any other
person relating to the Securities Account and/or any financial
assets credited thereto pursuant to which it has agreed to
comply with entitlement orders (as defined in Section
8-102(a)(8) of the UCC) of such other person; and
(iii) It has not entered into, and until the termination of this
agreement will not enter into, any agreement with the Debtor or
the Secured Party purporting to limit or condition the
obligation of the Securities Intermediary to comply with entitlement orders as
set forth in Section 3 hereof.
Section 7. Adverse Claims. Except for the claims and interest of the
Secured Party and of the Debtor in the Securities Account, the Securities
Intermediary does not know of any claim to, or interest in, the Securities
Account or in any "financial asset" (as defined in Section 8-102(a) of the UCC)
credited thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against the Securities Account or in any financial asset
carried therein, the Securities Intermediary will promptly notify the Secured
Party and the Debtor thereof.
Section 8. Maintenance of Securities Account. In addition to, and not in
lieu of, the obligation of the Securities Intermediary to honor entitlement
orders as agreed in Section 3 hereof, the Securities Intermediary agrees to
maintain the Securities Account as follows:
(a) Notice of Sole Control. If at any time the Secured Party delivers to
the Securities Intermediary a Notice of Sole Control in substantially the form
set forth in Exhibit 1 hereto, the Securities Intermediary agrees that after
receipt of such notice, it will take all instruction with respect to the
Securities Account solely from the Secured Party.
(b) Voting Rights. Until such time as the Securities Intermediary receives
a Notice of Sole Control pursuant to subsection (a) of this Section 8, the
Debtor shall direct the Securities Intermediary with respect to the voting of
any financial assets credited to the Securities Account.
(c) Permitted Investments. Until such time as the Securities Intermediary
receives a Notice of Sole Control signed by the Secured Party, the Debtor shall
direct the Securities Intermediary with respect to the selection of investments
to be made; provided, however, that the Securities Intermediary shall not honor
any instruction to purchase any investments other than investments of a type
describe on Exhibit 2 hereto.
(d) Statements and Confirmations. The Securities Intermediary will promptly
send copies of all statements, confirmations and other correspondence concerning
the Securities Account and/or any financial assets credited thereto
simultaneously to each of the Debtor and the Secured Party at the address for
each set forth in Section 12 of this Agreement.
(e) Tax Reporting. All items of income, gain, expense and loss recognized
in the Securities Account shall be reported to the Internal Revenue Service and
all state and local taxing authorities under the name and taxpayer
identification number of the Debtor.
Section 9. Representations, Warranties and Covenants of the Securities
Intermediary. The Securities Intermediary hereby makes the following
representations, warranties and covenants:
(a) The Securities Account has been established as set forth in Section 1
above and the Securities Account will be maintained in the manner set forth
herein until termination of this Agreement; and
(b) This Securities Account Control Agreement is the valid and legally
binding obligations of the Securities Intermediary.
Section 10. Indemnification of Securities Intermediary. The Debtor and the
Secured Party hereby agree that (a) the Securities Intermediary is released from
any and all liabilities to the Debtor and the Secured Party arising from the
terms of this agreement and the compliance of the Securities Intermediary with
the terms hereof, except to the extent that such liabilities arise from the
Securities Intermediary's negligence and (b) the Debtor, its successors and
assigns shall at all times indemnify and save harmless the Securities
Intermediary from and against any and all claims, actions and suits of others
arising out of the terms of this agreement or the compliance of the Securities
Intermediary with the terms hereof, except to the extent that such arises from
the Securities Intermediary's negligence, and from and against any and all
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character arising by reason of the same, until the termination
of this agreement.
Section 11. Successors; Assignment. The terms of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or heirs and personal representatives who obtain
such rights solely by operation of law. The Secured Party may assign its rights
hereunder only with the express written consent of the Securities Intermediary
and by sending written notice of such assignment to the Debtor.
Section 12. Notices. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two days after being sent by certified or registered United States
mail, return receipt requested, postage prepaid, addressed to the party at the
address set forth below.
Debtor:
Secured Party:
Securities Intermediary:
Any party may change his address for notices in the manner set forth
above.
Section 13. Termination. The obligations of the Securities Intermediary to
the Secured Party pursuant to this Control Agreement shall continue in effect
until the security interests of the Secured Party in the Securities Account have
been terminated pursuant to the terms of the Security Agreement and the Secured
Party has notified the Securities Intermediary of such termination in writing.
The Secured Party agrees to provide Notice of Termination in substantially the
form of Exhibit 3 hereto to the Securities Intermediary upon the request of the
Debtor on or after the
termination of the Secured Party's security interest in the Securities Account
pursuant to the terms of the Security Agreement. The termination of this Control
Agreement shall not terminate the Securities Account or alter the obligations of
the Securities Intermediary to the Debtor pursuant to any other agreement with
respect to the Securities Account.
Section 14. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
MUZAK LLC
By: _____________________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By: ____________________________________
Name:
Title:
[NAME OF INSTITUTION SERVING AS
SECURITIES INTERMEDIARY]
By: ____________________________________
Name:
Title:
Exhibit 1
---------
[Letterhead of Canadian Imperial Bank of Commerce]
[Date]
[Name and Address of Securities Intermediary]
Attention: __________________
Re: Notice of Sole Control
----------------------
Ladies and Gentlemen:
As referenced in the Securities Account Control Agreement, dated _______,
___, among Muzak LLC, you and the undersigned (a copy of which is attached) we
hereby give you notice of our sole control over securities account number
____________ (the "Securities Account") and all financial assets credited
thereto. You are hereby instructed not to accept any direction, instructions or
entitlement orders with respect to the Securities Account or the financial
assets credited thereto from any person other than the undersigned, unless
otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to Muzak LLC.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE
By: __________________________________
Name:
Title:
cc: Muzak LLC
Exhibit 2
---------
Permitted Investments
---------------------
Exhibit 3
---------
[Letterhead of Canadian Imperial Bank of Commerce]
[Date]
[Name and Address of Securities Intermediary]
Attention:_____________
Re: Termination of Control Agreement
--------------------------------
You are hereby notified that the Control Agreement between you, Audio
Communications Network, LLC and the undersigned (a copy of which is attached) is
terminated and you have no further obligations to the undersigned pursuant to
such Agreement. Notwithstanding any previous instructions to you, you are hereby
instructed to accept all future directions with respect to Securities Account
number ______________ from Audio Communications Network, LLC. This notice
terminates any obligations you may have to the undersigned with respect to such
account, however nothing contained in this notice shall alter any obligations
which you may otherwise owe to Audio Communications Network, LLC pursuant to any
other agreement.
You are instructed to deliver a copy of this notice by facsimile
transmission to [insert name of Debtor].
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE
By: _________________________________
Name:
Title: