EXHIBIT 10.2
EXECUTION COPY
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GUARANTEE AND COLLATERAL AGREEMENT
made by
MUZAK HOLDINGS LLC
MUZAK LLC
and certain of its Subsidiaries
in favor of
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
Dated as of May 20, 2003
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINED TERMS..........................................................1
1.1 Definitions............................................................1
1.2 Other Definitional Provisions..........................................5
SECTION 2. GUARANTEE..............................................................6
2.1 Guarantee..............................................................6
2.2 Right of Contribution..................................................6
2.3 No Subrogation.........................................................7
2.4 Amendments, etc. with Respect to the Borrower Obligations..............7
2.5 Guarantee Absolute and Unconditional...................................8
2.6 Reinstatement..........................................................8
2.7 Payments...............................................................9
2.8 Discharge of Guarantee Upon Sale of Guarantor..........................9
SECTION 3. GRANT OF SECURITY INTEREST.............................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................11
4.1 Title; No Other Liens.................................................11
4.2 Perfected First Priority Liens........................................11
4.3 Jurisdiction of Organization, Corporate Names.........................11
4.4 Current Locations; Inventory and Equipment............................12
4.5 Condition and Maintenance of Equipment................................12
4.6 Farm Products.........................................................12
4.7 Investment Property...................................................12
4.8 Receivables...........................................................13
4.9 Contracts.............................................................13
4.10 Intellectual Property.................................................14
4.11 Deposit Accounts, Securities Accounts.................................14
4.12 Collateral............................................................14
SECTION 5. COVENANTS.............................................................14
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper....14
5.2 Maintenance of Insurance..............................................15
5.3 Payment of Obligations................................................15
5.4 Maintenance of Perfected Security Interest; Further Documentation.....15
5.5 Changes in Locations, Name, etc.......................................16
5.6 Notices...............................................................16
5.7 Investment Property...................................................16
5.8 Uncertificated Investment Property....................................18
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5.9 Receivables...........................................................18
5.10 Contracts.............................................................19
5.11 Intellectual Property.................................................19
5.12 Commercial Tort Claims................................................20
5.13 Deposit Accounts, Securities Accounts.................................21
SECTION 6. REMEDIAL PROVISIONS...................................................21
6.1 Certain Matters Relating to Receivables...............................21
6.2 Communications with Obligors; Grantors Remain Liable..................22
6.3 Pledged Stock.........................................................22
6.4 Intellectual Property; Grant of License...............................23
6.5 Intellectual Property Litigation......................................24
6.6 Proceeds to Be Turned Over to Administrative Agent....................24
6.7 Application of Proceeds...............................................24
6.8 Code and Other Remedies...............................................25
6.9 Registration Rights...................................................26
6.10 Deficiency............................................................27
SECTION 7. THE ADMINISTRATIVE AGENT..............................................27
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc...........27
7.2 Duty of Administrative Agent..........................................29
7.3 Execution of Financing Statements.....................................29
7.4 Authority of Administrative Agent.....................................29
7.5 Access to Collateral, Books and Records; Other Information............30
SECTION 8. MISCELLANEOUS.........................................................30
8.1 Amendments in Writing.................................................30
8.2 Notices...............................................................30
8.3 No Waiver by Course of Conduct; Cumulative Remedies...................30
8.4 Enforcement Expenses; Indemnification.................................31
8.5 Successors and Assigns................................................31
8.6 Set-Off...............................................................31
8.7 Counterparts..........................................................32
8.8 Severability..........................................................32
8.9 Section Headings......................................................32
8.10 Integration...........................................................32
8.11 GOVERNING LAW.........................................................32
8.12 Submission To Jurisdiction; Waivers...................................32
8.13 Acknowledgements......................................................33
8.14 Additional Grantors...................................................33
8.15 Releases..............................................................33
8.16 WAIVER OF JURY TRIAL..................................................34
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SCHEDULES
Schedule 4.2 Filing Locations
Schedule 4.3(a) Legal Names; Jurisdiction of Organization
Schedule 4.3(b) Historical Organizational Names/Other Trade Names
Schedule 4.4(a) Chief Executive Offices/Locations of Books and Records
Schedule 4.4(b) Additional Locations of Equipment and Inventory etc.
Schedule 4.7(a) Pledged Stock
Schedule 4.7(c) Pledged Notes
Schedule 4.10(a) Copyrights, Copyright Licenses, Trademarks, Trademark
Licenses, Patents and Patent Licenses
Schedule 4.10(b) Exceptions
Schedule 4.10(c) Judgments
Schedule 4.10(d) No Proceedings
Schedule 4.11 Deposit Accounts and Securities Accounts
Schedule 8.2 Notice Information
ANNEXES
Annex I-A Form of Securities Account Control Agreement
Annex I-B Form of Deposit Account Control Agreement
Annex II Form of Issuer Acknowledgement
Annex III Form of Assumption Agreement
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GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 20, 2003, made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the "Grantors"), in favor of Bear Stearns
Corporate Lending Inc., as administrative agent (together with its successors
and assigns, in such capacity, the "Administrative Agent") for the banks and
other financial institutions or entities (the "Lenders") from time to time
parties to the Credit Agreement, dated as of May 20, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Muzak Holdings LLC ("Holdings"), Muzak LLC (the "Borrower"), the Lenders,
Bear, Stearns & Co. Inc. and Lehman Brothers Inc., as joint lead arrangers and
joint bookrunners (together with their successors and assigns, collectively, the
"Joint Lead Arrangers"), Lehman Commercial Paper Inc. and Fleet National Bank,
as co-syndication agents (together with their successors and assigns, in such
capacity, collectively, the "Co-Syndication Agents"), General Electric Capital
Corporation, as documentation agent (together with its successors and assigns,
in such capacity, the "Documentation Agent") and the Administrative Agent
(together with the Joint Lead Arrangers, the Co-Syndication Agents and the
Documentation Agent, the "Agents").
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Lenders, the Agents and
the Lender Counterparties (collectively, the "Secured Parties");
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Parties to enter into the Credit Agreement and to induce the Lenders to
make their respective extensions of credit to the Borrower thereunder, each
Grantor hereby agrees with the Administrative Agent, for the ratable benefit of
the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit
Agreement, and the following terms are used herein as defined in the New York
UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Farm Products, Fixtures, General Intangibles, Goods,
Instruments, Inventory, Letter-of-Credit Rights, Registered Organization,
Securities Account and Supporting Obligations.
(b) The following terms shall have the following meanings:
"Agents": as defined in the preamble.
"Agreement": this Guarantee and Collateral Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans and all other obligations and liabilities
of the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Secured Party, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, this
Agreement, the other Loan Documents, any Letter of Credit, any Specified Hedge
Agreement or any other document made, delivered or given in connection with any
of the foregoing, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Secured Parties that are required to be paid by the Borrower pursuant to the
terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.6.
"Collateral Account Funds" shall mean, collectively, the following
from time to time on deposit in the Collateral Account: all funds (including,
without limitation, all trust monies), investments (including, without
limitation, all Cash Equivalents) and all certificates and instruments from time
to time representing or evidencing such investments; all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Administrative Agent for or on behalf of any
Grantor in substitution for, or in addition to, any or all of the Collateral;
and all interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the items constituting Collateral.
"Contracts" shall mean, collectively, with respect to each Grantor,
all sale, service, performance, equipment or property lease contracts,
agreements and grants and all other contracts, agreements or grants (in each
case, whether written or oral, or third party or inter-
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company), between such Grantor and third parties, and all assignments,
amendments, restatements, supplements, extensions, renewals, replacements or
modifications thereof.
"Copyrights": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 4.10(a)), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in Schedule
4.10(a)), granting any right under any Copyright, including, without limitation,
any grant of rights to manufacture, distribute, exploit and sell materials
derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution.
"Foreign Subsidiary": any Subsidiary organized under the laws of any
jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
Foreign Subsidiary.
"Grantors": as defined in the preamble hereto.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2) or any
other Loan Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Secured Parties that are required to be paid by
such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).
"Guarantors": the collective reference to each Grantor other than the
Borrower.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
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"Intercompany Note": any promissory note evidencing loans made by any
Grantor to Holdings or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all "investment
property," as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Foreign Subsidiary Voting Stock excluded from the definition of
"Pledged Stock") and (ii) whether or not constituting "investment property" as
so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
Property.
"Lender Counterparties": as defined in the Credit Agreement.
"Material Contract": any contract or other arrangement to which any
Grantor is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect (as defined in the Credit Agreement); provided,
however, that no franchise contract or arrangement or license contract or
arrangement entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business shall be considered a Material Contract unless it
involves aggregate annual consideration payable or receivable by the Borrower or
such Subsidiary of not less than $2,500,000.
"Mortgaged Property" means each parcel of real property and the
improvements thereto owned by a Grantor and identified on Schedule 1.1 of the
Credit Agreement.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, including, without limitation, any of the foregoing referred to in
Schedule 4.10(a), (ii) all applications for letters patent of the United States
or any other country and all divisions, continuations and continuations-in-part
thereof, including, without limitation, any of the foregoing referred to in
Schedule 4.10(a) and (iii) all rights to obtain any reissues or extensions of
the foregoing.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 4.10(a).
"Pledged Notes": all promissory notes listed on Schedule 4.7(c), all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held
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by any Grantor (other than promissory notes issued in connection with extensions
of trade credit by any Grantor in the ordinary course of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule
4.7(a), together with any other shares, stock certificates, options, interests
or rights of any nature whatsoever in respect of the Capital Stock of any Person
that may be issued or granted to, or held by, any Grantor while this Agreement
is in effect (other than such other shares, stock certificates, options,
interests or rights, the fair market value of which shall not exceed $50,000 in
the aggregate); provided that in no event shall more than 65% of the total
outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds," as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to in Schedule 4.10(a), and (ii) the right to obtain all renewals
thereof.
"Trademark License": any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to in Schedule 4.10(a).
1.2 Other Definitional Provisions. (a) The words "hereof," "herein,"
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Secured Parties, the prompt and complete
payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of any Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by any Secured Party from
the Borrower, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in
respect of the Borrower Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated.
2.2 Right of Contribution. The Subsidiary Guarantors desire to
allocate among themselves in a fair and equitable manner their obligations under
this Agreement. Accordingly, each Subsidiary Guarantor hereby agrees that to the
extent that a Subsidiary Guar-
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antor shall have paid more than its proportionate share of any payment made
hereunder, such Subsidiary Guarantor shall be entitled to seek and receive
contribution from and against any other Subsidiary Guarantor hereunder which has
not paid its proportionate share of such payment. Each Subsidiary Guarantor's
right of contribution shall be subject to the terms and conditions of Section
2.3. The provisions of this Section 2.2 shall in no respect limit the
obligations and liabilities of any Subsidiary Guarantor to the Secured Parties,
and each Subsidiary Guarantor shall remain liable to the Secured Parties for the
full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by any Secured
Party, no Guarantor shall be entitled to be subrogated to any of the rights of
any Secured Party against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by any Secured Party for the
payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled
to seek any contribution or reimbursement from the Borrower or any other
Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Secured Parties by the Borrower on account of the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Secured Parties, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be credited and applied against the
Borrower Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine pursuant to this Agreement.
