Exhibit 10.2
FORM OF AMENDED AND RESTATED SECURITY AGREEMENT
Dated as of April 30, 2001
FROM
MEDIABAY, INC., XXXXX XXXXXXX, INC., AUDIO BOOK CLUB, INC., VIDEO
YESTERYEAR, iNC., XXXXXXXX.XXX, INC., XXXXXXXXXXXXX.XXX, INC., ABC-
COA ACQUISITION CORP., MEDIABAY SERVICES, INC., ABC INVESTMENT
CORP., MEDIABAY PUBLISHING, INC. AND RADIO CLASSICS, INC.
as Grantors
to
ING (U.S.) CAPITAL LLC,
as Administrative Agent
Table of Contents Page
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Section 1. Grant of Security...........................................................2
Section 2. Security for Obligations....................................................6
Section 3. Grantors Remain Liable......................................................6
Section 4. Delivery of Security Collateral and Account Collateral......................6
Section 5. Maintaining the L/C Cash Collateral Account.................................7
Section 6. Investing of Amounts in the L/C Cash Collateral Account.....................7
Section 7. Release of Amounts..........................................................7
Section 8. Representations and Warranties..............................................8
Section 9. Further Assurances.........................................................10
Section 10. As to Equipment and Inventory..............................................11
Section 11. Insurance..................................................................11
Section 12. Place of Perfection; Record; Collection of Receivables.....................12
Section 13. Voting Rights; Dividends; Etc..............................................13
Section 14. As to the Assigned Agreements..............................................15
Section 15. Payments Under the Assigned Agreements.....................................16
Section 16. Transfers and Other Liens; Additional Shares...............................16
Section 17. Administrative Agent Appointed Attorney-in-Fact............................16
Section 18. Administrative Agent May Perform...........................................17
Section 19. Administrative Agent's Duties..............................................17
Section 20. Remedies...................................................................17
Section 21. Registration Rights; Private Sale..........................................18
Section 22. Indemnity and Expenses.....................................................19
Section 23. Security Interest Absolute.................................................20
Section 24. Amendments; Waivers; Etc...................................................21
Section 25. Addresses for Notices......................................................21
Section 26. Continuing Security Interest; Assignments under the Credit Agreement.......21
Section 27. Release and Termination....................................................22
Section 28. Governing Law; Terms.......................................................22
Section 29. JURISDICTION...............................................................23
Section 30. WAIVER OF JURY TRIAL.......................................................23
Section 31. Counterparts...............................................................24
Section 32. Amendment and Restatement; Reaffirmation of Continuing Security............24
Schedules
Schedule I Pledged Shares and Pledged Debt
Schedule II Locations of Equipment and Inventory
Schedule III Trade Names
Exhibits
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Exhibit A Form of Cash Collateral Account Letter
Exhibit B Form of Consent and Agreement
Exhibit C Form of Security Agreement Supplement
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AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT (this "Agreement"), dated as of
April 30, 2001, by and among MediaBay, Inc., a Florida corporation ("MediaBay"),
Xxxxx Xxxxxxx, Inc., a Delaware corporation ("Xxxxx Xxxxxxx"), Audio Book Club,
Inc., a Delaware corporation ("Audio Book Club", and together with MediaBay and
Xxxxx Xxxxxxx, the "Borrowers" and each individually, a "Borrower"),
XxxxxXxx.xxx, Inc., a Delaware corporation ("XxxxxXxx.xxx"), XxxxxXxxxXxxx.xxx,
Inc., a Delaware corporation ("XxxxxXxxxXxxx.xxx"), ABC-COA Acquisition Corp., a
Delaware corporation ("ABC-COA"), MediaBay Services, Inc., a Delaware
corporation ("MediaBay Services"), Video Yesteryear, Inc., a Delaware
corporation ("Video Yesteryear"), ABC Investment Corp., a Delaware corporation
("ABC Investment"), Mediabay Publishing, Inc., a Delaware corporation ("MediaBay
Publishing") and Radio Classics, Inc., a Delaware corporation ("Radio
Classics"), the Additional Grantors (as defined in Section 24(c) hereof) (the
Additional Grantors, together with the Borrowers, XxxxxXxx.xxx,
XxxxxXxxxXxxx.xxx, ABC-COA, MediaBay Services, Video Yesteryear, ABC Investment,
MediaBay Publishing, and Radio Classics, the "Grantors") and ING (U.S.) Capital
LLC ("ING"), as administrative agent (in such capacity, together with its
successors in such capacity, the "Administrative Agent") for the Secured Parties
(as defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENTS
(1) MediaBay has entered into a Credit Agreement, dated as of December 31,
1998, which Credit Agreement is contemporaneously herewith being amended and
restated in its entirety to continue in effect pursuant to an Amended and
Restated Credit Agreement dated as of even date herewith (said Agreement, as it
may hereafter be amended, restated, supplemented, extended or otherwise modified
from time to time, the "Credit Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined), with the banks,
financial institutions and other institutional lenders party thereto (the
"Lenders"), and ING (U.S.) Capital LLC, as Issuing Bank and as Administrative
Agent.
(2) Each Grantor is the owner of the shares (such shares being the "Pledged
Shares") set forth opposite such Grantor's name in Part I of Schedule I hereto
and issued by the corporations named therein and of the indebtedness for
borrowed money (the "Pledged Debt") set forth opposite such Grantor's name in
Part II of Schedule I and issued by the obligors named therein.
(3) If and when determined by the Administrative Agent, the Administrative
Agent will open a non-interest bearing cash collateral account (the "L/C Cash
Collateral Account") with Fleet National Bank at its office at Fleet National
Bank, Xxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, (or at such other
institution as may be acceptable to the Administrative Agent), in the name of
the Borrowers but under the sole control and dominion of the Administrative
Agent and subject to the terms of this Agreement.
(4) Each Grantor other than the MediaBay is a wholly-owned Subsidiary of
MediaBay and will derive substantial benefit from the Advances made to, and the
issuance of Letters of Credit on behalf of, the Borrowers.
(5) It is a condition precedent to the Lenders' making of Advances, the
Issuing Bank's issuing of Letters of Credit under the Credit Agreement and the
Hedge Banks entering into Bank Hedge Agreements with the Borrowers from time to
time that the Borrowers shall have granted the assignment and security interest
and made the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances under the Credit Agreement, the Issuing Bank to issue
Letters of Credit under the Credit Agreement and the Hedge Banks to enter into
Bank Hedge Agreements with the Borrowers from time to time, each of the Grantors
hereby agrees with the Administrative Agent, for the benefit of the
Administrative Agent and the ratable benefit of the Secured Parties, as follows:
Section 1 Grant of Security.