2.4 Amendments, etc. with Respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by any Secured Party may be rescinded by such Secured Party and
any of the Borrower Obligations continued, and the Borrower Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Secured Party,
and the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent (or
the Required Lenders or all Lenders, as the case may be) may deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by any Secured Party for the payment of the Borrower Obligations may
be sold, exchanged, waived, surrendered or released. No Secured Party shall have
any obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Borrower Obligations or for the guarantee contained in
this Section 2 or any property subject thereto.
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2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by any Secured Party
upon the guarantee contained in this Section 2 or acceptance of the guarantee
contained in this Section 2; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this
Section 2; and all dealings between the Borrower and any of the Guarantors, on
the one hand, and the Secured Parties, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Borrower Obligations or
any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Secured Party, (b)
any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower or any other Person against any Secured Party, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Borrower Obligations, or of
such Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, any Secured Party may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by any Secured Party to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of any
Secured Party against any Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by any Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
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2.7 Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the Funding Office.
2.8 Discharge of Guarantee Upon Sale of Guarantor. If all of the
Capital Stock of any Guarantor or any of its successors in interest hereunder
shall be sold or otherwise disposed of (including by merger or consolidation) in
accordance with the terms and conditions of the Credit Agreement, the guarantee
by such Guarantor or such successor in interest, as the case may be, hereunder
shall automatically be discharged and released without any further action,
effective as of the time of such Asset Sale (as defined in the Credit
Agreement); provided, as a condition precedent to such discharge and release,
the Administrative Agent shall have received evidence satisfactory to it that
arrangements satisfactory to it have been made for delivery to Administrative
Agent of the applicable Net Cash Proceeds (as defined in the Credit Agreement)
of such disposition pursuant to Section 3.2 of the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby pledges, assigns and grants to the Administrative
Agent for the ratable benefit of the Secured Parties, a lien on and security
interest in, all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"Collateral"), as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Collateral Accounts and all Collateral Account Funds;
(d) all Commercial Tort Claims;
(e) all Contracts;
(f) all Deposit Accounts;
(g) all Documents (other than title documents with respect to
vehicles);
(h) all Equipment;
(i) all Fixtures;
(j) all General Intangibles;
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(k) all Goods;
(l) all Instruments;
(m) all Intellectual Property;
(n) all Inventory;
(o) all Investment Property;
(p) all Letter-of-Credit Rights;
(q) all other property not otherwise described above, whether tangible
or intangible;
(r) all books and records pertaining to the Collateral; and
(s) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in any property to the extent that such grant of a security interest is
(i) prohibited by any Requirements of Law of a Governmental Authority, requires
a consent not obtained of any Governmental Authority pursuant to such
Requirement of Law or (ii) prohibited by, or constitutes a breach or default
under or results in the termination of or requires any consent not obtained
under (x) any contract, license, agreement, instrument or other document
evidencing or giving rise to such property, or (y) in the case of any Investment
Property, Pledged Stock or Pledged Note, any applicable shareholder or similar
agreement, except in each case to the extent that such Requirement of Law or the
term in such contract, license, agreement, instrument or other document or
shareholder or similar agreement providing for such prohibition, breach, default
or termination or requiring such consent is ineffective under applicable law,
except, in any case described by clauses (i) and (ii) above, the grant of a
security interest shall only be prohibited to the extent and for so long as such
Requirement of Law, contract, license, agreement, Pledged Stock, Pledged Note or
other instrument or agreement applicable thereto validly prohibits the creation
of a Lien on such property in favor of the Administrative Agent and, upon the
termination of such prohibition (howsoever occurring), such property shall
become Collateral under this Agreement;
provided, further, that from and after the Closing Date, no Grantor shall permit
to become effective in any document creating, governing or providing for any
permit, lease or license, a provision that would prohibit the creation of a Lien
on such permit, lease or license in favor of the Administrative Agent unless
such Grantor believes, in its reasonable judgment, that such prohibition is
usual and customary in transactions of such type.
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SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Secured Parties to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby represents and warrants to each Secured
Party that:
4.1 Title; No Other Liens. Except for the security interest granted to
the Administrative Agent for the ratable benefit of the Secured Parties pursuant
to this Agreement and the other Liens permitted to exist on the Collateral by
the Credit Agreement, such Grantor owns each item of the Collateral free and
clear of any and all Liens or claims of others. No effective financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except (i) such as have been filed in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties pursuant to this Agreement or as are permitted by the Credit Agreement,
(ii) financing statements for which proper termination statements have been
delivered to the Administrative Agent for filing and (iii) financing statements
filed in connection with Liens permitted by the Credit Agreement. For the
avoidance of doubt, it is understood and agreed that any Grantor may, as part of
its business, grant licenses to third parties to use Intellectual Property owned
or developed by a Grantor. For purposes of this Agreement and the other Loan
Documents, such licensing activity shall not constitute a "Lien" on such
Intellectual Property. Each Secured Party understands that any such licenses may
be exclusive to the applicable licensees, and such exclusivity provisions may
limit the ability of the Administrative Agent to utilize, sell, lease or
transfer the related Intellectual Property or otherwise realize value from such
Intellectual Property pursuant hereto.
4.2 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings of the financing
statements naming such grantor as "debtor" and the Administrative Agent as
"secured party" and describing the Collateral in the filing offices set forth on
Schedule 4.2 (which, in the case of all filings and other documents referred to
on said Schedule, have been duly completed and delivered to the Administrative
Agent) and such other actions as specified on Schedule 4.2, (to the extent, in
the case of unregistered Intellectull Property constituting Collateral, that a
security interest may be perfected in such unregistered Intellectual Property)
will constitute valid perfected security interests in all of the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, as collateral security for such Grantor's Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase any Collateral from such Grantor and (b) are
prior to all other unrecorded Liens on the Collateral in existence on the date
hereof except for Liens permitted by the Credit Agreement which have priority
over the Liens on the Collateral by operation of law. Each Grantor represents
and warrants that the Administrative Agent has a perfected first priority
security interest in all uncertificated Investment Property, Pledged Stock or
Pledged Note pledged by it hereunder that is in existence on the date hereof.
4.3 Jurisdiction of Organization, Corporate Names.(a) (a) Set forth on
Schedule 4.3(a) are (i) the exact legal names of each Grantor, as such names
appear in their
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respective certificates of incorporation or any other organizational documents
and (ii) the organizational identification numbers, if any, of each Grantor that
is a Registered Organization, the Federal Taxpayer Identification Numbers of
such Grantor and the state of formation of each Grantor. Each Grantor is (i) the
type of entity disclosed next to its name on Schedule 4.3(a) and (ii) a
Registered Organization except to the extent disclosed on Schedule 4.3(a).
(b) Set forth on Schedule 4.3(b) are (i) the corporate or
organizational names that each Grantor has had in the past five years and (ii) a
list of all other names (including trade names or fictitious business names)
used by such Grantor, now or at any time during the past five years. Such
Grantor has furnished to the Administrative Agent a certified charter,
certificate of incorporation or other organizational document and a long-form
good standing certificate as of a date which is recent to the date hereof.
4.4 Current Locations; Inventory and Equipment. Set forth on Schedule
4.4(a) are (i) the chief executive offices of each Grantor and (ii) all
locations where each Grantor maintains any books or records relating to any
Collateral.
(b) Set forth on Schedule 4.4(b) are (i) all of the jurisdictions
where each Grantor maintains any of the Collateral consisting of Inventory or
Equipment not identified above and (ii) the names and addresses of all persons
or entities other than any Grantor, such as lessees, consignees, warehousemen or
purchasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral consisting of Instruments, Chattel Paper,
Inventory or Equipment.
4.5 Condition and Maintenance of Equipment. The Equipment of such
Grantor is in good repair, working order and condition, reasonable wear and tear
excepted in accordance with such Grantor's past practices. Each Grantor shall
cause the Equipment to be maintained and preserved in good repair, working order
and condition, reasonable wear and tear excepted, in accordance with such
Grantor's past practices, and shall as quickly as commercially practicable make
or cause to be made all repairs, replacements and other improvements which are
necessary or appropriate in the conduct of such Grantor's business.
4.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 Investment Property. (a) Set forth on Schedule 4.7(a) is a true
and correct list of all of the issued and outstanding Pledged Stock of each
Grantor. The shares of Pledged Stock pledged by such Grantor hereunder
constitute all the issued and outstanding shares of all classes of the Capital
Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary
Voting Stock, if less, 65% of the outstanding Foreign Subsidiary Voting Stock of
each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly authorized and
validly issued and are fully paid and nonassessable.
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(c) Set forth on Schedule 4.7(c) is a true and correct list of all
Pledged Notes of each Grantor. Each of the Pledge Notes constitute the legal,
valid and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement and Liens permitted by
Section 7.3 of the Credit Agreement.
4.8 Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument in the form of a
note or Chattel Paper which has not been delivered to the Administrative Agent.
(b) The amounts represented by such Grantor to the Secured Parties
from time to time as owing to such Grantor in respect of the Receivables will at
such times be accurate.
4.9 Contracts. (a) No consent of any party (other than such Grantor)
to any Contract is required in connection with the execution, delivery and
performance of this Agreement, except as has been obtained in all material
respects.
(b) Each Material Contract is in full force and effect and constitutes
a valid and legally enforceable obligation of the parties thereto, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Material Contracts by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Material Contract to any material adverse limitation, either
specific or general in nature.
(d) Neither such Grantor nor (to such Grantor's knowledge) any of the
other parties to the Material Contracts is in default in the performance or
observance of any of the terms thereof.
(e) Such Grantor has delivered to the Administrative Agent a complete
and correct copy of each Material Contract, including all amendments,
supplements and other modifications thereto.
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(f) No amount payable to such Grantor under or in connection with any
Material Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Administrative Agent.
4.10 Intellectual Property. (a) Schedule 4.10(a) lists all registered
Copyrights, registered and material unregistered Trademarks, issued Patents and
applications for the foregoing and all material written Copyright Licenses,
Patent Licenses and Trademark Licenses.
(b) Except as set forth on Schedule 4.10(b), to the knowledge of such
Grantor on the date hereof, all material Intellectual Property is valid,
subsisting, unexpired and enforceable, has not been abandoned and, to the
knowledge of such Grantor, does not infringe the intellectual property rights of
any other Person.
(c) Except as set forth on Schedule 4.10(c), to the knowledge of such
Grantor, no holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of, or such
Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth on Schedule 4.10(d), no action or proceeding
is pending, or, to the knowledge of such Grantor, threatened, on the date hereof
(i) seeking to limit, cancel or question the validity of any Intellectual
Property of such Grantor or such Grantor's ownership interest therein, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Intellectual Property.
4.11 Deposit Accounts, Securities Accounts. Schedule 4.11 sets forth
each Deposit Account or Securities Account in which any Grantor has any interest
on the date hereof.
4.12 Collateral. All information set forth herein, including the
schedules annexed hereto, and all information contained in any documents,
schedules and lists heretofore delivered to any Secured Party in connection with
this Agreement, in each case, relating to the Collateral, is accurate and
complete in all material respects.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Secured Parties that, from
and after the date of this Agreement until the Obligations (other than
contingent obligations not due and payable) shall have been paid in full, no
Letter of Credit shall be outstanding and the Commitments shall have terminated:
5.1 Delivery of Instruments, Certificated Securities and Chattel
Paper. If any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper, in each case,
with a stated value, face value or fair market
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value equal to or exceeding $10,000, shall be promptly delivered to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
5.2 Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Administrative Agent and
(ii) to the extent requested by the Administrative Agent, insuring such Grantor
against liability for personal injury and property damage relating to such
Inventory and Equipment, such policies to be in such form and amounts and having
such coverage as may be reasonably satisfactory to the Administrative Agent.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective unless the insurer gives at least 30 days notice to the Administrative
Agent, (ii) name the Administrative Agent as insured party or loss payee, as
applicable, and (iii) be reasonably satisfactory in all other respects to the
Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent a report of
a reputable insurance broker with respect to such insurance substantially
concurrently with each delivery of the Borrower's audited annual financial
statements and such supplemental reports with respect thereto as the
Administrative Agent may from time to time reasonably request.
5.3 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
material claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except that
none of the foregoing need be paid if the amount or validity thereof could not
reasonably be expected to result in the sale, forfeiture or loss of any material
portion of the Collateral or any interest therein.
5.4 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.2 to the extent that such security interest may be perfected under
applicable law, and upon the written request of the Administrative Agent, shall
defend such security interest against the claims and demands of all Persons
whomsoever, subject to the rights of such Grantor under the Loan Documents to
dispose of the Collateral.
(b) Such Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection therewith as the
Administrative Agent may reasonably request in writing, all in reasonable
detail.
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(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts, Securities Accounts,
Letter-of-Credit Rights and any other relevant Collateral, taking any actions
necessary to enable the Administrative Agent to obtain "control" (within the
meaning of the applicable Uniform Commercial Code) with respect thereto.
(d) Such Grantor will not establish any additional Deposit Accounts or
Securities Accounts having a balance greater than $10,000 individually or
$25,000 in the aggregate without executing and delivering, concurrently with the
establishment of such account, a control agreement substantially in the form
attached hereto as Annex I-A or I-B, as applicable, or as reasonably
satisfactory to the Administrative Agent and the related depositary bank or
securities intermediary, as the case may be, in order to perfect the security
interest of the Administrative Agent in such account under the Uniform
Commercial Code.
5.5 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the location of its
chief executive office or sole place of business or principal residence
from that referred to in Section 4.3; or
(ii) change its name.
5.6 Notices. Such Grantor will advise the Administrative Agent
promptly, in reasonable detail (which notice shall specify that it is being
delivered pursuant to this Section), of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) the occurrence of any other event, upon its becoming aware
thereof, which could reasonably be expected to have a material adverse effect on
the aggregate value of the Collateral or on the security interests created
hereby.
5.7 Investment Property.
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(a) If such Grantor shall become entitled to receive or shall receive
any certificate (including, without limitation, any certificate representing a
dividend or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the Capital Stock of any Issuer,
whether in addition to, in substitution of, as a conversion of, or in exchange
for, any shares of the Pledged Stock, or otherwise in respect thereof, such
Grantor shall accept the same as the agent of the Secured Parties, hold the same
in trust for the Secured Parties and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Investment
Property upon the liquidation or dissolution of any Issuer shall be paid over to
the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Investment Property or any property shall be
distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in
trust for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any Capital Stock of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any Capital Stock of any nature of any Issuer, except to the extent permitted by
this Agreement or the Credit Agreement, (ii) sell, assign, transfer, exchange,
or otherwise dispose of, or grant any option with respect to, the Investment
Property or Proceeds thereof (except pursuant to a transaction expressly
permitted by the Credit Agreement), (iii) create, incur or permit to exist any
Lien or option in favor of, or any claim of any Person with respect to, any of
the Investment Property or Proceeds thereof, or any interest therein, except for
the security interests created by this Agreement and the Liens permitted by the
Credit Agreement or (iv) enter into any agreement or undertaking restricting the
right or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.7(a) with respect to the Investment Property issued by it and (iii) the
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terms of Sections 6.3(c) and 6.9 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.9 with respect to the Investment Property issued by it.
5.8 Uncertificated Investment Property. Each Grantor hereby agrees
that if any issuer of Pledged Notes or Pledged Stock is organized in a
jurisdiction which does not permit the use of certificates to evidence equity
ownership, or if any of the Pledged Notes or Pledged Stock are at any time not
evidenced by certificates of ownership, then each applicable Grantor shall, to
the extent permitted by applicable law, record such pledge on the register or
the books of the issuer, cause the issuer to execute and deliver to the
Administrative Agent an acknowledgment of the pledge of such Pledged Notes or
Pledged Stock substantially in the form of Annex II hereto, execute any
customary pledge forms or other documents necessary or appropriate to complete
the pledge and give the Administrative Agent the right to transfer such Pledged
Notes or Pledged Stock under the terms hereof and, if required by the
Administrative Agent, provide to the Administrative Agent an opinion of counsel,
in form and substance satisfactory to the Administrative Agent, confirming such
pledge and perfection thereof.
5.9 Receivables. (a) Other than in the ordinary course of business
substantially consistent with its past practice, such Grantor will not (i) grant
any extension of the time of payment of any Receivable, (ii) compromise or
settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable, (iv)
allow any credit or discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that could reasonably be
expected to adversely affect the value thereof.
(b) Maintenance of Records. Each Grantor shall keep and maintain at
its own cost and expense complete records of each Receivable, in a manner
consistent with prudent business practice, including, without limitation,
records of all payments received, all credits granted thereon, all merchandise
returned and all other documentation relating thereto.
(c) Legend. Each Grantor shall legend, at the request of the
Administrative Agent made at any time after the occurrence of any Event of
Default which is continuing and in form and manner reasonably satisfactory to
the Administrative Agent, the Receivables and the other books, records and
documents of such Grantor evidencing or pertaining to the Receivables with an
appropriate reference to the fact that the Receivables have been assigned to the
Administrative Agent for the benefit of the Secured Parties and that the
Administrative Agent has a security interest therein.
(d) Modification of Terms, etc. No Grantor shall rescind or cancel any
indebtedness evidenced by any Receivable or modify any term thereof or make any
adjustment with respect thereto except in the ordinary course of business
substantially consistent with prudent business practice, or extend or renew any
such indebtedness except in the ordinary course of business consistent with
prudent business practice or compromise or settle any dispute, claim, suit or
legal proceeding relating thereto or sell any Receivable or interest therein
except in the ordinary course of business substantially consistent with prudent
business practice without the prior written consent of the Administrative Agent.
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(e) Collection. Each Grantor shall cause to be collected from the
account debtor of each of the Receivables, as and when due in the ordinary
course of business consistent with prudent business practice (including, without
limitation, Receivables that are delinquent, such Receivables to be collected in
accordance with generally accepted commercial collection procedures), any and
all amounts owing under or on account of such Receivable, and apply forthwith
upon receipt thereof all such amounts as are so collected to the outstanding
balance of such Receivable, except that any Grantor may, with respect to an
Receivable, allow in the ordinary course of business (i) a refund or credit due
in the ordinary course of business and (ii) such extensions of time to pay
amounts due in respect of Receivables and such other modifications of payment
terms or settlements in respect of Receivables as shall be commercially
reasonable in the circumstances, all in accordance with such Grantor's ordinary
course of business substantially consistent with its collection practices as in
effect from time to time. The costs and expenses (including, without limitation,
attorneys' fees) of collection, in any case, whether incurred by any Grantor,
the Administrative Agent or any Secured Party, shall be paid by the Grantors.
(f) Evidence of Doubtful Receivables. Such Grantor will deliver to the
Administrative Agent a copy of each material written demand, notice or document
received by it that questions or calls into doubt the validity or enforceability
of more than 5% of the aggregate amount of the then outstanding Receivables.
5.10 Contracts. (a) Such Grantor will perform and comply in all
material respects with all its obligations under the Material Contracts.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material written demand, notice or document received by it relating in any
way to any Material Contract that questions the validity or enforceability of
such Material Contract.
5.11 Intellectual Property. Except with regard to the following
subsections (a) through (h) to the extent any Grantor reasonably determines that
any Intellectual Property is no longer used or useful in or material to its
business, (a) such Grantor (either itself or through licensees) will (i)
continue to use commercially each material Trademark in order to maintain such
registered Trademarks in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past the quality of products and services
offered under such Trademark, (iii) use such registered Trademarks with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, and (iv) not (and not permit any licensee or
sublicensee thereof to) perform any act or knowingly omit to perform any act
whereby such Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not perform
any act, or omit to perform any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) perform any act or knowingly omit to perform any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
perform any act whereby any material portion of the Copyrights may fall into the
public domain.
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(d) Such Grantor will not perform any act that knowingly uses any
material Intellectual Property to infringe the intellectual property rights of
any other Person.
(e) Such Grantor will notify the Administrative Agent immediately if
it knows, or has reason to know, that any application or registration relating
to any material Intellectual Property may become forfeited, abandoned or
dedicated to the public, or of any final or non-appealable adverse determination
or development (including, without limitation, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding such Grantor's ownership of, or the
validity of, any material Intellectual Property or such Grantor's right to
register the same or to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within 30 calendar days after the last day of
the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's security interest in
any Copyright, Patent or Trademark and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall upon its
becoming aware thereof, (i) take such actions as such Grantor shall reasonably
deem appropriate under the circumstances to protect such Intellectual Property
and (ii) if such Intellectual Property is of material economic value, promptly
notify the Administrative Agent and at the request of the Administrative Agent,
sue for infringement, misappropriation or dilution, to seek appropriate relief
and to recover any and all damages for such infringement, misappropriation or
dilution.
5.12 Commercial Tort Claims. Such Grantor shall advise the
Administrative Agent and the Lenders promptly of any Commercial Tort Claim held
by such Grantor individually or in the aggregate in excess of $500,000 and shall
promptly execute a supplement to this Agreement in form and substance reasonably
satisfactory to the Administrative Agent to
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grant a security interest in such Commercial Tort Claim to the Administrative
Agent for the benefit of the Secured Parties.