Each of the Grantors hereby assigns and pledges to the Administrative
Agent, for the benefit of the Administrative Agent and the ratable benefit of
the Secured Parties, and hereby grants to the Administrative Agent, for the
benefit of the Administrative Agent and the ratable benefit of the Secured
Parties, a security interest in the following (collectively, the "Collateral"):
(a) all of such Grantor's machinery and equipment in all of its forms,
whether now owned or hereafter arising or acquired, wherever located, now or
hereafter existing, all fixtures and all parts thereof and all accessions
thereto (any and all such equipment, fixtures, parts and accessions, the
"Equipment");
(b) all of such Grantor's inventory in all of its forms, whether now owned
or hereafter arising or acquired, wherever located, now or hereafter existing
(including, without limitation, (i) raw materials and work in process, (ii)
finished goods, (iii) materials used or consumed in the manufacture or
production thereof, (iv) goods in which such Grantor has an interest in mass or
a joint or other interest or right of any kind (including, without limitation,
goods in which such Grantor has an interest or right as consignee) and (v) goods
that are returned to or repossessed by such Grantor), and all accessions
thereto, products thereof and documents therefor (any and all such inventory,
accessions, products and documents, the "Inventory");
(c) all of such Grantor's accounts, contract rights, chattel paper,
instruments, deposit accounts and other claims of any kind, whether now owned or
hereafter arising or acquired, now or hereafter existing, whether or not arising
out of or in connection with the sale or lease of goods or the rendering of
services, and all rights now or hereafter existing in and to all security
agreements, leases and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, instruments, deposit accounts or
claims, except that the Grantor shall not grant, for so long as such grant would
be prohibited by the terms of any such agreements, leases or other contracts or
by applicable law, a security interest in any such agreements, leases or other
contracts with respect to which the grant of any security interest or collateral
assignment contemplated hereby is prohibited by its terms or by applicable law
(any
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and all such accounts, contract rights, chattel paper, instruments, deposit
accounts and claims, to the extent not referred to in clause (d), (e) or (f)
below, being the "Receivables", and any and all such leases, security agreements
and other contracts being the "Related Contracts");
(d) all of such Grantor's right, title and interest, whether now existing
or hereafter arising or acquired, in and to the following (the "Security
Collateral"), without duplication:
(i) the Pledged Shares and the certificates representing the Pledged
Shares, including without limitation, the shares of capital stock of all of
such Grantor's Subsidiaries, and the certificates representing the Pledged
Shares; provided, however, that only 65% of the shares of capital stock of
such Grantor's Foreign Subsidiaries shall be pledged, and all 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
such Pledged Shares;
(ii) the Pledged Debt and the instruments evidencing the Pledged Debt,
and all interest, 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 Pledged Debt;
(iii) all additional shares of stock of any issuer of the Pledged
Shares from time to time acquired by such Grantor in any manner, provided,
however, that only 65% of the shares of capital stock of such Grantor's
Foreign Subsidiaries shall be pledged pursuant to this Agreement, and the
certificates representing such additional shares, and all 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 such
shares;
(iv) all additional indebtedness for borrowed money from time to time
owed to such Grantor by any obligor of the Pledged Debt and the instruments
evidencing such indebtedness, and all interest, 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 such indebtedness;
(v) all additional "investment property" (as defined in the UCC) now
owned or hereafter arising or acquired by such Grantor including, without
limitation, (A) all securities, whether certificated or uncertificated,
including, without limitation, stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (B) all security entitlements of such
Grantor including, without limitation, the rights of such Grantor to any
securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or
other money owing by any securities intermediary with respect to that
account; (C) all securities accounts held by such Grantor; (D) all
commodity contracts held by such Grantor; and (E) all commodity accounts
held by such Grantor.
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(e) each of the agreements to which such Grantor is now or may hereafter
become a party, and each Hedge Agreement to which such Grantor is now or may
hereafter become a party, in each case as such agreements may be amended,
restated or otherwise modified from time to time, unless and for so long as the
Grantor is not permitted to grant a security interest therein or collateral
assignment thereof (collectively, the "Assigned Agreements"), including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) claims of such Grantor for
damages arising out of or for breach of or default under the Assigned
Agreements, and (iv) the right of such Grantor to terminate the Assigned
Agreements, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder (all such Collateral being the "Agreement
Collateral");
(f) all of such Grantor's right, title and interest, whether now existing
or hereafter arising or acquired, in and to the following (collectively, the
"Account Collateral"):
(i) the L/C Cash Collateral Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the L/C Cash Collateral Account;
(ii) all deposit accounts of such Grantor, all funds held therein and
all certificates and instruments, if any, from time to time representing or
evidencing such deposit accounts;
(iii) all Collateral Investments (as hereinafter defined) from time to
time and all certificates and instruments, if any, from time to time
representing or evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit accounts, checks and
other instruments from time to time hereafter delivered to or otherwise
possessed by the Administrative Agent for or on behalf of such Grantor in
substitution for or in addition to any or all of the then existing Account
Collateral; and
(v) 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 then existing Account Collateral;
(g) all of such Grantor's corporate and business records, customer lists,
credit files, computer program printouts and other computer materials and
records;
(h) without limitation of any of the foregoing, all of such Grantor's
general intangibles, including, without limitation,
(i) all choses in action, claims and causes of action or rights of
recovery or set-off of every kind and character, and the goodwill of the
business of such Grantor as a going concern;
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(ii) (A) all rights of such Grantor to receive moneys due and to
become due under or pursuant to any general intangibles, (B) all rights of
such Grantor to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to any general intangibles, (C) claims of such
Grantor for damages arising out of or for breach of or default under any
general intangibles, and (D) the right of such Grantor to terminate any
general intangibles, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder;
(iii) all of such Grantor's right, title and interest, whether now
owned or hereafter arising or acquired, in and to the following
(individually a "Copyright" and collectively, "Copyrights"): (A) all
copyrights and general intangibles of like nature (whether registered or
unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (B) all reissues, extensions or renewals
thereof;
(iv) all rights of such Grantor now owned or hereafter arising or
acquired under any and all agreements granting any right to use any
Copyright;
(v) all of such Grantor's right, title and interest, whether now
existing or hereafter arising or acquired, in and to the following
(individually a "Patent" and collectively, "Patents"): (A) all letters
patent of the United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of the United
States or any other country, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State or Territory
thereof, or any other country, and (B) all reissues, continuations,
continuations-in-part or extensions thereof;
(vi) all rights of such Grantor now owned or hereafter arising or
acquired under any and all agreements granting any right with respect to
any invention on which a Patent is in existence;
(vii) all of such Grantor's right, title and interest, whether now
existing or hereafter arising or acquired, in and to the following
(individually a "Trademark" and collectively, "Trademarks"): (A) all
trademarks, trade names, corporate names, business names, trade styles,
service marks, logos, other source or business
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identifiers, prints and labels on which any of the foregoing have appeared
or appear, designs and general intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office
or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; and (B) all reissues,
extensions or renewals thereof; and
(viii) all rights of such Grantor now owned or hereafter arising or
acquired under all agreements granting any right to use any Trademark or
Trademark registration.