5.13 Deposit Accounts, Securities Accounts. Within 30 days of the
Closing Date, unless otherwise extended or waived by the Administrative Agent,
each Grantor shall deliver to the Administrative Agent a control agreement,
executed by all parties thereto, for each Deposit Account or Securities Account
listed on Schedule 4.11 in which any Grantor has an interest on the date hereof.
Notwithstanding the foregoing, no Deposit Account or Securities Account of any
Grantor will exist on the Closing Date for which such Grantor has not delivered
to the Administrative Agent a control agreement executed by all parties thereto,
provided that the Grantors shall not be required to enter into control
agreements with respect to any Deposit Account or Securities Account having a
balance of less than $10,000 individually or $25,000 in the aggregate; provided
further that the Administrative Agent shall not (i) have "control" (as defined
in Section 9-104 of the UCC) of any Deposit Account or Securities Account nor
(ii) be authorized to give any instructions directing the disposition of funds
from any Deposit Account or Securities Account, as applicable, or withhold any
withdrawal rights from such Grantor with respect to funds from time to time
credited to any Deposit Account or Securities Account, as applicable, unless an
Event of Default (as defined in the Credit Agreement) has occurred and is
continuing, or after giving effect to any withdrawal, any Event of Default would
occur.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) After an Event of
Default has occurred and is continuing, the Administrative Agent shall have the
right to make test verifications of the Receivables in any manner and through
any medium that it reasonably considers advisable, and each Grantor shall
furnish all such assistance and information as the Administrative Agent may
require in connection with such test verifications.
(b) The Administrative Agent hereby authorizes each Grantor to collect
such Grantor's Receivables. The Administrative Agent may curtail or terminate
said authority at any time after the occurrence and during the continuance of an
Event of Default. If required by the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, any payments of
Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent if required,
in a Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Secured Parties only as provided in Section 6.7 hereof, and (ii)
until so turned over, shall be held by such Grantor in trust for the Secured
Parties, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.
(c) At the Administrative Agent's request, upon the occurrence and
during the continuance of an Event of Default, each Grantor shall deliver to the
Administrative Agent
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all original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including, without limitation,
all original orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of the Secured Parties may
at any time after the occurrence and during the continuance of an Event of
Default and after prior written notice to the Grantors communicate with obligors
under the Receivables and parties to the Contracts to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables or Contracts.
(b) After the occurrence and during the continuance of an Event of
Default, the Administrative Agent in its own name or in the name of the Secured
Parties may, and upon the request of the Administrative Agent each Grantor
shall, notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Administrative Agent for
the ratable benefit of the Secured Parties and that payments in respect thereof
shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. No Secured Party shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of or
arising out of this Agreement or the receipt by any Secured Party of any payment
relating thereto, nor shall any Secured Party be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given written notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b) hereof, each Grantor shall be
permitted to receive all cash dividends paid in respect of the Pledged Stock and
all payments made in respect of the Pledged Notes, in each case paid in the
normal course of business of the relevant Issuer and consistent with past
practice, to the extent permitted in this Agreement or the Credit Agreement, and
to exercise all voting and corporate or other organizational rights with respect
to the Investment Property; provided, however, that no vote shall be cast or
corporate or other organizational right exercised or other action taken which,
in the Administrative Agent's reasonable judgment, would result in any violation
of any provision of the Credit Agreement, this Agreement or any other Loan
Document. The Administrative Agent shall promptly execute and deliver (or cause
to be executed and delivered) to such Grantor all such proxies, dividend
payments orders and
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other instruments as such Grantor may from time to time reasonably request for
the purpose of enabling such Grantor to exercise the voting and other consensual
rights when and to the extent which it is entitled to exercise pursuant to this
clause (a) and to receive dividends, principal or interest payments which is
authorized to receive and retain pursuant to this clause (a).
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give written notice of its intent to exercise such
rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall
have the right to receive any and all cash dividends, payments or other Proceeds
paid in respect of the Investment Property and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Investment Property shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Investment Property at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) upon delivery of any notice
to such effect pursuant to Section 6.3(a) hereof, pay any dividends or other
payments with respect to the Investment Property directly to the Administrative
Agent while an Event of Default has occurred and is continuing.
6.4 Intellectual Property; Grant of License. For the purpose of
enabling the Administrative Agent, effective upon the occurrence and during the
continuance of an Event of Default, to exercise rights and remedies under this
Section 6 at such time as the Administrative Agent shall be lawfully entitled to
exercise such rights and remedies, and for no other purpose, each Grantor hereby
grants to the Administrative Agent upon the occurrence and during the
continuance of an Event of Default, to the extent assignable, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, assign, license or sublicense any of the
Intellectual Property now owned or
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hereafter acquired by such Grantor, wherever the same may be located, including
in such license access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout hereof.
6.5 Intellectual Property Litigation. Upon the occurrence and during
the continuance of any Event of Default, the Administrative Agent shall have the
right but shall in no way be obligated to file applications for protection of
the Intellectual Property and/or bring suit in the name of any Grantor, the
Administrative Agent or the Secured Parties to enforce the Intellectual Property
and any license thereunder. In the event of such suit, each Grantor shall, at
the reasonable request of the Administrative Agent, do any and all lawful acts
and execute any and all documents requested by the Administrative Agent in aid
of such enforcement and the Grantors shall promptly reimburse and indemnify the
Administrative Agent, as the case may be, for all costs and expenses incurred by
the Administrative Agent in the exercise of its rights under this Section 6.5 in
accordance with Section 8.4 hereof. In the event that the Administrative Agent
shall elect not to bring suit to enforce the Intellectual Property, each Grantor
agrees, at the reasonable request of the Administrative Agent, to take all
commercially reasonable actions necessary, whether by suit, proceeding or other
action, to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value of or other damage to any of the Intellectual
Property by others and for that purpose agrees to diligently maintain any suit,
proceeding or other action against any Person so infringing necessary to prevent
such infringement.
6.6 Proceeds to Be Turned Over to Administrative Agent. In addition to
the rights of the Secured Parties specified in Section 6.1 with respect to
payments of Receivables, if an Event of Default shall occur and be continuing,
all Proceeds received by any Grantor consisting of cash, checks and other
near-cash items shall be held by such Grantor in trust for 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). Upon the occurrence and during the continuance of an Event
of Default, all Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control and while held by the Administrative Agent in a
Collateral Account (or by such Grantor in trust for 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 6.7.
6.7 Application of Proceeds. At such intervals as may be agreed upon
by the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2 and any proceeds, awards or
rents of any Mortgaged Property or other Collateral, in payment of the
Obligations in the following order:
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First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;
Second, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the parties to which such Obligations are
then due and owing based on the respective amounts thereof;
Third (this clause being applicable only if an Event of Default shall
have occurred and be continuing), to the Administrative Agent, for
application by it towards prepayment of the Obligations, pro rata among the
parties holding such Obligations based on the respective amounts thereof;
and
Fourth, any balance of such Proceeds remaining after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding and
the Commitments shall have terminated shall be paid over to the Borrower or
as otherwise may be required by applicable law.
6.8 Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived to the extent permitted by applicable law), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to perform any of the foregoing), in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or office of any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Any Secured Party shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Administrative Agent's written request, to
assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.8, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Secured Parties here-
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under, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Administrative Agent account for the surplus, if any, to
any Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Secured Parties arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.9 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.8 hereof, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and perform or cause to be performed all such other
acts as may be, in the opinion of the Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its reasonable best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Administrative Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. In
connection with the foregoing clauses (i) through (iv) inclusive, each Grantor
agrees to cause such Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions which the Administrative Agent
shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock pursuant to
Section 6.8 hereof, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Stock pursuant to Section 6.8 hereof for the
period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Se-
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curities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.
(c) Each Grantor agrees to use its reasonable best efforts to perform
or cause to be performed all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Stock pursuant to this
Section 6.9 valid and binding and in compliance with any and all other
applicable Requirements of Law. Each Grantor further agrees that a breach of any
of the covenants contained in this Section 6.9 will cause irreparable injury to
the Secured Parties, that the Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.9 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives (to the extent permitted by law) and
agrees not to assert any defenses against an action for specific performance of
such covenants except for a defense that no Event of Default has occurred and is
continuing under the Credit Agreement.
6.10 Deficiency. Each Grantor shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by any Secured Party to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
Each Grantor hereby irrevocably appoints the Administrative Agent and any
authorized officer or agent thereof, with full power of substitution, as its
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
assent by such Grantor, to perform any or all of the following acts:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Receivable or Contract
or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the
Administrative Agent's security
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interest in such Intellectual Property (and the associated goodwill) and
general intangibles of such Grantor relating thereto or represented
thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.8
or 6.9, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems reasonably
necessary to protect, preserve or realize upon the Collateral and
Administrative Agent's security interests therein and to effect the intent
of this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
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(c) The reasonable expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at the rate applicable hereto under Section 3.11 of the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent in accordance with Section 10.5 of the Credit Agreement.
(d) Each Grantor hereby ratifies all acts that said attorneys shall
lawfully perform or cause to be performed by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
7.2 Duty of Administrative Agent. 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, the Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the New
York UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. No Secured
Party nor any of its officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Administrative Agent and the Secured Parties
hereunder are solely to protect the Secured Parties' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Secured Party
to exercise any such powers. The Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents shall
be responsible to any Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to any applicable law,
each Grantor authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral without the signature of such Grantor in such form and in such
offices as the Administrative Agent determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. Each
Grantor authorizes the Administrative Agent to use the collateral description
"all personal property" in any such financing statement. Each Grantor hereby
ratifies and authorizes the filing by the Administrative Agent of any financing
statement with respect to the Collateral made prior to the date hereof.
7.4 Authority of Administrative Agent. Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the 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 the Admin-
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istrative Agent and the other Secured Parties, be governed by the Credit
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Administrative Agent and the
Grantors, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Secured Parties with full and valid authority so to act or
refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
7.5 Access to Collateral, Books and Records; Other Information. Upon
reasonable request to each Grantor, the Administrative Agent, its agents,
accountants and attorneys shall have full and free access to visit and inspect,
as applicable, during normal business hours and such other reasonable times as
may be requested by the Administrative Agent all of the Collateral including,
without limitation, all of the books, correspondence and records of such Grantor
relating thereto. The Administrative Agent and its representatives may examine
the same, take extracts therefrom and make photocopies thereof, and such Grantor
agrees to render to the Administrative Agent, at such Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested by
the Administrative Agent with regard thereto. Such Grantor shall, at any and all
times, within a reasonable time after written request by the Administrative
Agent, furnish or cause to be furnished to the Administrative Agent, in such
manner and in such detail as may be reasonably requested by the Administrative
Agent, additional information with respect to the Collateral.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 8.2 or such other address
specified in writing to the Administrative Agent in accordance with such
Section.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. No Secured
Party shall by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are
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cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees
to pay or reimburse each Secured Party for all its costs and expenses incurred
in collecting against such Guarantor under the guarantee contained in Section 2
or otherwise enforcing or preserving any rights under this Agreement and the
other Loan Documents to which such Guarantor is a party, including, without
limitation, the fees and disbursements of counsel (including the allocated fees
and expenses of in-house counsel) to each Secured Party.
(b) Each Guarantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 10.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Secured Parties and their successors and assigns; provided that no Grantor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes each Secured
Party at any time and from time to time, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Secured Party to or for the credit or the account of such Grantor,
or any part thereof in such amounts as such Secured Party may elect, against and
on account of the obligations and liabilities of such Grantor to such Secured
Party hereunder and claims of every nature and description of such Secured Party
against such Grantor, in any currency, whether arising hereunder, under the
Credit Agreement, any other Loan Document or otherwise, as such Secured Party
may elect, whether or not any Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. Each Secured
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Party shall notify such Grantor promptly of any such set-off and the application
made by such Secured Party of the proceeds thereof, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Secured Party under this Section 8.6 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy in which case, when so delivered shall be deemed an original), and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
8.8 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Secured Parties with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by any Secured Party relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other
Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES. EXCEPT TO THE EXTENT THAT THE UNIFORM
COMMERCIAL CODE PROVIDES THAT PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF THE JURISDICTION OTHER THAN THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
-32-
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) no Secured Party has any fiduciary relationship with or duty to
any Grantor arising out of or in connection with this Agreement or any of
the other Loan Documents, and the relationship between the Grantors, on the
one hand, and the Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Secured Parties or among the Grantors and the Secured Parties.
8.14 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.9 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex III hereto.
8.15 Releases. (a) At such time as the Loans and the other Obligations
(other than Obligations in respect of Specified Hedge Agreements) shall have
been paid in full and the Commitments have been terminated, the Collateral shall
be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. At the request and sole
expense of
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any Grantor following any such termination, the Administrative Agent shall
promptly deliver to such Grantor any Collateral held by the Administrative Agent
hereunder, and promptly execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor (except where such sale, transfer or disposal is to
another Grantor) in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Grantor, shall
execute and deliver to such Grantor all releases or other documents reasonably
necessary or desirable for the release of the Liens created hereby on such
Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, EACH SECURED PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Signature pages follow]
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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
MUZAK HOLDINGS LLC
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
MUZAK LLC
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
AUDIO ENVIRONMENTS, INC.
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
BACKGROUND MUSIC BROADCASTERS, INC.
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
BI ACQUISITION, LLC
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
BUSINESS SOUND, INC.
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
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MLP ENVIRONMENTAL MUSIC, LLC
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
MUSIC INCORPORATED
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
MUZAK CAPITAL CORPORATION
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
MUZAK HOUSTON, INC.
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
TELEPHONE AUDIO PRODUCTIONS, INC.
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
VORTEX SOUND COMMUNICATIONS
COMPANY, INC.
By: /s/ Michael F. Zendan II
-------------------------------
Name: Michael F. Zendan II
Title: Vice President
-36-
SCHEDULE 4.2 TO GUARANTEE AND COLLATERAL AGREEMENT
UCC Filing Jurisdictions:
SCHEDULE 4.3(a) TO GUARANTEE AND COLLATERAL AGREEMENT
Jurisdictions of Organization:
SCHEDULE 4.3(b) TO GUARANTEE AND COLLATERAL AGREEMENT
Other Names:
SCHEDULE 4.4(a) TO GUARANTEE AND COLLATERAL AGREEMENT
Chief Executive Offices:
SCHEDULE 4.4(b) TO GUARANTEE AND COLLATERAL AGREEMENT
(i) Inventory and Equipment Jurisdictions:
(ii) Lessees, Consignees, Warehousemen or Purchasers of Chattel Paper:
SCHEDULE 4.7(a) TO GUARANTEE AND COLLATERAL AGREEMENT
Pledged Stock:
Common Stock
1. Two Hundred Ten Thousand (210,000) shares of the common stock of Business
Sound, Inc., represented by Stock Certificate No. 38, standing in the name
of Audio Communications Network, LLC.
2. Eleven Thousand Seven (11,007) shares of the common stock of
Electro-Systems Corporation, represented by Stock Certificate No. 081,
standing in the name of Audio Communications Network, LLC.
3. One Hundred (100) shares of the common stock of Muzak Capital Corporation,
represented by Stock Certificate No. C-3, standing in the name of Muzak
LLC.
4. Seven Thousand Five Hundred (7,500) shares of the common stock of Audio
Environments, Inc., represented by Stock Certificate No. 17, standing in
the name of Muzak LLC.
5. Ten Thousand (10,000) shares of the common stock of Background Music
Broadcasters, Inc., represented by Stock Certificate No. 6, standing in the
name of Muzak LLC.
6. One Million (1,000,000) shares of the common stock of Telephone Audio
Productions, Inc., represented by Stock Certificate No. 5, standing in the
name of Muzak LLC.
7. Two Thousand Eight Hundred Fifty (2,850) shares of the common stock of
Vortex Sound Communications Company, Inc., represented by Stock Certificate
No. 9, standing in the name of Muzak LLC.
8. Two Thousand Nine Hundred Twenty-Eight (2,928) shares of the common stock
of Muzak Houston, Inc., represented by Stock Certificate No. 191, standing
in the name of Muzak LLC.
9. One (1) share of the common stock of CISUM Incorporated (now Music
Incorporated), represented by Stock Certificate No. 1, standing in the name
of Vortex Sound Communications Company, Inc.
LLC Interests
1. One Hundred (100) Common Units of Muzak LLC, represented by Certificate No.
C-2, standing in the name of Muzak Holdings LLC.
2. One Thousand (1,000) Common Units of MLP Environmental Music, LLC,
represented by Certificate No. C-1, standing in the name of Muzak LLC.
3. One Hundred (100) Common Units of BI Acquisition LLC, represented by
Certificate No. 1, standing in the name of Muzak LLC.
SCHEDULE 4.7(c) TO GUARANTEE AND COLLATERAL AGREEMENT
Pledged Notes:
1. Note between Alcas Holdings B.V., as maker and Muzak Limited Partnership,
as holder, dated as of April 23, 1998 for (NLG) 1,600,000.
SCHEDULE 4.10(a) TO GUARANTEE AND COLLATERAL AGREEMENT
1. Trademarks
2. Copyright Registrations
3. Material Software:
SCHEDULE 4.10(b) TO GUARANTEE AND COLLATERAL AGREEMENT
SCHEDULE 4.10(c) TO GUARANTEE AND COLLATERAL AGREEMENT
SCHEDULE 4.10(d) TO GUARANTEE AND COLLATERAL AGREEMENT
SCHEDULE 4.11 TO GUARANTEE AND COLLATERAL AGREEMENT
Deposit Accounts:
Securities Accounts:
SCHEDULE 8.2 TO GUARANTEE AND COLLATERAL AGREEMENT
Notice Information:
1. Muzak Holdings LLC
Muzak Holdings LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
2. Muzak LLC
Muzak LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
3. Muzak Capital Corporation
Muzak Capital Corporation
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
4. MLP Environmental Music, LLC
MLP Environmental Music, LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
5. Business Sound, Inc.
Business Sound, Inc.
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
6. BI Acquisition, LLC
BI Acquisition, LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
7. Audio Environments, Inc.
Audio Environments, Inc.
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
8. Background Music Broadcasters, Inc.
Background Music Broadcasters, Inc.
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
9. Telephone Audio Productions, Inc.
Telephone Audio Productions, Inc.
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
10. Vortex Sound Communications Company, Inc.
Vortex Sound Communications Company, Inc.
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
11. Muzak Houston, Inc.
Muzak Houston, Inc.
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
12. Music Incorporated
Music Incorporated
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: General Counsel
with a copy to:
ABRY Partners, LLC
111 Huntington Avenue 30/th/ Floor
Boston, Massachusetts 02199
Attention: Peni Garber
with a copy to:
Kirkland & Ellis
Citigroup Center
153 East 53/rd/ Street
New York, NY 10022-4611
Attention: Lisa Anastos, Esq.
ANNEX I-A
[FORM OF]
SECURITIES ACCOUNT CONTROL AGREEMENT
[provided under separate cover]
ANNEX I-A
[FORM OF]
CONTROL AGREEMENT CONCERNING SECURITIES ACCOUNTS
This Control Agreement Concerning Securities Accounts (this "Control
Agreement"), dated as of [ ] by and among [ ] (the "Grantor"),
BEAR STEARNS CORPORATE LENDING INC., as the administrative agent (in such
capacity, the "Administrative Agent") and [ ] (the "Securities
Intermediary"), is delivered pursuant to Section 5.13 of that certain guarantee
and collateral agreement (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Guarantee and Collateral Agreement"),
dated as of May 20, 2003 made by the Borrower and the other Grantors, in favor
of the Administrative Agent for the benefit of the Secured Parties. This Control
Agreement is for the purpose of perfecting the security interests of the Secured
Parties granted by the Grantor in the Designated Securities Accounts described
below. All references herein to the "UCC" shall mean the Uniform Commercial Code
as in effect from time to time in the State of New York. Capitalized terms used
but not defined herein shall have the meanings assigned to such terms in the
Guarantee and Collateral Agreement.
Section 1. Confirmation of Establishment and Maintenance of
Designated Accounts. The Securities Intermediary hereby confirms that (i) the
Securities Intermediary has established for the Grantor and maintains the
securities account(s) listed in Schedule 1 attached hereto (such account(s),
together with each such other securities account maintained by the Grantor with
the Securities Intermediary collectively, the "Designated Accounts" and each a
"Designated Account"), (ii) each of the Designated Accounts is a "securities
account" as such term is defined in Section 8-501(a) of the UCC, (iii) the
Securities Intermediary shall, subject to the terms of this Control Agreement
and the Guarantee and Collateral Agreement, treat the Grantor as entitled to
exercise the rights that comprise any financial asset which is Investment
Property and which is credited to a Designated Account and (iv) all securities
or other property underlying any financial assets which constitute Investment
Property and which are credited to any Designated 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
any Designated Account be registered in the name of the Grantor, payable to the
order of the Grantor or specially endorsed to the Grantor, except to the extent
the foregoing have been specially endorsed to the Securities Intermediary or in
blank. For avoidance of doubt, it is noted that the term "Designated Accounts"
as used in any security agreement or guarantee and collateral agreement means
both the Designated Accounts hereunder and the "Designated Accounts" in the
comparable agreement entered into with respect to any other Grantor.
Section 2. "Financial Assets" Election. The Securities Intermediary
hereby agrees that each item of Investment Property (whether investment
property, financial asset, security, instrument or cash) credited to any
Designated Account shall be treated as a "financial asset" within the meaning of
Section 8-102(a)(9) of the UCC.