(i) all proceeds of any and all of the foregoing Collateral (including,
without limitation, proceeds that constitute property of the types described in
clauses (a) - (h) of this Section 1) and, to the extent not otherwise included,
all (i) payments under insurance (whether or not the Administrative Agent is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral and (ii) cash.
Section 2. Security for Obligations.
This Agreement secures the payment of all Obligations of each Grantor now
or hereafter existing under the Loan Documents, whether for principal, interest,
fees, expenses or otherwise (all such Obligations being the "Secured
Obligations"). Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by such Grantor to the Administrative Agent or the
Secured Parties under the Loan Documents and the Bank Hedge Agreements but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Grantor.
Section 3. Grantors Remain Liable.
Anything herein to the contrary notwithstanding, (a) each Grantor shall
remain liable under the contracts and agreements included in the Collateral to
which it is a party to the extent set forth therein to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Administrative Agent of any of the rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts and agreements included in the Collateral to which it is a
party and (c) neither the Administrative Agent nor any Secured Party shall have
any obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Administrative Agent or
any Secured Party be obligated to perform any of the obligations or duties of
any Grantor under such contracts and agreements included in the Collateral to
which it is a party or to take any action to collect or enforce any claim for
payment assigned hereunder.
Section 4. Delivery of Security Collateral and Account Collateral.
All certificates or instruments representing or evidencing Security
Collateral or Account Collateral (except those relating to cash accounts and
deposit instruments not required by the
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Administrative Agent to be delivered to the Administrative Agent on the Closing
Date (but which it retains the right to require) shall be delivered to and held
by or on behalf of the Administrative Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Administrative Agent. The Administrative Agent shall have
the right, upon the occurrence and during the continuation of an Event of
Default and on five (5) business days' notice to the Borrowers, to transfer to
or to register in the name of the Administrative Agent or any of its nominees
any or all of the Security Collateral and the Account Collateral, subject only
to the revocable rights specified in Section 13(a). In addition, the
Administrative Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing Security Collateral or Account
Collateral for certificates or instruments of smaller or larger denominations.
Section 5. Maintaining the L/C Cash Collateral Account.
So long as any Advance shall remain unpaid, any Letter of Credit shall be
outstanding or any Lender shall have any Commitment under the Credit Agreement
or any Hedge Bank or any Loan Party shall have any obligations under any Hedge
Agreement:
(a) The Borrowers will maintain the L/C Cash Collateral Account with
Fleet (or such other institution as may be acceptable to Administrative
Agent).
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account and, except as
otherwise provided by the provisions of Section 7 and Section 20, that no
amount (including interest on Collateral Investments) shall be paid or
released to or for the account of, or withdrawn by or for the account of,
any Grantor or any other Person from the L/C Cash Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations, of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
Section 6. Investing of Amounts in the L/C Cash Collateral Account.
If requested by the Borrowers, the Administrative Agent will, subject to
the provisions of Section 7 and Section 20, from time to time invest (a) amounts
on deposit in the L/C Cash Collateral Account in such Cash Equivalents as the
Borrowers may select, in each case which investments shall be made in the name
of the Administrative Agent on behalf of the Borrowers, and (b) interest paid on
the Cash Equivalents referred to in clause (a) above, and reinvest other
proceeds of any such Cash Equivalents that may mature or be sold, in each case
in such Cash Equivalents as the Borrowers may select, in each case which
investments shall be made in the name of the Administrative Agent on behalf of
the Borrowers (the Cash Equivalents referred to in clauses (a) and (b) above
being collectively "Collateral Investments"). Interest and proceeds that are not
invested or reinvested in Collateral Investments as provided above shall be
deposited and held in the L/C Cash Collateral Account.
Section 7. Release of Amounts.
Upon the drawing of any Letter of Credit for which funds are on deposit in
the L/C Cash Collateral Account, such funds shall be applied to
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reimburse the Issuing Bank or the Revolving Credit Lenders, as applicable, as
provided in the Credit Agreement.
Section 8. Representations and Warranties.
Each Grantor represents and warrants as follows:
(a) All of such Grantor's existing Equipment and Inventory are located
at the places specified for such Grantor on Schedule II hereto. The chief
place of business and chief executive office of such Grantor and the office
where such Grantor keeps its records concerning the Receivables, and, to
the extent possessed, the original copies of each Assigned Agreement and
all originals of all chattel paper that evidence Receivables, are currently
located at the address specified below the name of such Grantor on the
signature pages hereof (or in the case of any Additional Grantor at the
address specified below the name of such Additional Grantor on the
signature page of the Security Agreement Supplement (as defined in Section
24(c)) executed and delivered by such Additional Grantor). None of the
material Receivables or Agreement Collateral is evidenced by a promissory
note or other instrument.
(b) Such Grantor is the legal and beneficial owner of the Collateral
pledged by such Grantor hereunder free and clear of any Lien, except for
security interests created or permitted under the Loan Documents
(including, without limitation, any Liens disclosed on Schedule 6.1(c) to
the Credit Agreement). No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in
any recording office, except such as may have been filed: (i) in favor of
the Administrative Agent relating to this Agreement or (ii) with respect to
Permitted Liens or as otherwise permitted pursuant to the Credit Agreement.
(c) Set forth below on Schedule III hereto is a complete and accurate
list of (i) all names under which any Grantor is or has been doing business
within the last five years (including, without limitation, all trade names,
division names and fictitious names), (ii) all trade names that any Grantor
owns or, if applicable, all material trade names that any Grantor is
licensed to use (including the expiration date of such license, if
applicable) and (iii) all trade names that any Grantor has established the
right to use (collectively, the "Trade Names"). No Grantor has changed
within the past six months its name or identity, by reorganization or
otherwise, or its address set forth below the name of such Grantor on the
signature pages hereof or the Security Agreement Supplement executed and
delivered by it, as the case may be, except as set forth on Schedule III
hereto.