-2-
Section 3. Entitlement Order. If at any time the Securities
Intermediary shall receive an "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) issued by the Administrative Agent and relating to
Investment Collateral or other Investment Property maintained in one or more of
the Designated Accounts, the Securities Intermediary shall comply with such
entitlement order without further consent by the Grantor or any other Person.
Section 4. Subordination of Lien; Waiver of Set-Off. In the event
that the Securities Intermediary has or subsequently obtains by agreement,
operation of law or otherwise a security interest in any Designated Account or
any Investment Property, the Securities Intermediary hereby agrees that such
security interest shall be subordinate to the security interest of the Secured
Parties. The financial assets and other items deposited to any Designated
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 Parties (except that the
Securities Intermediary may set off (i) all amounts due to the Securities
Intermediary in respect of its customary fees and expenses for the routine
maintenance and operation of the Designated Accounts, including overdraft fees
and amounts advanced to settle authorized transactions, and (ii) the face amount
of any checks or other items which have been credited to any Designated Account
but are subsequently returned unpaid because of uncollected or insufficient
funds).
Section 5. Choice of Law. Both this Control Agreement and the
Designated Accounts 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, the
State of New York shall be deemed to be the Securities Intermediary's location
and the Designated Accounts (as well as the security entitlements related
thereto) shall be governed by the laws of the State of New York without regard
to conflicts of law principles thereof.
Section 6. Conflict with Other Agreements; Amendments. As of the
date hereof, there are no other agreements entered into between the Securities
Intermediary and the Grantor with respect to any Designated Account or any
security entitlements or other financial assets credited thereto (other than
standard and customary documentation with respect to the establishment and
maintenance of such Designated Accounts). The Securities Intermediary and the
Grantor will not enter into any other agreement with respect to any Designated
Account unless the Administrative Agent shall have received prior written notice
thereof. The Securities Intermediary and the Grantor will not enter into any
other agreement with respect to creation or perfection of any security interest
in, or control of security entitlements maintained in any of the Designated
Accounts without the prior written consent of the Administrative Agent acting in
its sole discretion. In the event of any conflict with respect to "control" over
any Designated Account between this Control Agreement (or any portion hereof)
and any other agreement now existing or hereafter entered into, the terms of
this Control Agreement shall prevail. No amendment or modification of this
Control Agreement or waiver of any rights hereunder shall be binding on any
party hereto unless it is in writing and is signed by all the parties hereto.
-3-
Section 7. Certain Agreements.
(i) The Securities Intermediary acknowledges receipt of a copy of
the Guarantee and Collateral Agreement.
(ii) The Securities Intermediary has furnished to the Administrative
Agent and the Grantor the most recent account statement issued by the Securities
Intermediary with respect to each of the Designated Accounts and the financial
assets and cash balances held therein. The account statement for each Designated
Account identifies the Investment Collateral held therein in the manner set
forth on Exhibit A attached hereto. The Securities Intermediary represents and
warrants to the Administrative Agent that each such statement accurately
reflects the assets held in such Designated Account as of the date thereof.
(iii) The Securities Intermediary will, upon its receipt of each
supplement to the Guarantee and Collateral Agreement signed by the Grantor and
identifying one or more security entitlements or other financial assets as
"Investment Collateral," enter into its records, including computer records,
with respect to each Designated Account a notation with respect to Investment
collateral so that such records and reports generated with respect thereto
identify the Investment Collateral as "Pledged."
(iv) The Administrative Agent has delivered to the Securities
Intermediary a list, signed by an authorized representative (the "Authorized
Representative"), of the officers of the Administrative Agent authorized to give
approvals or instructions under this Control Agreement (including notices and
other instructions under Section 9 hereof) and the Securities Intermediary shall
be entitled to rely on communications from such authorized officers until the
earlier of the termination of this Control Agreement in accordance with the
terms hereof, with notification by the Authorized Representative of a change and
the assignment of the rights of the Secured Parties in accordance with Section
11 hereof.
Section 8. Notice of Adverse Claims. Except for the claims and
interest of the Administrative Agent and of the Grantor in the Investment
Collateral and other Investment Property, the Securities Intermediary on the
date hereof does not know of any claim to, or security interest in, any
Designated Account or in any "financial asset" (as defined in Section 8-102(a)
of the UCC) credited thereto and does not know of any claim that any Person
other than the Administrative Agent has been given "control" of any Designated
Account or any such financial asset. If any Person asserts any lien, encumbrance
or adverse claim (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process and any claim of "control") against any
of the Investment Collateral or in any financial asset carried in any Designated
Account constituting Investment Property, the Securities Intermediary will
promptly notify the Administrative Agent and the Grantor thereof.
Section 9. Maintenance of Designated Accounts. 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 Designated Accounts as follows:
-4-
(i) Notice of Sole Control. If an Event of Default has occurred and
is continuing, the Administrative Agent shall be entitled to deliver to the
Securities Intermediary a notice of sole control in substantially the form
set forth in Exhibit A attached hereto (the "Notice of Sole Control") with
respect to any Designated Account. The Securities Intermediary agrees that,
after receipt of such notice and prior to the receipt of a Revocation
Notice of Sole Control, it will take all instructions with respect to such
Designated Account solely from the Administrative Agent. Permitting
settlement of trades pending at the time of receipt of such notice shall
not constitute a violation of the immediately preceding sentence. Without
limiting the generality of the first sentence of this paragraph, upon
receipt of a Notice of Sole Control and prior to the receipt of a
Revocation Notice of Sole Control, the Securities Intermediary shall (x) no
longer permit any trading with respect to the applicable Investment
Collateral to be initiated by the Grantor or any representative of, or
investment manager appointed by, the Grantor and the Securities
Intermediary shall follow all instructions given by an authorized officer
of the Administrative Agent, including without limitation instructions for
distribution or transfer of any Investment Collateral or other Investment
Property in any Designated Account to be made to the Administrative Agent
and (y) follow all instructions given by an authorized officer of the
Administrative Agent, including, without limitation, instructions for
distribution or transfer of any funds in any Designated Account to be made
to the Administrative Agent. If, at any time after such Notice of Sole
Control has been delivered to the Securities Intermediary, such Event of
Default is no longer occurring, the Administrative Agent shall immediately
deliver a revocation notice of sole control stating that such Notice of
Sole Control is no longer in effect (a "Revocation Notice of Sole
Control"). Upon receipt of a Revocation Notice of Sole Control, the
Securities Intermediary will take all instructions with respect to such
Designated Account solely from the Grantor or its authorized
representatives unless it shall receive a subsequent Notice of Sole
Control.
(ii) Voting Rights. Until such time as the Securities Intermediary
receives a Notice of Sole Control pursuant to clause (i) of this Section
and prior to such time as the Securities Intermediary receives a Revocation
Notice of Sole Control, the Grantor, or an investment manager on behalf of
the Grantor, shall direct the Securities Intermediary with respect to the
voting of any Investment Collateral or other financial assets constituting
Investment Property credited to any Designated Account.
(iii) Permitted Dispositions. Until such time as the Securities
Intermediary receives either a Notice of Sole Control signed by the
Administrative Agent with respect to some or all of the Investment
Collateral and other Investment Property or a notice signed by the
Administrative Agent that a proposed sale, exchange or transfer of certain
Investment Collateral by or on behalf of the Grantor will violate the
Guarantee and Collateral Agreement, and after the Securities Intermediary
receives a Revocation Notice of Sole Control related to such Notice of Sole
Control signed by the Administrative Agent, a Grantor, or any
representative of, or investment manager appointed by, a Grantor, shall
direct the Securities Intermediary with respect to the sale, exchange or
transfer of such Investment Collateral held in a Designated Account.
-5-
(iv) Statements and Confirmations. The Securities Intermediary will
send copies of all statements and other correspondence (excluding routine
confirmations) concerning any Designated Account or any financial assets
constituting Investment Property credited thereto simultaneously to the
Grantor and the Administrative Agent at the address set forth in Section 12
hereof. The Securities Intermediary will provide to the Administrative
Agent and to the Grantor, upon the Administrative Agent's request therefor
from time to time (which may be as frequent as daily and is expected to be
at least as frequent as weekly) and, in any event as of the last business
day of each calendar month, a statement of the market value of each item of
the Investment Collateral in each Designated Account.
(v) Bailee for Perfection. The Securities Intermediary acknowledges
that, in the event that it should come into possession of any certificate
representing any security or other assets held as Investment Collateral in
any of the Designated Accounts, the Securities Intermediary shall retain
possession of the same for the benefit of the Secured Parties (and such act
shall cause the Securities Intermediary to be deemed a bailee for the
Secured Parties, if necessary) to perfect the Secured Party's security
interest in such securities or assets. The Securities Intermediary hereby
acknowledges its receipt of a copy of the Guarantee and Collateral
Agreement as notice to the Securities Intermediary regarding notice of a
security interest in collateral held by a bailee.
(vi) Certain Matters Relating to Interest, Dividends, etc. Until
receipt of a Notice of Sole Control with respect to some or all of the
Investment Collateral and after the receipt of the Revocation Notice of
Sole Control, the Securities Intermediary shall have no responsibility to
furnish reports to the Administrative Agent with respect to, or to
segregate or otherwise account to the Administrative Agent for, dividends,
interest or other amounts received in Designated Accounts with respect to
Investment Collateral.
Section 10. Representations, Warranties and Covenants of the
Securities Intermediary. The Securities Intermediary hereby makes the following
representations, warranties and covenants:
(i) The Designated Accounts have been established as set forth in
Section 1 hereof and each Designated Account will be maintained in the
manner set forth herein until termination of this Control Agreement. The
Securities Intermediary shall not change the name or account number of any
Designated Account without the prior written consent of the Administrative
Agent.
(ii) No financial asset constituting Investment Collateral is or
will be registered in the name of the Grantor, payable to its order or
specially indorsed to it, except to the extent such financial asset has
been indorsed to the Securities Intermediary or in blank.
(iii) This Control Agreement is the valid and legally binding
obligation of the Securities Intermediary.
-6-
(iv) The Securities Intermediary has not entered into any agreement
with any other Person pursuant to which it has agreed to comply with
entitlement orders (as defined in Section 8-102(a)(8) of the UCC) with
respect to financial assets credited to any Designated Account. Until the
termination of this Control Agreement the Securities Intermediary will not,
without the written approval of the Grantor and the Administrative Agent,
enter into any agreement with any Person pursuant to which it agrees to
comply with entitlement orders with respect to Investment Collateral. Until
the termination of this Control Agreement, the Securities Intermediary will
not, without the written approval of the Grantor and the Administrative
Agent (which shall not be unreasonably withheld), enter into any agreement
with any Person relating to any Designated Account or any financial assets
credited thereto pursuant to which it agrees to comply with entitlement
orders of such Person.
(v) The Securities Intermediary is a "securities intermediary" as
defined in Article 8-102(a)(14) of the UCC.
The Securities Intermediary has not entered into any other agreement
with the Grantor or Administrative Agent purporting to limit or condition the
obligation of the Securities Intermediary to comply with entitlement orders with
respect to financial assets credited to any Designated Account as set forth in
Section 3 hereof.
Section 11. Successors; Assignment. The terms of this Control
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective corporate successors and permitted assignees.
Section 12. Notices. Any notice, request or other communication
required or permitted to be given under this Control 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 (2) 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.
Grantor: Muzak LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: Chief Financial Officer
Telecopy: (803) 396-3357
Telephone: (803) 396-3000
-7-
with copy to:
Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022-4611
Attention: Lisa Anastos, Esq.
Telecopy: (212) 446-4900
Telephone: (212) 446-4761
Securities
Intermediary: [ ]
_____________________
_____________________
Attention: __________
Telecopy: ___________
Telephone: __________
Administrative
Agent: Bear Stearns Corporate Lending Inc.
383 Madison Avenue, 8th Floor
New York, New York 10179
Attention: Kevin Cullen
Telecopy: (212) 272-9743
Telephone: (212) 272-5724
with a copy to:
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attention: John Papachristos, Esq.
Telecopy: (212) 269-5420
Telephone: (212) 701-3000
Any party may change its address for notices in the manner set forth
above.
Section 13. Termination. The rights and powers granted herein to the
Administrative Agent have been granted in order to perfect the security
interests of the Secured Parties in the Investment Collateral and other
Investment Property maintained in the Designated Accounts, are powers coupled
with an interest and will be affected neither by the bankruptcy of the Grantor
nor by the lapse of time. The obligations of the Securities Intermediary
hereunder shall continue in effect until the security interests of the Secured
Parties (including, without limitation, by virtue of the notice pursuant to
Section 11 hereof) with respect to the Investment Collateral and other
-8-
Investment Property have been terminated and an Authorized Representative has
notified the Securities Intermediary of such termination in writing. Upon
delivery of such notice of termination to the Securities Intermediary by an
Authorized Representative, the Securities Intermediary will transmit to such
account as the Authorized Representative may direct (in accordance with Section
8.15 of the Guarantee and Collateral Agreement) all collected funds, if any,
then on deposit in, or otherwise to the credit of, the Designated Account.
Section 14. Definitions. The following terms shall have the
following meanings:
"Investment Collateral" means, all "investment property," as such term
is used in the UCC, of the Grantor and, in any event, shall include, without
limitation, (i) the Designated Account, (ii) all financial assets, cash, checks,
drafts, securities and instruments deposited or held or required to be deposited
or held in the Designated Account and all security entitlements relating
thereto, (iii) all investments and all certificates and instruments, if any,
from time to time representing or evidencing any other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the foregoing items listed in clauses (i) and (ii) of this
definition and (iv) each consent, control or other agreement, including, without
limitation, this Control Agreement, entered into by the Grantor with the
Securities Intermediary and all rights, if any, and interests of the Grantor in,
to and under each such consent, control or other agreement; provided, however,
that Investment Collateral shall in no event include the Investment Property.
Section 15. Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.
Section 16. Counterparts. This Control 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 Control Agreement by signing
and delivering one or more counterparts.
[Signature page follows]
MUZAK LLC
By: _________________________________
Name:
Title:
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
By: _________________________________
Name:
Title:
[ ],
as Securities Intermediary
By: _________________________________
Name:
Title:
SCHEDULE I
Designated Account(s)
EXHIBIT A
[Letterhead of Bear Stearns Corporate Lending Inc.]
[Date]
[Securities Intermediary]
[Address]
Attention:
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in Section 9(i) of the Control Agreement Concerning
Designated Accounts dated as of [ ], among [ ], us and you (the
"Control Agreement"; capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Control Agreement) (a copy of which
is attached) we hereby give you notice of our sole control over the Investment
Collateral and other financial assets constituting Investment Property
maintained in the securities accounts, account numbers ________________ (the
"Specified Designated Accounts"). You are hereby instructed not to accept any
direction, instruction or entitlement order with respect to Investment
Collateral maintained in the Specified Designated Accounts or the financial
assets constituting Investment Property credited thereto from any Person other
than the undersigned, unless otherwise ordered by a court of competent
jurisdiction or upon receipt of a Revocation Notice of Sole Control (as defined
in the Control Agreement) executed by the undersigned.
You are instructed to deliver a copy of this notice by facsimile
transmission to [Grantor].
Very truly yours,
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
By: __________________________________
Name:
Title:
cc: [Grantor]
ANNEX I-B
[FORM OF]
DEPOSIT ACCOUNT CONTROL AGREEMENT
[provided under separate cover]
ANNEX I-B
[FORM OF]
CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS
This Control Agreement Concerning Deposit Accounts (this "Control
Agreement"), dated as of [ ] by and among [ ] (the "Grantor"),
in favor of BEAR STEARNS CORPORATE LENDING INC., as the administrative agent (in
such capacity, the "Administrative Agent") and [ ] (the "Bank"), is
delivered pursuant to Section 5.13 of that certain guarantee and collateral
agreement (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "Guarantee and Collateral Agreement"), dated as of May
20, 2003 made by the Borrower and the other Grantors, in favor of the
Administrative Agent for the benefit of the Secured Parties. This Control
Agreement is for the purpose of perfecting the security interests of the Secured
Parties granted by the Grantor in the Designated Accounts described below. All
references herein to the "UCC" shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York. Capitalized terms used but
not defined herein shall have the meanings assigned to such terms in the
Guarantee and Collateral Agreement.
Section 1. Confirmation of Establishment and Maintenance of
Designated Accounts. The Bank hereby confirms that (i) the Bank has established
for the Grantor and maintains the deposit account(s) listed in Schedule 1
attached hereto (such deposit account(s), together with each such other deposit
account maintained by the Grantor with the Bank collectively, the "Designated
Accounts" and each a "Designated Account"), (ii) each Designated Account is a
"deposit account" as such term is defined in Article 9 of the UCC. For avoidance
of doubt, it is noted that the term "Designated Accounts" as used in any
security agreement means both the Designated Accounts hereunder and the
"Designated Accounts" in the comparable agreement entered into with respect to
any other Grantor.
Section 2. Control. The Administrative Agent shall at all times (A)
have "control" (as defined in Section 9-104 of the UCC) of any Designated
Account and (B) during the period following delivery of a Notice of Sole Control
and prior to delivery of a Revocation Notice of Sole Control, be authorized to
direct the Bank to comply without further consent of the Grantor or any person
acting or purporting to act for the Grantor being required, with all
instructions originated by the Administrative Agent directing disposition of the
funds in the Designated Account. The Grantor, the Administrative Agent, and the
Bank agree that the Bank will comply with instructions originated by the
Administrative Agent during the period following delivery of a Notice of Sole
Control and prior to delivery of Revocation Notice of Sole Control directing the
disposition of the funds in the Designated Account without further consent by
the Grantor. The Bank shall comply with instructions directing the disposition
of funds in the Designated Account(s) originated by the Grantor or its
authorized representatives until such time as the Administrative Agent delivers
a Notice of Sole Control pursuant to Section 8(i) hereof to the Bank and prior
to delivery of Revocation Notice of Sole Control.
-2-
Section 3. Subordination of Lien; Waiver of Set-Off. In the event
that the Bank has or subsequently obtains by agreement, operation of law or
otherwise a security interest in any Designated Account, the Bank hereby agrees
that such security interest shall be subordinate to that of the Secured Parties.
The funds deposited into any Designated 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 Parties (except that the Bank may set off (i) all amounts
due to the Bank in respect of its customary fees and expenses for the routine
maintenance and operation of the Designated Accounts, including overdraft fees,
and (ii) the face amount of any checks or other items which have been credited
to any Designated Account but are subsequently returned unpaid because of
uncollected or insufficient funds).
Section 4. Choice of Law. Both this Control Agreement and the
Designated Account(s) shall be governed by the law of the State of New York.
Regardless of any provision in any other agreement, for purposes of the UCC, the
State of New York shall be deemed to be the Bank's jurisdiction and the
Designated Account(s) shall be governed by the law of the State of New York
without regard to conflict of laws principles thereof.
Section 5. Conflict with Other Agreements; Amendments. As of the
date hereof, there are no other agreements entered into between the Bank and the
Grantor with respect to any Designated Account or any funds credited thereto
(other than standard and customary documentation with respect to the
establishment and maintenance of such Designated Accounts). The Bank and the
Grantor will not enter into any other agreement with respect to any Designated
Account unless the Administrative Agent shall have received prior written notice
thereof. The Bank and the Grantor will not enter into any other agreement with
respect to control of the Designated Accounts without the prior written consent
of the Administrative Agent acting in its sole discretion. In the event of any
conflict with respect to "control" over any Designated Account between this
Control Agreement (or any portion hereof) and any other agreement now existing
or hereafter entered into, the terms of this Control Agreement shall prevail. No
amendment or modification of this Control Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing and is
signed by all the parties hereto.
Section 6. Certain Agreements.
(i) The Bank has furnished to the Administrative Agent and the
Grantor the most recent account statement issued by the Bank with respect to
each of the Designated Accounts and the cash balances held therein. The Bank
represents and warrants to the Administrative Agent that each such statement
accurately reflects the assets held in such Designated Account as of the date
thereof.
(ii) The Administrative Agent has delivered to the Bank a list,
signed by an authorized representative (the "Authorized Representative"), of the
officers of the Administrative Agent authorized to give approvals or
instructions under this Control Agreement (including notices and other
instructions under Section 8 hereof) and the Bank shall be entitled to rely on
communications from such authorized officers until the earlier of the
termination of this Control Agreement in accordance with the terms hereof, the
notification by the Authorized Representative of a change and the assignment of
the rights of the Secured Parties in accordance with Section 11 hereof.
-3-
Section 7. Notice of Adverse Claims. Except for the claims and
interest of the Secured Parties and of the Grantor in the Designated Account(s),
the Bank on the date hereof does not know of any claim to, or security interest
in, any Designated Account or in any funds credited thereto and does not know of
any claim that any Person other than the Administrative Agent has been given
"control" of any Designated Account or any such funds. If any Person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process and any claim of "control")
against any funds in any Designated Account, the Bank will promptly notify the
Administrative Agent and the Grantor thereof.