(d) Except as set forth for each Grantor on Schedule II hereto, such
Grantor has exclusive possession and control of the existing Equipment and
Inventory pledged by such Grantor hereunder.
(e) The Pledged Shares owned by such Grantor have been duly authorized
and validly issued and are fully paid and non-assessable. To the best
knowledge of such Grantor, the Pledged Debt owed to such Grantor has been
duly authorized, authenticated or issued and delivered and, is the legal,
valid and binding obligation of the issuers thereof and is not in default.
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(f) The Pledged Shares constitute the percentage of the issued and
outstanding shares of stock of the issuers thereof indicated on Schedule I.
The Pledged Debt is outstanding in the principal amount indicated on
Schedule I.
(g) The Assigned Agreements to which such Grantor is a party have been
duly authorized, executed and delivered by such Grantor. There exists no
default under any material Assigned Agreement to which such Grantor is a
party, by Grantor or, to Grantor's knowledge, any other party thereto,
except under any Assigned Agreement which involves a sum not in excess of
$50,000 individually or $250,000 in the aggregate per annum for any default
which individually or in the aggregate with other defaults would not
reasonably be expected to have a Material Adverse Effect. If reasonably
required by the Administrative Agent each party to the Assigned Agreements
to which such Grantor is a party, other than such Grantor, has executed and
delivered to such Grantor a consent, in substantially the form of Exhibit C
hereto, to the assignment of the Agreement and Collateral to the
Administrative Agent pursuant to this Agreement.
(h) Upon either the filing by the Administrative Agent or its
representatives of the proper financing statements referred to in Section
3.1 of the Credit Agreement or the taking of possession thereof, as
applicable, this Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto create a valid and perfected first priority security interest in the
Collateral of such Grantor which can be perfected by such filings or by the
taking of possession, to the extent possession is so taken by the
Administrative Agent, securing the payment of the Secured Obligations, and
all filings and other actions necessary or desirable to perfect and protect
such security interest shall have been duly taken.
(i) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either (i)
for the grant by such Grantor of the assignment and security interest
granted hereby, for the pledge by such Grantor of the Security Collateral
pursuant hereto or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) for the perfection or maintenance of the
pledge, assignment and security interest created hereby (including the
first priority nature of such pledge, assignment or security interest),
except for the filing of financing and continuation statements under the
Uniform Commercial Code, which financing statements are in proper form and
are duly executed and except for any other actions required to be taken as
requested by the Administrative Agent which have been duly taken, or (iii)
for the exercise by the Administrative Agent of its voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with
the disposition of any portion of the Security Collateral by laws affecting
the offering and sale of securities generally.
(j) The Inventory which has been produced by such Grantor has been
produced in compliance with all requirements of the Fair Labor Standards
Act.
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Section 9. Further Assurances.
(a) Each of the Grantors agrees that from time to time, at the expense of
the Borrowers, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary,
or that the Administrative Agent may reasonably request, in order to perfect and
protect any pledge, assignment or security interest granted or purported to be
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, such Grantor will, upon any such reasonable
request of the Administrative Agent: (i) upon the occurrence and during the
continuance of an Event of Default xxxx conspicuously each document included in
the Inventory pledged by such Grantor hereunder, each chattel paper included in
the Receivables pledged by such Grantor hereunder, each Related Contract pledged
by such Grantor hereunder, each Assigned Agreement pledged by such Grantor
hereunder and each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to the Administrative Agent, indicating that
such document, chattel paper, Related Contract, Assigned Agreement or Collateral
is subject to the security interest granted hereby; (ii) if any Collateral
pledged by such Grantor hereunder shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Administrative
Agent hereunder such note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Administrative Agent; and (iii) execute such
financing or continuation statements, or amendments thereto, and such other
instruments or notices as may be reasonably requested by the Administrative
Agent in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) Each Grantor hereby authorizes the Administrative Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral pledged by such Grantor hereunder, without the
signature of such Grantor where permitted by law in order to perfect and
preserve the pledge, assignment and security interest granted or purported to be
granted hereby. A copy of each such statement and amendment will be timely
provided to such Grantor. A photocopy or other reproduction of this Agreement or
any financing statement covering its Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) Each Grantor will furnish to the Administrative Agent from time to time
statements and schedules further identifying and describing the Collateral and
such reports in connection with its Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
(d) Each Grantor hereby agrees, upon the request of the Administrative
Agent at any time following the occurrence and during the continuance of an
Event of Default, and at the expense of the Borrowers, (i) within fourteen (14)
days after such request deliver to the Administrative Agent a letter agreement
among such Grantor, the bank where the account is located and the Administrative
Agent in respect of the main cash concentration account of such Grantor, which
agreement shall be in substantially the form of Exhibit A hereto, (ii) within
twenty-one (21) days after such request deliver to the Administrative Agent a
letter agreement, in substantially the form of Exhibit B hereto, in respect of
each lockbox and blocked deposit
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account of such Grantor, (iii) within thirty (30) days after such request, take
whatever action (including, without limitation, the filing of Uniform Commercial
Code financing statements) as may be reasonably necessary or advisable in the
sole discretion of the Administrative Agent to vest in the Administrative Agent
(or in any representative of the Administrative Agent designated by it), for the
benefit of the Administrative Agent and the ratable benefit of the Secured
Parties, valid and subsisting Liens on the main cash concentration accounts of
the Borrowers and each other Grantor and the lockboxes and blocked deposit
accounts of the Grantors, and (iv) at any time and from time to time, promptly
execute and deliver any and all further instruments and documents and take all
such other action as the Administrative Agent may deem reasonably necessary in
obtaining the full benefits of the Liens on, or in preserving the Liens in, such
main concentration accounts, lockboxes and blocked deposit accounts.
Section 10. As to Equipment and Inventory.
(a) Each Grantor shall keep the Equipment and Inventory (other than
Inventory sold in the ordinary course of business) pledged by such Grantor
hereunder at the places therefor specified in Section 8(a) or, upon fifteen (15)
days' prior written notice to the Administrative Agent, at such other places in
a jurisdiction where all action required by this Agreement to maintain the
security interest of the Administrative Agent in such Equipment and Inventory
granted hereby shall have been taken with respect to such Equipment and
Inventory.
(b) Each Grantor shall cause the Equipment pledged by such Grantor
hereunder which individually or in the aggregate is material to such Grantor's
business to be maintained and preserved in good working condition, repair and
working order, ordinary wear and tear excepted and except for insured casualty
losses and shall forthwith, or in the case of any loss or damage to any of such
Equipment, as quickly as practicable after the occurrence thereof, make or cause
to be made all repairs, replacements and other improvements in connection
therewith that are necessary or desirable to such end. Each Grantor shall
promptly furnish to the Administrative Agent a statement respecting any loss or
damage to any of the Equipment pledged by such Grantor hereunder (other than
immaterial loss or damage) or loss or damage to Equipment which individually or
in the aggregate is not material to such Grantor's business.
(c) Each Grantor shall timely pay when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment and
Inventory pledged by such Grantor hereunder; provided, however, that such
Grantor shall not be required to pay any such tax, assessment, charge or claim
that is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien resulting
therefrom attaches to its property and becomes enforceable against the Borrowers
or any of their Subsidiaries. In producing the Inventory pledged by such Grantor
hereunder, each Grantor shall comply in all material respects with all
requirements of the Fair Labor Standards Act.
Section 11. Insurance.
(a) Each Grantor shall, at its own expense, maintain insurance with respect
to the Equipment and Inventory pledged by such Grantor hereunder in such
amounts, against such risks, in such form and with such insurers, as required by
the Credit Agreement. Each policy for liability insurance shall provide for all
losses to be paid on behalf of the Administrative Agent
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and each Grantor as their interests may appear and each policy for property
damage insurance shall provide for all losses (except so long as the payor shall
not have received notice from the Administrative Agent to the effect that an
Event of Default shall have occurred and is continuing for losses of less than
$250,000 per occurrence) to be paid directly to the Administrative Agent and
with respect to losses of $250,000 or more per occurrence but not in excess of
$500,000 per occurrence or $500,000 in the aggregate, the Administrative Agent
shall, unless an Event of Default shall have occurred and then be continuing,
make such insurance proceeds available to the subject Grantor for the repair or
replacement of the subject Collateral. Each such policy shall in addition (i)
name such Grantor and the Administrative Agent as insured parties thereunder
(without any representation or warranty by or obligation upon the Administrative
Agent) as their interests may appear, (ii) contain the agreement by the insurer
that any loss thereunder in excess of $250,000 per occurrence unless an Event of
Default shall have occurred and be continuing shall be payable to the
Administrative Agent notwithstanding any action, inaction or breach of
representation or warranty by such Grantor, (iii) provide that there shall be no
recourse against the Administrative Agent for payment of premiums or other
amounts with respect thereto and (iv) provide that the insurer shall endeavor to
provide at least thirty (30) days' prior written notice of cancellation or of
lapse to the Administrative Agent. Each Grantor shall, if so requested by the
Administrative Agent, deliver to the Administrative Agent original or duplicate
policies of such insurance and, as often as the Administrative Agent may
reasonably request, a report of a reputable insurance broker with respect to
such insurance. Further, each Grantor shall, at the request of the
Administrative Agent, duly exercise and deliver instruments of assignment of its
insurance policies to comply with the requirements of Section 9 and cause the
insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by any Grantor
pursuant to this Section 11 may be paid directly to the Person who shall have
incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory which individually or in the aggregate is
material to such Grantor's business when subsection (c) of this Section 11 is
not applicable, the Grantor that owns such Equipment or Inventory shall make or
cause to be made the necessary repairs to or replacements of such Equipment or
Inventory out of available net proceeds of insurance maintained by such Grantor
pursuant to this Section 11.
(c) Upon the occurrence and during the continuance of any Event of Default
or the loss (equal to or in excess of $500,000 per occurrence or in the
aggregate) of any Equipment or Inventory, all insurance payments in respect of
such Equipment or Inventory shall, except as provided in Section 11(a), be paid
to and applied by the Administrative Agent as specified in Section 20(b).
Section 12. Place of Perfection; Record; Collection of Receivables.
(a) Each of the Grantors shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Collateral, and, to the extent possessed, the original copies of the Assigned
Agreements and all originals of all chattel paper that evidence Receivables, at
the location therefor specified in Section 8(a) or, upon fifteen (15) days'
prior written notice to the Administrative Agent, at such other locations in a
jurisdiction where all actions required by this Agreement to maintain the
security interest of the
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Administrative Agent in such Collateral granted hereby shall have been taken
with respect to the Collateral. Each of the Grantors shall hold and preserve
such records, Assigned Agreements and chattel paper and shall permit
representatives of the Administrative Agent at any time during normal business
hours to inspect and make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), each of the
Grantors shall continue to collect, at its own expense, all amounts due or to
become due such Grantor under the Receivables pledged by such Grantor hereunder
provided that, so long as no Event of Default has occurred and is continuing,
each Grantor may settle or compromise the amount of payment of any of its
Receivables, release wholly or partly any Obligor thereof, or allow any credit
or discount thereon in the ordinary course of business. In connection with such
collections, each Grantor may take such action as such Grantor may deem
necessary or advisable to enforce collection of the Receivables pledged by such
Grantor hereunder; provided, however, that the Administrative Agent shall have
the right at any time, upon the occurrence and during the continuance of an
Event of Default and upon five business (5) days' written notice to the
Borrowers of its intention to do so, to notify the obligors under any
Receivables of the assignment of such Receivables to the Administrative Agent
and to direct such Obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Administrative Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by any Grantor of the notice from the Administrative Agent
referred to in the proviso of the preceding sentence upon the occurrence and
during the continuance of an Event of Default, (i) all amounts and proceeds
(including instruments) received by such Grantor in respect of the Receivables
pledged by such Grantor hereunder shall be received in trust for the benefit of
the Administrative Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Administrative Agent in the same
form as so received (with any necessary endorsement) to be applied as provided
by Section 20(b) and (ii) without the prior consent of the Administrative Agent,
such Grantor shall not adjust, settle or compromise the amount or payment of any
of its Receivables, release wholly or partly any Obligor thereof, or allow any
credit or discount thereon.
Section 13. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be continuing:
(i) The Grantors shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the other Loan Documents; provided, however, that the Grantors shall not
exercise or refrain from exercising any such right if such action would
reasonably be expected to have a material adverse effect on the value of
the Security Collateral or any part thereof.
(ii) The Grantors shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Security Collateral;
provided, however, that any and all
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(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Security
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral
shall be, and shall be forthwith, delivered to the Administrative Agent to hold
as Security Collateral and shall, if received by any of the Grantors, be
received in trust for the benefit of the Administrative Agent, be segregated
from the other property or funds of such Grantor and be forthwith delivered to
the Administrative Agent as Security Collateral in the same form as so received
(with any necessary endorsement); provided further, however, that the Grantors
shall be entitled to retain any such payments referred to in clause (A), (B) or
(C) above to the extent such payments are made between the Borrowers and their
Subsidiaries or between the Borrowers' Subsidiaries and in each case are
otherwise permitted by the terms of the Credit Agreement, including without
limitation Sections 6.4 and 6.7 thereof and in each case to the extent relating
to Investments prior to the occurrence and during the continuance of a Default
subject however to any prepayment requirements under the Credit Agreement.
(iii) The Administrative Agent shall execute and deliver (or cause to
be executed and delivered) to each of the Grantors all such proxies and
other instruments as such Grantor may request for the purpose of enabling
such Grantor to exercise, prior to the occurrence and during the
continuance of an Event of Default, the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an Event of Default:
(i) All rights of each of the Grantors (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 13(a)(i) shall automatically
cease and (y) to receive the dividends and interest payments that it would
otherwise be authorized to receive and retain pursuant to Section 13(a)(ii)
shall automatically cease, and all such rights shall thereupon be vested
solely in the Administrative Agent, which shall thereupon have the sole
right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Security Collateral such
dividends and interest payments.
(ii) All dividends and interest payments that are received by any of
the Grantors contrary to the provisions of paragraph (i) of this Section
13(b) shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent as Security Collateral in
the same form as so received (with any necessary endorsement).
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Section 14. As to the Assigned Agreements.
(a) Each of the Grantors shall, at its expense:
(i) perform and observe all the material terms and provisions of the
Assigned Agreements to which such Grantor is a party to be performed or
observed by it, maintain such Assigned Agreements in full force and effect
and enforce such Assigned Agreements in accordance with their terms, except
where the failure to do so would not be reasonably likely to have a
Material Adverse Effect and take all such action to such end as may be from
time to time reasonably requested by the Administrative Agent; and
(ii) furnish to the Administrative Agent promptly upon receipt thereof
copies of all material notices received by such Grantor (other than those
created or arising in the ordinary course) under or pursuant to the
Assigned Agreements to which such Grantor is a party relating to any breach
or default by any party which could reasonably be expected to have a
Material Adverse Effect, and from time to time (A) furnish to the
Administrative Agent such information and reports regarding the Collateral
pledged by such Grantor hereunder as the Administrative Agent may
reasonably request and (B) upon the reasonable request of the
Administrative Agent, make to each other party to any such Assigned
Agreement such demands and requests for information and reports or for
action as such Grantor is entitled to make thereunder.
(b) Each of the Grantors agrees that it shall not without the consent of
the
Administrative Agent if any such action would reasonably be expected to be
adverse to the interests of, or impair the security value of such Collateral to,
the Administrative Agent or the Lenders (except if adverse, or causing an
impairment, in each case only in an immaterial way or with respect to Collateral
which individually or in the aggregate is not material to such Grantor's
business) and shall not in any event take any such action at any time following
the occurrence and during the continuance of a Default or an Event of Default:
(i) cancel or terminate any Assigned Agreement to which such Grantor
is a party, or consent to or accept any cancellation or termination
thereof;
(ii) amend or otherwise modify any Assigned Agreement to which such
Grantor is a party, or give any consent, waiver or approval thereunder;
(iii) waive any material default under or material breach of any
Assigned Agreement to which such Grantor is a party;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with any Assigned Agreement to which such
Grantor is a party, except as expressly provided therein; or
(v) take any other action in connection with any Assigned Agreement to
which such Grantor is a party, that would impair the value of the interest
or rights of such Grantor thereunder or that would impair the interest or
rights of the Administrative Agent.
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Section 15. Payments Under the Assigned Agreements.
Following the occurrence and continuance of an Event of Default, if
requested by the Administrative Agent, each of the Grantors shall effectively
instruct each other party to each Assigned Agreement to which such Grantor is a
party, that all payments due or to become due under or in connection with such
Assigned Agreement shall be made in accordance with the instructions of the
Administrative Agent. In such event the Administrative Agent shall instruct such
party to make (A) such payments to the Borrowers so long as no Event of Default
shall have occurred and be continuing or (B) such payments to the Administrative
Agent if any Event of Default shall have occurred and be continuing. Any payment
made to the Administrative Agent under this Section 15 shall be applied as
provided in Section 20(b).
Section 16. Transfers and Other Liens; Additional Shares.
(a) Each of the Grantors agrees that it shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except sales of Inventory in the ordinary
course of business or sales or other dispositions of other assets permitted by
the Credit Agreement, or (ii) create or suffer to exist any Lien upon or with
respect to any of the Collateral except for (A) the pledge, assignment and
security interest created by this Agreement and (B) any other Liens expressly
permitted under Section 6.1 of the Credit Agreement.
(b) Each of the Grantors agrees that it shall (i) cause each issuer of the
Pledged Shares which it controls not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor and except as otherwise permitted by the Credit
Agreement, and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional shares of stock or other
securities owned by such Grantor of each issuer of the Pledged Shares; provided,
however, that in no event shall more than 65% of the capital stock of any
Foreign Subsidiary of a Grantor be pledged pursuant to this Agreement except if
and to the extent otherwise provided in the Credit Agreement.
Section 17. Administrative Agent Appointed Attorney-in-Fact.
Each of the Grantors hereby irrevocably appoints the Administrative Agent
such Grantor's attorney-in-fact, with full authority in the place and stead of
the Borrowers and in the name of the Borrowers or otherwise, upon the occurrence
and during the continuance of an Event of Default, to take any action and to
execute any instrument that the Administrative Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 11,
(b) to ask for, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of its Collateral,
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
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(d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the
collection of any of its Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Administrative Agent with respect to any of its Collateral.
Section 18. Administrative Agent May Perform.
If any of the Grantors fails to perform any agreement contained herein, the
Administrative Agent may itself, upon reasonable prior notice to such Grantor,
perform, or cause performance of, such agreement, and the reasonable and actual
expenses of the Administrative Agent incurred in connection therewith shall be
payable by such Grantor under Section 22(b).
Section 19. Administrative Agent's Duties.
The powers conferred on the Administrative Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Collateral, as to ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Security Collateral, whether or not the
Administrative Agent or any Secured Party has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral. The
Administrative Agent shall exercise reasonable care in the custody and
preservation of any Collateral in its possession and shall accord such
Collateral treatment equal to that which Administrative Agent accords other
similar property in its possession.
Section 20. Remedies.
If any Event of Default shall have occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
upon default under the Uniform Commercial Code in effect in the State of
New York at such time (the "N.Y. Uniform Commercial Code") (whether or not
the N.Y. Uniform Commercial Code applies to the affected Collateral) and
also may (i) require any or all of the Grantors to, and each Grantor hereby
agrees that it will at its expense and upon request of the Administrative
Agent forthwith, assemble all or part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative Agent at a
place to be designated by the Administrative Agent that is reasonably
convenient to both parties and (ii) without notice except as specified
below and as required by law, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Administrative
Agent's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Administrative Agent may deem commercially
reasonable. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Administrative Agent
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Administrative Agent may adjourn any public
or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice except as
required by law, be made at the time and place to which it was so
adjourned.
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(b) Any cash held by or on behalf of the Administrative Agent as
Collateral and all cash proceeds received by the Administrative Agent in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as Collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to
the Administrative Agent pursuant to Section 22) in whole or in part by the
Administrative Agent for the ratable benefit of the Secured Parties
against, all or any part of the Secured Obligations in such order as is
specified by the Credit Agreement and, if the Credit Agreement does not so
specify an order of application against the Obligations, in such order as
the Administrative Agent shall elect, provided, however, that this Section
20(b) shall be subject to the provisions of Section 11(a). Any surplus of
such cash or cash proceeds held by the Administrative Agent and remaining
after payment in full of all the Secured Obligations shall be paid over to
the applicable Grantors or to whomsoever may be lawfully entitled to
receive such surplus.
(c) The Administrative Agent may exercise any and all rights and
remedies of any of the Grantors under or in connection with the Assigned
Agreements or otherwise in respect of the Collateral, including, without
limitation, any and all rights of any Grantor to demand or otherwise
require payment of any amount under, or performance of any provision of,
any Assigned Agreement.
(d) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Administrative Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid
over to the Administrative Agent in the same form as so received (with any
necessary endorsement or assignment).
(e) The Administrative Agent may, with reasonable notice to any of the
Grantors and at any time or from time to time, charge, set-off or otherwise
apply all or any part of the Secured Obligations against the L/C Cash
Collateral Account or any part thereof; provided, however, that the failure
to give notice shall not affect the validity of such charge, set-off or
application.
(f) Each Grantor will furnish to the Administrative Agent correct and
complete customer lists and updates thereof as the Administrative Agent may
reasonably request, all in reasonable detail.
Section 21. Registration Rights; Private Sale.
(a) If the Administrative Agent shall determine to exercise its right to
sell all or any of the Security Collateral pursuant to Section 20 pursuant to a
public offering (it being understood by each of the Grantors that the
Administrative Agent shall be under no obligation to do so and may, in its sole
discretion, dispose of the Security Collateral in any manner permitted by law
that the Administrative Agent may select), each Grantor agrees that, upon
request of the Administrative Agent, such Grantor will, at its own expense:
(i) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers thereof
to execute and deliver all such instruments and documents, and do or cause
to be done all such other acts and things as
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may be necessary or, in the sole discretion of the Administrative Agent,
desirable to register its Security Collateral under the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), to cause a
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the
related prospectus that, in the sole discretion of the Administrative
Agent, are necessary or desirable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(ii) use its best efforts to qualify its Security Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Security Collateral, as
requested by the Administrative Agent in its sole discretion;
(iii) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 10(a) of the Securities Act;
(iv) provide the Administrative Agent with such other information and
projections as may be necessary or, in the sole discretion of the
Administrative Agent, desirable to enable the Administrative Agent to
effect the sale of its Security Collateral; and
(v) do or cause to be done all such other acts and things as may be
necessary to make such sale of its Security Collateral or any part thereof
valid and binding and in compliance with applicable law.
The Administrative Agent is authorized, in connection with any sale of the
Security Collateral pursuant to Section 20, to deliver or otherwise disclose to
any prospective purchaser of the Security Collateral (A) any registration
statement or prospectus, and all supplements and amendments thereto, prepared
pursuant to clause (i) above, (B) any information and projections provided to it
pursuant to clause (iv) above and (C) any other information in its possession
relating to the Security Collateral.
(b) The Grantors recognize that, upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent may be unable to
effect a public sale of all or a part of the Security Collateral, and may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated 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. The Grantors acknowledge that any such private
sales may be at places and on terms less favorable to the sellers than if sold
at public sales and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner, and that the Administrative Agent has
no obligation to delay the sale of any such securities for the period of time
necessary to permit any such securities to be registered for public sale.
Section 22. Indemnity and Expenses.
(a) Each of the Grantors hereby agrees, jointly and severally, to indemnify
the Administrative Agent from and against any and all claims, losses and
liabilities arising out of or
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resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from the
Administrative Agent's gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction.
(b) The Borrowers will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Administrative Agent or the Secured
Parties hereunder or (iv) the failure by the Borrowers or any other Grantor to
perform or observe any of the provisions hereof.
Section 23. Security Interest Absolute.
The obligations of each Grantor under this Agreement are independent of the
Secured Obligations, and a separate action or actions may be brought and
prosecuted against each Grantor to enforce this Agreement, irrespective of
whether any action is brought against the Borrowers or any other Grantor or
whether the Borrowers or any other Grantor is joined in any such action or
actions. All rights of the Administrative Agent and the pledge, assignment and
security interest hereunder, and all obligations of each Grantor hereunder,
shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment
or waiver of or any consent to any departure from any Loan Document,
including, without limitation, any increase in the Secured Obligations
resulting from the extension of additional credit to the Borrowers or any
Guarantor or any of their subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Borrowers or any Guarantor or any of their
subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrowers or any Guarantor or any of their
subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or a third party grantor of a
security interest.
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Section 24. Amendments; Waivers; Etc.
(a) No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Administrative
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No failure on the part of the Administrative Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(c) Upon the execution and delivery by any Person of a supplement to this
Agreement, in each case in substantially the form of Exhibit D hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Grantor" and shall be and become a Grantor, and each reference in
this Agreement to an "Additional Grantor" or a "Grantor" shall also mean and be
a reference to such Additional Grantor and each reference in any other Loan
Document to a "Grantor" or a "Loan Party" shall also mean and be a reference to
such Additional Grantor, and (ii) the supplements attached to each Security
Agreement Supplement shall be incorporated into and become a part of and
supplement the Schedules to this Agreement, as appropriate, and the
Administrative Agent may attach such supplements to such Schedules, and each
reference to such Schedules shall mean and be a reference to such Schedules, as
supplemented pursuant hereto.
Section 25. Addresses for Notices.
All notices and other communications provided for hereunder shall be in
writing (including telegraphic, telecopy or telex communication) and mailed,
telegraphed, telecopied, telexed or delivered if to any Grantor addressed to it
at the address set forth below its name on the signature pages hereof; if to any
Additional Grantor, addressed to it at the address set forth below its name on
the signature pages to the Security Agreement Supplement executed and delivered
by such Additional Grantor; if to the Administrative Agent, addressed to it at
its address set forth in Section 11.2 of the Credit Agreement or, as to each
other party, at such other address as shall be designated by such party in a
written notice to the Grantors and the Administrative Agent. All such notices
and communications shall, when mailed by certified mail, return receipt
requested, telegraphed, telecopied or telexed, be effective three (3) Business
Days after mailing, or two (2) Business Days after being deposited with a
recognized overnight delivery service with all changes prepaid or billed to the
account of the sender, or upon transmission to the telegraph company, upon
delivery by telecopier or upon confirmation by telex answerback, respectively,
addressed as aforesaid. Any party hereto may change the Person, address or
telecopier number to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given hereunder only when actually received by the party to which it
is addressed.
Section 26. Continuing Security Interest; Assignments under the Credit
Agreement.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the later of (i)
the indefeasible payment in full in cash of
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the Secured Obligations and (ii) the Termination Date, (b) be binding upon each
Grantor, its successors and assigns and (c) inure, together with the rights and
remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent, the Lender Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 11.7 of the
Credit Agreement. Notwithstanding the foregoing, no Grantor may assign any of
its rights or obligations under this Agreement without the prior written consent
of the Administrative Agent, which consent may be withheld for any reason.
Section 27. Release and Termination.
(a) Upon any sale, lease, transfer or other disposition of any item of
Collateral in accordance with the express terms of the Loan Documents, the
Administrative Agent will, at the Grantors' expense, execute and deliver to each
Grantor such documents as such Grantor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted hereby; provided, however, that (i) at the time of such request and such
release no Default shall have occurred and be continuing, (ii) such Grantor
shall deliver to the Administrative Agent, at least ten (10) days prior to the
date of the proposed release, a written request for release describing the item
of Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Administrative
Agent and a certification by such Grantor to the effect that the transaction is
in compliance with the Loan Documents and as to such other matters as the
Administrative Agent may request, and (iii) the proceeds of any such sale,
lease, transfer or other disposition required to be applied in accordance with
Section 2.6 or any other provision of the Credit Agreement shall be applied as
required by the terms of the Credit Agreement.
(b) Upon the latest of (i) the indefeasible payment in full in cash of the
Secured Obligations, (ii) the expiration, termination or cancellation of all of
the Letters of Credit and (iii) the Termination Date, the pledge, assignment and
security interest granted by each of the Grantors hereby shall terminate and all
rights to the Collateral shall revert to the appropriate Grantor. Upon any such
termination, the Administrative Agent will, at the Grantors' expense, execute
and deliver to the appropriate Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
(c) To the extent any one or more provisions of this Agreement shall
conflict with one or more provisions in the Credit Agreement, the provisions of
the Credit Agreement shall control and supersede any such conflicting
provision(s) of this Agreement.
Section 28. Governing Law; Terms.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES
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HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Article 9 of the N.Y. Uniform
Commercial Code are used herein as therein defined.
Section 29. JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK
CITY, NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY
LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY
LENDER PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY
JURISDICTION.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
Section 30. WAIVER OF JURY TRIAL.
EACH OF THE BORROWERS, THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THE
SECURED PARTIES VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS, THE ADVANCES OR THE ACTIONS OF THE ADMINISTRATIVE
AGENT OR ANY SECURED PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
SECURED PARTIES AND THE ADMINISTRATIVE AGENT TO ENTER INTO THIS AGREEMENT AND TO
MAKE ADVANCES PURSUANT TO THE LOAN DOCUMENTS.
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Section 31. Counterparts.
This Agreement may be executed in any number of several counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Delivery by telecopier of an executed counterpart
of a signature page to this Agreement shall be as effective as delivery of a
manually executed counterpart to this Agreement.
Section 32. Amendment and Restatement; Reaffirmation of Continuing
Security.
This Agreement amends and restates in its entirety the Security Agreement,
originally dated December 31, 1998, by and among MediaBay, the other Loan
Parties party thereto and Fleet National Bank, as Administrative Agent, which
Security Agreement continues in effect as so amended and restated as set forth
herein. Without limiting the generality of the immediately preceding sentence,
the Liens granted under the Security Agreement as so amended and restated as set
forth herein shall in all respects be and remain continuing, securing the
payment of all Obligations. MediaBay and the other Loan Parties party to the
Security Agreement as so amended and restated as set forth herein, hereby
reaffirm the security interests and Liens granted to the Administrative Agent
for its benefit and the ratable benefit of the other Secured Parties pursuant to
the Security Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, each of the Grantors has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
MEDIABAY, INC.
By:_________________________________
Title:______________________________
Address:
XXXXX XXXXXXX, INC.
By:_________________________________
Title:______________________________
Address:
AUDIO BOOK CLUB, INC.
By:_________________________________
Title:______________________________
Address:
XXXXXXXX.XXX, INC.
By:_________________________________
Title:______________________________
Address:
XXXXXXXXXXXXX.XXX, INC.
By:_________________________________
Title:______________________________
Address:
ABC-COA ACQUISITION CORP.
By:_________________________________
Title:______________________________
Address:
MEDIABAY SERVICES, INC.
By:_________________________________
Title:______________________________
Address:
VIDEO YESTERYEAR, INC.
By:_________________________________
Title:______________________________
Address:
ABC INVESTMENT CORP.
By:_________________________________
Title:______________________________
Address:
MEDIABAY PUBLISHING, INC.
By:_________________________________
Title:______________________________
Address:
RADIO CLASSICS, INC.
By:_________________________________
Title:______________________________
Address:
ACCEPTED:
ING (U.S.) CAPITAL LLC,
AS ADMINISTRATIVE AGENT
By: _____________________________________
Title: ____________________________________