Section 8. Maintenance of Designated Accounts. In addition to, and
not in lieu of, the obligation of the Bank agreed in Section 2 hereof, the Bank
agrees to maintain the Designated Accounts as follows:
(i) Notice of Sole Control. If an Event of Default has occurred and
is continuing, the Administrative Agent shall be entitled to deliver to the
Bank a notice of sole control in substantially the form set forth in
Exhibit A attached hereto (the "Notice of Sole Control") with respect to
any Designated Account. The Bank agrees that, after receipt of such notice
and prior to the receipt of a Revocation Notice of Sole Control, it will
take all instruction with respect to such Designated Account solely from
the Administrative Agent. Without limiting the generality of the first
sentence of this paragraph, upon receipt of a Notice of Sole Control and
prior to the receipt of a Revocation Notice of Sole Control, the Bank shall
follow all instructions given by an authorized officer of the
Administrative Agent, including, without limitation, instructions for
distribution or transfer of any funds in any Designated Account to be made
to the Administrative Agent. If, at any time after such Notice of Sole
Control has been delivered to the Bank, such Event of Default is no longer
occurring, the Administrative Agent shall immediately deliver a revocation
notice of sole control stating that such Notice of Sole Control is no
longer in effect (a "Revocation Notice of Sole Control"). Upon receipt of a
Revocation Notice of Sole Control, the Bank will take all instructions with
respect to such Designated Account solely from the Grantor or its
authorized representatives unless it shall receive a subsequent Notice of
Sole Control.
(ii) Permitted Dispositions. Until such time as the Bank receives a
Notice of Sole Control signed by the Administrative Agent with respect to a
Designated Account and after the Bank receives a Revocation Notice of Sole
Control related to such Notice of Sole Control signed by the Administrative
Agent, a Grantor, or any representative of a Grantor, shall direct the Bank
with respect to the transfer of the funds held in such Designated Account.
Until such time as the Bank receives a Notice of Sole Control and after the
Bank receives a Revocation Notice of Sole Control related to such Notice of
Sole Control signed by the Administrative Agent, the Grantor shall be
entitled to write checks against amounts in each Designated Account, and
make withdrawals, transfers, and other dispositions of the funds in each
Designated Account.
(iii) Statements and Confirmations. The Bank will promptly send
copies of all statements and other correspondence (excluding routine
confirmations) concerning any Designated Account to the Grantor and the
Administrative Agent at the address set forth in
-4-
Section 11 hereof. The Bank will promptly provide to the Administrative
Agent and to the Grantor, upon the Administrative Agent's request therefor
from time to time and, in any event as of the last business day of each
calendar month, a statement of the cash balance in each Designated Account.
Section 9. Representations, Warranties and Covenants of the Bank.
The Bank hereby makes the following representations, warranties and covenants:
(i) The Designated Accounts have been established as set forth in
Section 1 hereof and each Designated Account will be maintained in the
manner set forth herein until termination of this Control Agreement. The
Bank shall not change the name or account number of any Designated Account
without the prior written consent of the Grantor and the Administrative
Agent.
(ii) The Bank is a "bank," as such term is defined in the UCC.
(iii) This Control Agreement is the valid and legally binding
obligation of the Bank.
(iv) The Bank has not entered into any agreement with any other
Person pursuant to which it has agreed to comply with any orders or
instructions with respect to any Designated Account. Until the termination
of this Control Agreement, the Bank will not, without the written approval
of the Grantor and the Administrative Agent, enter into any agreement with
any Person pursuant to which it agrees to comply with any orders or
instructions of such Person with respect to any Designated Account.
(v) The Bank has not entered into any other agreement with the
Grantor or the Administrative Agent purporting to limit or condition the
obligation of the Bank to comply with any orders or instructions with
respect to any Designated Account as set forth in Section 2 hereof.
Section 10. Successors; Assignment. The terms of this Control
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective corporate successors and permitted assignees.
Section 11. Notices. Any notice, request or other communication
required or permitted to be given under this Control 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 (2) 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.
-5-
Grantor: Muzak LLC
3318 Lakemont Boulevard
Fort Mill, South Carolina 29708
Attention: Chief Financial Officer
Telecopy: (803) 396-3357
Telephone: (803) 396-3000
with copy to:
Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022-4611
Attention: Lisa Anastos, Esq.
Telecopy: (212) 446-4900
Telephone: (212) 446-4761
Bank: [ ]
[Address]
Attention: ___________________
Telecopy: ____________________
Telephone: ____________________
Administrative
Agent: Bear Stearns Corporate Lending Inc.
383 Madison Avenue, 8th Floor
New York, New York 10179
Attention: Kevin Cullen
Telecopy: (212) 272-9743
Telephone: (212) 272-5724
with a copy to:
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attention: John Papachristos, Esq.
Telecopy: (212) 269-5420
Telephone: (212) 701-3000
Any party may change its address for notices in the manner set forth
above.
Section 12. Termination. The rights and powers granted herein to the
Administrative Agent have been granted in order to perfect the security
interests of the Secured
-6-
Parties in the Designated Accounts, are powers coupled with an interest and will
be affected neither by the bankruptcy of the Grantor nor by the lapse of time.
The obligations of the Bank hereunder shall continue in effect until the
termination of the security interests of the Secured Parties (including, without
limitation, by virtue of the notice pursuant to Section 11 hereof) with respect
to the Designated Account(s) have been terminated and a Authorized
Representative has notified the Bank of such termination in writing. Upon
delivery of such notice of termination to the Bank by an Authorized
Representative, the Bank will transmit to such account as the Authorized
Representative may direct (in accordance with Section 8.15 of the Guarantee and
Collateral Agreement) all collected funds, if any, then on deposit in, or
otherwise to the credit of, the Designated Account.
Section 13. Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.
Section 14. Counterparts. This Control 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 Control Agreement by signing
and delivering one or more counterparts.
[GRANTOR]
By: _________________________________
Name:
Title:
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
By: _________________________________
Name:
Title:
[ ], as Bank
By: _________________________________
Name:
Title:
SCHEDULE 1
Designated Account(s)
EXHIBIT A
[Date]
[Bank]
[Address]
Attention: _______________
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in Section 8(i) of the Control Agreement Concerning
Designated Accounts dated as of [ ], among [ ], us and you (the
"Control Agreement"; capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Control Agreement) (a copy of which
is attached) we hereby give you notice of our sole control over the Designated
Account(s), account number(s): _____________________________________________
(the "Specified Designated Accounts"). You are hereby instructed not to accept
any direction or instructions with respect to the Specified Designated Accounts
or any funds credited thereto from any Person other than the undersigned, unless
otherwise ordered by a court of competent jurisdiction or upon receipt of a
Revocation Notice of Sole Control (as defined in the Control Agreement) executed
by the undersigned.
You are instructed to deliver a copy of this notice by facsimile
transmission to [Grantor].
Very truly yours,
BEAR STEARNS CORPORATE LENDING INC.,
as Administrative Agent
By: _________________________________
Name:
Title:
cc: [Grantor]
ANNEX II
[FORM OF]
ISSUER ACKNOWLEDGMENT
The undersigned hereby (i) acknowledges receipt of a copy of that
certain guarantee and collateral agreement (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Guarantee and
Collateral Agreement"; capitalized terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Guarantee and Collateral
Agreement), dated as of May 20, 2003, among Muzak LLC (the "Borrower"), the
Guarantors from time to time party thereto, and Bear Stearns Corporate Lending
Inc., as Administrative Agent (in such capacity and together with any successors
in such capacity, the "Administrative Agent"), (ii) agrees promptly to note on
its books the security interests granted to the Administrative Agent and
confirmed under the Guarantee and Collateral Agreement, (iii) agrees that it
will comply with instructions of the Administrative Agent with respect to the
applicable Investment Property without further consent by the applicable
Grantor, (iv) agrees to notify the Administrative Agent upon obtaining knowledge
of any interest in favor of any Person in the applicable Investment Property
that is adverse to the interest of the Administrative Agent therein and (v)
waives any right or requirement at any time hereafter to receive a copy of the
Guarantee and Collateral Agreement in connection with the registration of any
Investment Property thereunder in the name of the Administrative Agent or its
nominee or the exercise of Voting rights by the Administrative Agent or its
nominee.
[_____________________________]
By:
-------------------------------
Name:
Title:
ANNEX III
[FORM OF]
ASSUMPTION AGREEMENT
[provided under separate cover]
ANNEX III to the
Guarantee and Collateral Agreement
[FORM OF]
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated as of [ ] (the "Agreement"),
by each Subsidiary Guarantor party hereto (each, an "Additional Subsidiary
Guarantor"), in favor of Bear Stearns Corporate Lending Inc., as Administrative
Agent for the for the benefit of the Lenders (as such terms are defined below).
Reference is made to the Credit Agreement dated as of May 20,
2003 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Credit Agreement"), among MUZAK HOLDINGS LLC, a Delaware
limited liability company (the "Holdings"), MUZAK LLC, a Delaware limited
liability company (the "Borrower"), the several lenders from time to time party
thereto (the "Lenders"); BEAR STEARNS CORPORATE LENDING INC., as administrative
agent (in such capacity, the "Administrative Agent"), LEHMAN COMMERCIAL PAPER
INC., as syndication agent (in such capacity, the "Syndication Agent"), BEAR,
STEARNS & CO. INC. and LEHMAN BROTHERS INC., as joint lead arrangers and joint
bookrunners (in such capacity, the "Joint Lead Arrangers"), and GENERAL ELECTRIC
CAPITAL CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent"). Capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 6.9(c) of the Credit Agreement, each
Additional Subsidiary Guarantor hereby agrees to become a "Subsidiary Guarantor"
for all purposes of the Credit Agreement, and a "Grantor" and a "Guarantor" for
all purposes of the Guarantee and Collateral Agreement and assumes and agrees to
be bound by the terms of the Credit Agreement and the Guarantee and Collateral
Agreement which are applicable to it. Each Additional Subsidiary Guarantor
further acknowledges and consents to the pledge of its Capital Stock under, and
all other obligations imposed pursuant to, the Guarantee and Collateral
Agreement. Without limiting the foregoing, the Additional Subsidiary Guarantor
hereby, jointly and severally with the other Subsidiary Guarantors, guarantees
to each Lender and the Administrative Agent and their respective successors and
assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of all Obligations under the Credit Agreement. In
addition, the Additional Subsidiary Guarantors hereby make the representations
and warranties set forth in Section 4 of the Credit Agreement and in Section 4
of the Guarantee and Collateral Agreement with respect to itself and its
obligations under this Agreement, as if each reference in such Sections to the
Loan Documents included reference to this Agreement.
-2-
Each Additional Subsidiary Guarantor hereby agrees that each of
the Schedules of the Guarantee and Collateral Agreement shall be supplemented as
provided in Appendix A hereto.
Each Additional Subsidiary Guarantor hereby agrees that this
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York without regard to conflicts of laws
principles thereof.
IN WITNESS WHEREOF, the Additional Subsidiary Guarantors have
caused this Agreement to be duly executed and delivered as of the day and year
first above written.
[ ]
By: _________________________________
Name:
Title:
Accepted and agreed:
BEAR STEARNS CORPORATE LENDING
INC., as Administrative Agent
By: ______________________________
Name:
Title: