DLPN 10-Q
Dolphin Entertainment, Inc. (DLPN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
———————
FORM
For the quarterly period ended
OR
For the transition period from __________ to __________
Commission file number:
(Exact name of registrant as specified in its charter)
———————
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices, including zip code)
(
(Registrant’s telephone number)
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| The |
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
The number of shares of common stock outstanding was as of May 11, 2026.
TABLE OF CONTENTS
i
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable: | ||||||||
| Trade, net of allowance of $ | ||||||||
| Other receivables | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Capitalized production costs, net | ||||||||
| Employee receivable | ||||||||
| Right-of-use assets | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Property, equipment and leasehold improvements, net | ||||||||
| Other long-term assets | ||||||||
| Total Assets | $ | $ | ||||||
(Continued)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 1 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Unaudited)
| March 31, 2026 | December 31, 2025 | |||||||
| LIABILITIES | ||||||||
| Current | ||||||||
| Accounts payable | $ | $ | ||||||
| Term loans, current portion | ||||||||
| Revolving line of credit | ||||||||
| Notes payable, current portion | ||||||||
| Convertible notes payable, current portion | ||||||||
| Accrued interest – related party | ||||||||
| Accrued compensation – related party | ||||||||
| Lease liabilities, current portion | ||||||||
| Deferred revenue | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Noncurrent | ||||||||
| Term loans, noncurrent portion | ||||||||
| Notes payable, noncurrent portion | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable– related party | ||||||||
| Convertible notes payable at fair value | ||||||||
| Loans from related party | ||||||||
| Lease liabilities | ||||||||
| Deferred tax liability | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred Stock, Series C, $ par value, shares authorized, shares issued and outstanding at March 31, 2026 and December 31, 2025 | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 2 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues | $ | $ | ||||||
| Expenses: | ||||||||
| Direct costs | ||||||||
| Payroll and benefits | ||||||||
| Selling, general and administrative | ||||||||
| Depreciation and amortization | ||||||||
| Acquisition cost | ||||||||
| Legal and professional | ||||||||
| Total expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (expenses) income: | ||||||||
| Change in fair value of convertible note | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Total other (expenses) income, net | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share: | ||||||||
| Basic | $ | ( | ) | $ | ( | ) | ||
| Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Allowance for credit losses | ||||||||
| Change in fair value of convertible notes | ( | ) | ( | ) | ||||
| Deferred income tax expense | ||||||||
| Amortization of debt premium | ( | ) | ||||||
| Debt origination costs amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, trade and other | ( | ) | ||||||
| Other current assets | ( | ) | ( | ) | ||||
| Capitalized production costs | ( | ) | ( | ) | ||||
| Other long-term assets and employee receivable | ( | ) | ( | ) | ||||
| Deferred revenue | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued interest – related party | ) | |||||||
| Other current liabilities | ( | ) | ||||||
| Other noncurrent liabilities | ( | ) | ||||||
| Lease liability, operating leases | ( | ) | ( | ) | ||||
| Lease liability, finance leases | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from convertible note payable | ||||||||
| Proceeds from notes payable | ||||||||
| Repayment of term loan | ( | ) | ( | ) | ||||
| Principal payments on finance leases | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net decrease in cash and cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash and cash equivalents and restricted cash, beginning of period | ||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(unaudited)
Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Lease liabilities arising from obtaining right-of-use assets | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF NON-CASH FLOWS INFORMATION: | ||||||||
| Convertible notes payable converted into shares of common stock | $ | $ | ||||||
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statements of cash flows that sum to the total of the same such amounts shown in the statements of cash flows:
Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited)
| For the three months ended March 31, 2026 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss for the three months ended March 31, 2026 | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Conversion of convertible notes payable | — | |||||||||||||||||||||||||||
| Balance March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| For the three months ended March 31, 2025 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss for the three months ended March 31, 2025 | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Issuance of shares related to restricted stock units | — | ( | ) | |||||||||||||||||||||||||
| Balance March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – GENERAL
Dolphin Entertainment, Inc., a Florida corporation (the “Company,” “Dolphin,” “we,” “us” or “our”), is a leading independent entertainment marketing and production company. Through its subsidiaries 42West, LLC (“42West”), The Door Marketing Group, LLC (“The Door”), Shore Fire Media, Ltd (“Shore Fire”), The Digital Dept., LLC (“The Digital Dept.”), Special Projects LLC (“Special Projects”), and Elle Communications, LLC (“Elle”), the Company provides expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the motion picture, television, music, gaming, culinary, hospitality and lifestyle industries.
42West (Film and Television, Gaming), Shore Fire (Music), The Door (Culinary, Hospitality, Lifestyle) and Elle (Impact, Philanthropy, Non-Profit) are each recognized global public relations (“PR”) and marketing leaders for the industries they serve. The Digital Dept. provides influencer marketing capabilities through divisions dedicated to influencer talent management, brand campaign strategy and execution, and influencer event ideation and production. Special Projects is the entertainment industry’s leading celebrity booking firm, specializing in uniting brands and events with celebrities and influencers across the entertainment, media, fashion, consumer product and tech industries. Dolphin’s legacy content production business, founded by our Emmy-nominated Chief Executive Officer, Bill O’Dowd, has produced multiple feature films and award-winning digital series, primarily aimed at family and young adult markets.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Dolphin, and all of its wholly owned subsidiaries, comprising Dolphin Films, Inc. (“Dolphin Films”), Dolphin SB Productions LLC, Dolphin Max Steel Holdings, LLC, Dolphin JB Believe Financing, LLC, Dolphin JOAT Productions, LLC, 42West, The Door, Shore Fire, The Digital Dept., Special Projects and Elle. The accounts of Always Alpha Sports Management, LLC (“Always Alpha”) are also included as of and for the three months ended March 31, 2025. Always Alpha was subsequently sold on November 14, 2025. All significant intercompany balances and transactions have been eliminated in consolidation. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence.
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2026, and its results of operations and cash flows for the three months ended March 31, 2026 and 2025. All significant inter-company balances and transactions have been eliminated from the condensed consolidated financial statements. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026. The condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to the estimates in the fair value of acquisitions, estimates in assumptions used to calculate the fair value of certain liabilities and impairment assessments for investment in capitalized production costs, goodwill and long-lived assets. Actual results could differ materially from such estimates.
| 7 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Recent Accounting Pronouncements
Accounting Pronouncements Adopted in 2026
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that permits an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. The Company adopted this ASU prospectively in the first quarter of 2026, and its adoption did not have a material effect on the Company’s condensed consolidated financial statements.
Accounting Guidance Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires the disaggregated disclosure of specific expense categories, including employee compensation, depreciation, and amortization, within relevant income statement captions. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of ASU 2024-03 can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. ASU 2024-03 will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of ASU 2024-03.
NOTE 2 – REVENUE
Disaggregation of Revenue
The Company’s principal geographic markets are within the U.S. The following is a description of the principal activities, by reportable segment, from which we generate revenue. For more detailed information about reportable segments, see Note 10.
Entertainment Publicity and Marketing
The Entertainment Publicity and Marketing (“EPM”) segment generates revenue from diversified marketing services, including public relations, entertainment and hospitality content marketing, strategic marketing consulting and content production of marketing materials. Within the EPM segment, we typically identify one performance obligation, the delivery of professional publicity services, in which we typically act as the principal. The Company renders services to clients for a fixed monthly fee. The services provided by the Company are considered a single performance obligation that is simultaneously consumed by clients as they are being rendered by the Company. The Company recognizes revenue as the monthly services are performed. Direct costs reimbursed by clients are billed as pass-through revenue with no mark-up.
We also enter into management agreements with a roster of social media influencers, athletes and sports broadcasters and we are paid a percentage of the revenue earned by them. Due to the short-term nature of these contracts, in which we typically act as the agent, the performance obligation is typically completed and revenue is recognized net at a point in time, typically the date of publication.
Content Production
The Content Production (“CPD”) segment generates revenue from the production of original motion pictures and other digital content production. In the CPD segment, we typically identify performance obligations depending on the type of service, for which we generally act as the principal. Revenue from motion pictures is recognized upon transfer of control of the licensing rights of the motion picture to the customer. For minimum guarantee licensing arrangements, the amount related to each performance obligation is recognized when the content is delivered, and the window for exploitation rights in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content. For sales or usage-based royalty income, revenue is recognized starting at the exhibition date and is based on the Company’s participation in the box office receipts of the theatrical exhibitor and the performance of the motion picture.
| 8 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
During the three months
ended March 31, 2026, the
During the three months ended March 31, 2025, the Company recognized $92,033 of revenue in its CPD segment related to sales of its motion picture Believe released in 2013.
The revenues recorded by the EPM and CPD segments is detailed below:
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Entertainment publicity and marketing | $ | $ | ||||||
| Content production | ||||||||
| Total Revenues | $ | $ | ||||||
Contract Balances
The opening and closing balances of our contract asset and liability balances from contracts with customers as of March 31, 2026 and December 31, 2025 were as follows:
| Accounts Receivable | Other Receivables | Contract Assets | Contract Liabilities | |||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ||||||||||||||
| Balance at March 31, 2026 | ||||||||||||||||||
Contract assets are comprised of services provided for which consideration has not been received and are transferred to accounts receivable when the right to payment becomes unconditional. Contract assets are presented within other current assets in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025.
Contract liabilities are recorded when the Company receives advance payments from customers for public relations projects or as deposits for promotional or brand-supported video projects. Once the work is performed or the projects are delivered to the customer, the contract liabilities are deemed earned and recorded as revenue. Advance payments received are generally for a short duration and are recognized once the performance obligation of the contract is met.
Revenues for the three months ended March 31, 2026 and 2025 include the following:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Amounts included in the beginning of year contract liability balance | $ | $ | ||||||
The Company’s unsatisfied performance obligations are for contracts that have an original expected duration of one year or less and, as such, the Company is not required to disclose the remaining performance obligation.
| 9 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
NOTE 3 — GOODWILL AND INTANGIBLE ASSETS
Goodwill
As of March 31, 2026, the
Company had a balance of $
The Company evaluates goodwill in the fourth quarter or more frequently if management believes indicators of impairment exist. Such indicators could include but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, (3) significant decline in market capitalization or (4) an adverse action or assessment by a regulator. There were no triggering events noted during the three months ended March 31, 2026 and 2025, that would require the Company to reassess goodwill for impairment outside its annual impairment test.
Intangible Assets
Finite-lived intangible assets consisted of the following as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||
| Gross
Carrying Amount | Accumulated
Amortization | Net
Carrying Amount | Gross
Carrying Amount | Accumulated
Amortization | Net
Carrying Amount | |||||||||||||||||||
| Intangible assets subject to amortization: | ||||||||||||||||||||||||
| Customer relationships | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Trademarks and trade names | ||||||||||||||||||||||||
| Non-compete agreements | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Amortization expense
associated with the Company’s intangible assets was $
| 2026 | $ | |||||
| 2027 | ||||||
| 2028 | ||||||
| 2029 | ||||||
| 2030 | ||||||
| Thereafter | ||||||
| Total | $ | |||||
NOTE 4 — OTHER CURRENT LIABILITIES
Other current liabilities consisted of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| Accrued funding under Max Steel marketing agreement | $ | $ | ||||||
| Accrued producer guarantee fee for Youngblood | ||||||||
| Accrued audit, legal and other professional fees | ||||||||
| Accrued commissions | ||||||||
| Accrued bonuses | ||||||||
| Talent liability | ||||||||
| Accumulated customer deposits | ||||||||
| Other | ||||||||
| Other current liabilities | $ | $ | ||||||
During the three months ended March
31, 2025, the Company entered into an agreement with Andrea Oliveri and Nicole Vecchiarelli, (“Special Projects Sellers”), to pay
$
| 10 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
NOTE 5 — DEBT
Total debt of the Company was as follows as of March 31, 2026 and December 31, 2025:
| Debt Type | March 31, | December 31, | ||||||
| 2026 | 2025 | |||||||
| Convertible notes payable | $ | $ | ||||||
| Convertible note payable - fair value option | ||||||||
| Non-convertible promissory notes | ||||||||
| Non-convertible promissory notes – Socialyte | ||||||||
| Convertible notes from related party | ||||||||
| Loans from related party | ||||||||
| Revolving line of credit | ||||||||
| First BKU Term loan | ||||||||
| Second BKU Term loan | ||||||||
| Debt issuance costs | ( | ) | ( | ) | ||||
| Total debt | $ | $ | ||||||
| Less current portion of debt | ( | ) | ( | ) | ||||
| Noncurrent portion of debt | $ | $ | ||||||
The table below details the maturity dates of the principal amounts for the Company’s debt as of March 31, 2026:
| Debt Type | Maturity Date | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | |||||||||||||||||||
| Convertible notes payable | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
| Nonconvertible promissory notes | ||||||||||||||||||||||||||
| Nonconvertible unsecured promissory note – Socialyte | (A) | |||||||||||||||||||||||||
| Revolving line of credit | ||||||||||||||||||||||||||
| First BKU Term Loan | ||||||||||||||||||||||||||
| Second BKU Term Loan | ||||||||||||||||||||||||||
| Convertible notes form related party | ||||||||||||||||||||||||||
| Loans from related party | ||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
(A) As discussed below, The Socialyte Purchase Agreement (as defined below) allows the Company to offset a working capital deficit against the Socialyte Promissory Note (as defined below). As such, the Company deferred the installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte.
| 11 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Convertible Notes Payable
During the three months
ended March 31, 2026 and 2025 the Company issued one and six convertible notes payable and received proceeds of $
The balance of each convertible notes payable and any accrued interest may be converted at the noteholder’s option at any time at the following conversion prices:
| Aggregate Convertible Notes balance | Conversion Price | Floor/Conversion Price | ||||
| $ | $ | |||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
| $ | ||||||
As of March 31, 2026 the
principal balance of $
On January 26, 2026, March
9, 2026 and March 18, 2026, three holders of three convertible notes payable with an aggregate principal balance of $
The Company recorded interest
expense related to these convertible notes payable of $
| 12 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Convertible Note Payable at Fair Value
The Company has one convertible
note payable outstanding with a principal amount of $
The Company had a balance
of $
The Company recorded a gain
in fair value of $
The convertible
note payable at fair value bears interest at a rate of
Nonconvertible Promissory Notes
During the three months
ended March 31, 2025, the Company issued a nonconvertible promissory note and received proceeds $
As of both March 31, 2026
and December 31, 2025, the Company had a balance of $
The Company recorded interest
expense related to these nonconvertible promissory notes of $
Nonconvertible Unsecured Promissory Note - Socialyte Promissory Note
In connection with the purchase
agreement for the acquisition of Socialyte (“Socialyte Purchase Agreement”), the Company entered into a promissory note with
the sellers of Socialyte (“the Socialyte Promissory Note”) amounting to $3,000,000. The Socialyte Promissory Note matured
on September 30, 2023 and was payable in two payments: $
The Socialyte Purchase Agreement allows the Company to offset a working capital deficit against the Socialyte Promissory Note. As such, the Company deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte. The Company has filed a lawsuit against the seller of Socialyte and certain of its principals related to the Socialyte Purchase Agreement. See Note 12.
The Company recorded interest
expense related to this Socialyte Promissory Note of $
| 13 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
BankUnited Term Loans
On September 29, 2023, the
Company entered into a loan agreement with BankUnited (“BankUnited Loan Agreement”) in which an existing term loan with BankProv
was repaid (the “Refinancing Transaction”). The BankUnited Loan Agreement includes: (i) $
On December 6, 2024, the
Company entered into a second Bank United Loan Agreement (“Second BKU Term Loan”) for $2.0 million to finance the acquisition
of Elle. The Second BKU Term Loan carries a 1.0% origination fee and matures in December 2027. Similar to the First
Interest accrues at 8.10%
fixed rate per annum on the First BKU Term Loan and 7.10% fixed rate per annum on the Second BKU Term Loan. Principal and interest are
payable on a monthly basis based on a 5-year amortization for the First BKU Term Loan and 3-year amortization for the Second BKU Term
Loan. Interest on the BKU Line of credit is payable on a monthly basis, with all principal due at maturity. The BKU Commercial Card payment
is due in full at the end of each bi-weekly billing cycle. During the three months ended March 31, 2026 and the year ended December 31,
2025, the Company did not use the BKU Commercial Card. During each of the three months ended March 31, 2026 and 2025, the Company made
payments in the amount of $354,621, inclusive of $
Interest on the BKU Line
of Credit is variable based on the Lender’s Prime Rate. During the three months ended March 31, 2026 and 2025, the Company recorded
interest expense and made payments of $
As of March 31, 2026, the
Company had a balance of $
Amortization of debt origination
costs under the Bank United Credit Facility is included as a component of interest expense in the condensed consolidated statements of
operations and amounted to approximately $
The BankUnited Credit Facility
contains financial covenants tested semi-annually, starting on June 30, 2024, on a trailing twelve-month basis that require the Company
to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited
Credit Facility contains a liquidity covenant that requires the Company to hold a cash balance at BankUnited with a daily minimum deposit
balance of $
FVP Loan
| 14 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
NOTE 6 — LOANS FROM RELATED PARTY
On June 1, 2021, the Company
issued Dolphin Entertainment LLC (“DE LLC”), an entity wholly owned by the Company’s CEO, Bill O’Dowd, a nonconvertible
promissory note with a principal balance of $
On May 12, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with DE LLC, pursuant
to which, the Company and DE LLC agreed to exchange the three DE LLC Notes in the aggregate principal amount of $
As of March 31, 2026
and December 31, 2025, the Company had an aggregate principal balance of $
The Company recorded
interest expense of $
Mock Notes
During 2024, the Company
issued three nonconvertible promissory notes to Mr. Donald Scott Mock, the brother of Mr. O’Dowd, in the amount of $
As of both March 31,
2026 and December 31, 2025, we had a principal balance of $
The Company recorded
interest expense of $
NOTE 7 — FAIR VALUE MEASUREMENTS
The Company’s non-financial assets measured at fair value on a nonrecurring basis include goodwill and intangible assets. The determination of our intangible fair values includes several assumptions and inputs (Level 3) that are subject to various risks and uncertainties. Management believes it has made reasonable estimates and judgments concerning these risks and uncertainties. All other financial assets and liabilities are carried at amortized cost.
The Company’s cash balances are representative of their fair values, as these balances are comprised of deposits available on demand. The carrying amounts of accounts receivable, notes receivable, prepaid and other current assets, accounts payable and other non-current liabilities approximate their fair values because of the short turnover of these instruments.
| 15 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Financial Disclosures about Fair Value of Financial Instruments
The tables below set forth information related to the Company’s condensed consolidated financial instruments:
| Level in | March 31, 2026 | December 31, 2025 | ||||||||||||||||||
| Fair Value | Carrying | Fair | Carrying | Fair | ||||||||||||||||
| Hierarchy | Amount | Value | Amount | Value | ||||||||||||||||
| Assets: | ||||||||||||||||||||
| Cash and cash equivalents | 1 | $ | $ | $ | $ | |||||||||||||||
| Restricted cash | 1 | |||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Convertible notes payable | 3 | $ | $ | $ | $ | |||||||||||||||
| Convertible note payable at fair value | 3 | |||||||||||||||||||
| Convertible notes – related party | 3 | |||||||||||||||||||
Convertible notes payable
As of March 31, 2026, the Company
has twenty-nine outstanding convertible notes payable with an aggregate principal amount of $
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||
| Level | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||
| 10% convertible notes due in May 2026 | 3 | $ | $ | $ | $ | ||||||||||||||
| 10% convertible notes due in October 2026 | 3 | ||||||||||||||||||
| 10% convertible notes due in November 2026 | 3 | ||||||||||||||||||
| 10% convertible notes due in December 2026 | 3 | ||||||||||||||||||
| 10% convertible notes due in January 2027 | 3 | ||||||||||||||||||
| 10% convertible note due in April 2027 | 3 | ||||||||||||||||||
| 10% convertible notes due in June 2027 | 3 | ||||||||||||||||||
| 10% convertible notes due in August 2027 | 3 | ||||||||||||||||||
| 10% convertible notes due in September 2027 | 3 | ||||||||||||||||||
| 10% convertible notes due in January 2028 | 3 | ||||||||||||||||||
| 10% convertible notes due in July 2028 | 3 | ||||||||||||||||||
| 10% convertible notes due in October 2028 | 3 | ||||||||||||||||||
| 10% convertible notes due in December 2028 | 3 | ||||||||||||||||||
| 10% convertible note due in March 2029 | 3 | ||||||||||||||||||
| 10% convertible note due in April 2029 | 3 | ||||||||||||||||||
| 10% convertible note due in May 2029 | 3 | ||||||||||||||||||
| 10% convertible note due in June 2029 | 3 | ||||||||||||||||||
| 10% convertible note due in July 2029 | 3 | ||||||||||||||||||
| 10% convertible notes due in January 2030 | 3 | ||||||||||||||||||
| 10% convertible notes due in February 2030 | 3 | ||||||||||||||||||
| 10% convertible notes due in August 2030 | 3 | ||||||||||||||||||
| 10% convertible notes due in September 2030 | 3 | ||||||||||||||||||
| 10% convertible note with related party due in June 2027 | 3 | ||||||||||||||||||
| 10% convertible note with related party due in October 2029 | 3 | ||||||||||||||||||
| 10% convertible note with related party due in December 2029 | 3 | ||||||||||||||||||
| $ | $ | $ | $ | ||||||||||||||||
| 16 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
The estimated fair value of the convertible notes was computed using a Monte Carlo Simulation, using the following assumptions:
| Fair Value Assumption – Convertible Debt | March 31, 2026 | December 31, 2025 | ||||||
| Stock Price | $ | $ | ||||||
| Minimum Conversion Price | $ | $ | ||||||
| Annual Asset Volatility Estimate | % | % | ||||||
| Risk Free Discount Rate (based on U.S. government treasury obligation with a term similar to that of the convertible note) | – | % | – | % | ||||
Fair Value Option (“FVO”) Election – Convertible note payable
Convertible note payable, at fair value
As of March 31, 2026, the
Company had one outstanding convertible note payable with a face value of $
The March 4th Note is measured at fair value and categorized within Level 3 of the fair value hierarchy. The following is a reconciliation of the fair values from December 31, 2025 to March 31, 2026:
| March 4th Note | ||||
| Fair value as of December 31, 2025 | $ | |||
| Gain on change of fair value reported in the condensed consolidated statements of operations | ( | ) | ||
| Fair value as of December 31, 2025 | $ | |||
The estimated fair value of the March 4th Note as of March 31, 2026 and December 31, 2025, was computed using a Black-Scholes simulation of the present value of its cash flows using a synthetic credit rating analysis and a required rate of return, using the following assumptions:
| March 31, 2026 | December 31, 2025 | |||||||
| Face value principal payable | $ | $ | ||||||
| Original conversion price | $ | $ | ||||||
| Value of common stock | $ | $ | ||||||
| Expected term (years) | ||||||||
| Volatility | % | % | ||||||
| Risk free rate | % | % | ||||||
| 17 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
The following table sets forth the computation of basic and diluted loss per share:
| Three Months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Numerator | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net income attributable to participating securities | ||||||||
| Net loss attributable to Dolphin Entertainment Common Stockholders and numerator for basic loss per share and diluted loss per share | $ | ( | ) | $ | ( | ) | ||
| Denominator | ||||||||
| Denominator for basic and diluted loss weighted-average shares | ||||||||
| Basic loss per share | $ | ) | $ | ) | ||||
| Diluted loss per share | $ | ) | $ | ) | ||||
Basic (loss) earnings per share is computed by dividing income or loss attributable to the shareholders of common stock (the numerator) by the weighted-average number of shares of common stock outstanding (the denominator) for the period. Diluted (loss) earnings per share assume that any dilutive equity instruments, such as convertible notes payable and warrants were exercised and outstanding common stock adjusted accordingly, if their effect is dilutive.
The Company’s convertible note payable at fair value, the warrant and the Series C preferred stock have clauses that entitle the holder to participate if dividends are declared to the common stockholders as if the instruments had been converted into shares of common stock. As such, the Company uses the two-class method to compute earnings per share and attribute a portion of the Company’s net income to these participating securities. These securities do not contractually participate in losses. For the three months ended March 31, 2026 and 2025, the Company had a net loss and as such the two-class method is not presented.
For the three months ended March 31, 2026, potentially dilutive instruments including shares of common stock issuable upon conversion of convertible notes outstanding were not included in the diluted loss per share as inclusion was considered to be antidilutive.
For the three months ended March 31, 2025, potentially dilutive instruments including shares of common stock upon conversion of convertible notes outstanding and shares of common stock issuable upon exercise of the Series I Warrant were not included in the diluted loss per share as inclusion was considered to be antidilutive.
NOTE 9 — RELATED PARTY TRANSACTIONS
As part of the employment
agreement with its CEO, the Company provided a $
As of March 31, 2026 and
December 31, 2025, the Company had accrued $
The Company recorded interest
expense related to the accrued compensation in the condensed consolidated statements of operations amounting to $
On May 13, 2025, the Company entered into a one-year consulting agreement with Hilarie Bass, a director, with an effective date of January 1, 2025, pursuant to which Ms. Bass will provide commercial litigation advice and litigation consulting services to the Company. As compensation for these services the Company will pay Ms. Bass $100,000 payable in four quarterly installments of $25,000 each. Payments in the amount of $25,000 each were made on May 15, 2025, July 10, 2025, November 1, 2025 and January 30, 2026 related to this consulting agreement with Ms. Bass. On April 29, 2026, the Company and Ms. Bass agreed to extend this agreement pursuant to its terms for a one-year period and it will renew automatically annually, unless one of the parties provides written notice on non-renewal prior to the end of the then-current period.
The Company entered into several DE LLC Notes with an entity wholly owned by its CEO and into two Mock Notes with its CEO’s brother. See Note 6 for further discussion.
| 18 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
NOTE 10 — SEGMENT INFORMATION
The Company operates in two reportable segments, Entertainment Publicity and Marketing Segment (“EPM”) and Content Production Segment (“CPD”).
| • | The Entertainment Publicity and Marketing segment is composed of 42West, The Door, Shore Fire, The Digital Dept., Special Projects and Elle. This segment primarily provides clients with diversified marketing services, including public relations, entertainment and hospitality content marketing, strategic marketing consulting and content production of marketing materials. |
| • | The Content Production segment is composed of Dolphin Entertainment and Dolphin Films. This segment engages in the production and distribution of digital content and feature films. The activities of our Content Production segment also include all corporate overhead activities. |
The Company’s chief operating decision maker (“CODM”) is its CEO. The profitability measure employed by our CODM for allocating resources to operating segments and assessing operating segment performance is adjusted operating income (loss) which is the loss from operations on the Company’s condensed consolidated statements of operations adjusted for depreciation and amortization, impairment of goodwill, acquisition costs, change in fair value of contingent consideration, stock compensation, bad debt and write-off of notes receivable.
The following tables present revenue and significant expenses by segment that are regularly provided to the CODM. Other segment items that the CODM does not consider in assessing segment performance are presented to reconcile to adjusted loss from operations.
| Three Months Ended March 31, 2026 | ||||||||||||
| EPM | CPD | Total | ||||||||||
| Segment revenue | $ | $ | $ | |||||||||
| Segment expenses: | ||||||||||||
| Segment direct costs | ||||||||||||
| Segment payroll and benefits | ||||||||||||
| Segment selling, general and administrative (1) | ||||||||||||
| Segment legal and professional | ||||||||||||
| Adjusted income (loss) from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Reconciliation to consolidated loss from operations: | ||||||||||||
| Bad debt expense | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Loss from operations | $ | ( | ) | |||||||||
(1) Excludes bad debt expense
| Three Months Ended March 31, 2025 | ||||||||||||
| EPM | CPD | Total | ||||||||||
| Segment revenue | $ | $ | $ | |||||||||
| Segment expenses: | ||||||||||||
| Segment direct costs | ||||||||||||
| Segment payroll and benefits | ||||||||||||
| Segment selling, general and administrative (1) | ||||||||||||
| Segment legal and professional | ||||||||||||
| Adjusted income (loss) from operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Reconciliation to consolidated loss from operations: | ||||||||||||
| Bad debt expense | ||||||||||||
| Acquisition costs | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Loss from operations | $ | ( | ) | |||||||||
| (1) Excludes bad debt expense |
The CODM does not
review assets on a segment basis. In connection with the acquisitions of its wholly owned subsidiaries, as of March 31, 2026 the Company
had assigned $
During the three months ended March 31, 2026 and 2025, there were no triggering events noted that would require the Company to reassess goodwill impairment outside of its regular annual impairment test.
| 19 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
NOTE 11 — LEASES
The Company and its subsidiaries are party to various office leases with terms expiring at different dates through February 2032. The amortizable life of the right-of-use asset is limited by the expected lease term. Although certain leases include options to extend, the Company did not include these in the right-of-use asset or lease liability calculations because it is not reasonably certain that the options will be executed.
| March 31 | December 31, | |||||||
| Operating Leases | 2026 | 2025 | ||||||
| Assets | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current | ||||||||
| Lease liabilities | $ | $ | ||||||
| Noncurrent | ||||||||
| Lease liabilities | $ | $ | ||||||
| Total lease liabilities | $ | $ | ||||||
| March 31 | December 31, | |||||||
| Finance Leases | 2026 | 2025 | ||||||
| Assets | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current | ||||||||
| Lease liabilities | $ | $ | ||||||
| Noncurrent | ||||||||
| Lease liabilities | $ | $ | ||||||
| Total lease liabilities | $ | $ | ||||||
The tables below show the lease income and expenses recorded in the condensed consolidated statements of operations incurred during the three months ended March 31, 2026 and 2025 for operating and financing leases, respectively.
| Three Months Ended March 31, | |||||||
| Lease costs | Classification | 2026 | 2025 | ||||
| Operating lease costs | Selling, general and administrative expenses | $ | $ | ||||
| Sublease income | Selling, general and administrative expenses | ( | ) | ||||
| Net operating lease costs | $ | $ | |||||
| Three Months Ended March 31, | |||||||
| Lease costs | Classification | 2026 | 2025 | ||||
| Amortization of right-of-use assets | Selling, general and administrative expenses | $ | $ | ||||
| Interest on lease liability | Selling, general and administrative expenses | ||||||
| Total finance lease costs | $ | $ | |||||
Lease Payments
For the three months
ended March 31, 2026 and 2025, the Company made payments in cash related to its operating leases in the amounts of $
Future minimum lease payments for leases for the remainder of 2026 and thereafter, were as follows:
| Year | Operating Leases | Finance Leases | ||||||||
| 2026 | $ | $ | ||||||||
| 2027 | ||||||||||
| 2028 | ||||||||||
| 2029 | ||||||||||
| 2030 | ||||||||||
| Thereafter | ||||||||||
| Total | $ | $ | ||||||||
| Less: Imputed interest | ( | ) | ( | ) | ||||||
| Present value of lease liabilities | $ | $ | ||||||||
As of March 31,
2026, the Company’s weighted average remaining lease term on its operating and finance leases is
| 20 |
DOLPHIN ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
NOTE 12— COMMITMENTS AND CONTINGENCIES
Litigation
On June 21, 2024, the Company filed a complaint in Los Angeles County Superior Court against NSL Ventures (“NSL”) the Socialyte seller, and its principals alleging that the defendants breached the Socialyte Purchase Agreement and committed acts of fraud and negligence in connection with that transaction, and that the Company is entitled to monetary damages caused by those acts. On September 16, 2024, Defendants answered the Complaint with a general denial and affirmative defenses. Also on September 16, 2024, defendant NSL also filed a Cross-complaint against the Company and Social Midco, LLC, alleging a single cause of action for breach of contract. The Company and Social Midco answered the Cross-complaint on October 1, 2024. As the case has progressed, the court appointed an independent accountant to adjudicate certain accounting issues relevant to the case. That independent accountant’s work is ongoing. In April 2026, the Court rejected Defendants’ attempt to dismiss the Company’s claims. Trial in the matter is scheduled for April 2027. Due to the stage of the proceedings an estimate of any possible loss or range of loss cannot be made at this time.
The Company may be subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. In the opinion of management and based upon the advice of its outside counsels, the liability, if any, from any pending litigation is not expected to have a material effect in the Company’s financial position, results of operations and cash flows.
| 21 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following management’s discussion and analysis together with our unaudited condensed consolidated financial statements and related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q, together with the audited consolidated financial statements, the accompanying notes, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the “Risk Factors” section of our Annual Report on Form 10-K and other factors set forth in other parts of this Quarterly Report on Form 10-Q and our filings with the SEC.
Overview
We are a leading independent entertainment marketing and production company. We were first incorporated in the State of Nevada on March 7, 1995 and domesticated in the State of Florida on December 4, 2014. Our common stock trades on The Nasdaq Capital Market under the symbol “DLPN.”
Through our subsidiaries, 42West LLC (“42West”), The Door Marketing Group LLC (“The Door”), Shore Fire Media, Ltd (“Shore Fire”), Elle Communications, LLC (“Elle”), The Digital Dept, LLC (“The Digital Dept.”) and Special Projects Media, LLC (“Special Projects”) we provide expert strategic marketing and publicity services to many of the top brands, both individual and corporate, in the motion picture, television, music, gaming, culinary, hospitality, lifestyle and charitable industries. 42West (Film and Television, Gaming), Shore Fire (Music), The Door (Culinary, Hospitality, Lifestyle) and Elle (Impact, Philanthropy, Non-Profit) are each recognized global public relations and marketing leaders for the industries they serve. As a group, they were recognized as the #1 PR firm in the country in the prestigious Observer rankings in 2025. The Digital Dept. provides influencer marketing capabilities through divisions dedicated to influencer talent management, brand campaign strategy and execution, and influencer event ideation and production. Dolphin’s legacy content production business, Dolphin Films, founded by our Emmy-nominated Chief Executive Officer, Bill O’Dowd, has produced multiple feature films and award-winning digital series, primarily aimed at family and young adult markets.
We have established an acquisition strategy based on identifying and acquiring companies that complement our existing entertainment publicity and marketing services and content production businesses. We believe that complementary businesses can create synergistic opportunities and bolster profits and cash flow. While we may acquire additional companies in the future, we are not in active negotiations with any such companies, and there is no assurance that we will be successful in acquiring any additional companies, whether in 2026 or at all.
We have also established an investment strategy, “Ventures” or “Dolphin 2.0,” based upon identifying opportunities to develop internally owned assets, or acquire ownership stakes in others’ assets, in the categories of entertainment content, live events and consumer products. We believe these categories represent the types of assets wherein our expertise and relationships in entertainment marketing most influences the likelihood of success. We are in various stages of internal development and outside conversations on a wide range of opportunities within these Ventures. We intend to enter into Venture investments during 2026, but there is no assurance that we will be successful in doing so, whether in 2026 or at all.
HOW WE ASSESS THE PERFORMANCE OF OUR BUSINESS
In assessing the performance of our business, we consider a variety of performance and financial measures. The key indicators of the financial condition and operating performance of our business are revenues, direct costs, payroll and benefits, selling, general and administrative expenses, legal and professional expenses, other income/expense and net income. Other income/expense consists mainly of interest expense, interest income and non-cash changes in fair value of liabilities,
We operate in two reportable segments: our entertainment publicity and marketing segment and our content production segment. The entertainment publicity and marketing segment is composed of 42West, The Door, Shore Fire, The Digital Dept., Special Projects, and Elle, and provides clients with diversified services, including public relations, entertainment content marketing, strategic communications, influencer marketing, celebrity booking and live event production. The content production segment is composed of Dolphin Films and Dolphin Digital Studios, which produce and distribute feature films and digital content.
| 22 |
Entertainment Publicity and Marketing (“EPM”)
Our revenue is directly impacted by the retention and spending levels of existing clients and by our ability to win new clients. We believe that we have a stable client base, and we have continued to grow organically through referrals and by actively soliciting new business. We earn revenues primarily from the following sources: (i) celebrity talent services; (ii) content marketing services under multiyear master service agreements in exchange for fixed project-based fees; (iii) individual engagements for entertainment content marketing services for durations of generally between three and six months; (iv) strategic communications services; (v) engagements for marketing of special events such as food and wine festivals; (vi) engagement for marketing of brands; (vii) arranging strategic marketing agreements between brands and social media influencers or celebrities and (viii) curating and booking celebrities for live events. For these revenue streams, we collect fees through either fixed fee monthly retainer agreements, fees based on a percentage of contracts or project-based fees.
We earn entertainment publicity and marketing revenues primarily through the following:
Talent – We earn fees from creating and implementing strategic communication campaigns for performers and entertainers, including Oscar, Tony and Emmy winning film, theater and television stars, directors, producers, celebrity chefs and Grammy winning recording artists. Our services in this area include ongoing strategic counsel, media relations, studio and/or network liaison work, and event and tour support. We believe that the proliferation of content, both traditional and on social media, will lead to an increasing number of individuals seeking such services, which will drive growth and revenue in our Talent departments for several years to come.
Entertainment Marketing and Brand Strategy – We earn fees from providing marketing direction, public relations counsel and media strategy for entertainment content (including theatrical films, television programs, DVD and VOD releases, and online series) from virtually all the major studios and streaming services, as well as content producers ranging from individual filmmakers and creative artists to production companies, film financiers, DVD distributors, and other entities. In addition, we provide entertainment marketing services in connection with film festivals, food and wine festivals, awards campaigns, event publicity and red-carpet management. As part of our services, we offer marketing and publicity services tailored to reach diverse audiences. We also provide marketing direction targeted to the ideal consumer through a creative public relations and creative brand strategy for hotel and restaurant groups.
Strategic Communications – We earn fees by advising companies looking to create, raise or reposition their public profiles, primarily in the entertainment industry. We also help studios and filmmakers deal with controversial movies, as well as high-profile individuals address sensitive situations. We believe that growth in the Strategic Communications division will be driven by increasing demand for these varied services by traditional and non-traditional media clients who are expanding their activities in the content production, branding, and consumer products PR sectors.
Digital Media Influencer Marketing Campaigns – We arrange strategic marketing agreements between brands and social media influencers, for both organic and paid campaigns. We also offer services for social media activations at events. Our services extend beyond our own captive influencer network, and we manage custom campaigns targeting specific demographics and locations, from ideation to delivery of results reports. We expect that our relationship with social media influencers will provide us the ability to offer these services to our existing clients in the entertainment and consumer products industries and will be accretive to our revenue.
Celebrity Booking and Live Event Programming – We arrange for brands and events to book celebrity and influencer talent. Our services include the creation of the strategy to elevate the brand or event through celebrity and/or influencer inclusion, to the booking of celebrities and influencers for commercial endorsements or appearances, to the curation of event lists and securing attendance, to the coordination and production of live events. We believe the expansion of brands seeking celebrity and/or influencer endorsements, as well as celebrity and/or influencers to attend brand-sponsored live events, will drive growth and revenue for the next several years.
| 23 |
Content Production (“CPD”)
Project Development and Related Services
We have a team that dedicates a portion of its time to identifying scripts, story treatments and novels for acquisition, development and production. The scripts can be for either digital, television or motion picture productions. We have acquired the rights to certain scripts that we intend to produce and release in the future, subject to obtaining financing. We have not yet determined if these projects would be produced for digital, television or theatrical distribution.
We have completed development of several feature films, which means that we have completed the script and can begin pre-production once financing is obtained. We are planning to fund these projects through third-party financing arrangements, domestic distribution advances, pre-sales, and location-based tax credits, and if necessary, sales of our common stock, securities convertible into our common stock, debt securities or a combination of such financing alternatives; however, there is no assurance that we will be able to obtain the financing necessary to produce any of these feature films.
During the three months ended March 31, 2026, we entered into an agreement with YB Aircraft Productions Inc. (“YB”) to acquire the licensing rights to distribute Youngblood movie worldwide, with the exception of Canada, and agreed to pay YB a guaranteed, non-refundable advance of $700,000, payable in two equal installments of $350,000 each, on August 31, 2026 and February 28, 2027. The $700,000 advance to YB was recorded in direct costs in our condensed consolidated statement of operations for the three months ended March 31, 2026. We also entered into a distribution agreement with Well Go USA, Inc. (“Well Go”) to distribute the film across all media in the United States. The agreement provides for a $450,000 guaranteed, non-refundable advance against the revenues from distribution of Youngblood upon delivery of the film to Well Go. The film was released in theaters on March 6, 2026 and the Company recorded revenues of $450,000 from the minimum guaranteed advance for the three months ended March 31, 2026.
Revenues
For the three months ended March 31, 2026 and 2025, we derived a majority of our revenues from our entertainment publicity and marketing segment. During the three months ended March 31, 2026, we generated income in our content production segment related to Youngblood.
The table below sets forth the percentage of total revenue derived from our segments for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenues: | ||||||||
| Entertainment publicity and marketing | 96.4 | % | 99.2 | % | ||||
| Content production | 3.6 | % | 0.8 | % | ||||
| Total revenue | 100 | % | 100 | % | ||||
Expenses
Our expenses consist primarily of:
| (1) | Direct costs – include certain costs of services, as well as certain production costs, related to our entertainment publicity and marketing business. Direct costs also includes the minimum guarantee of $700,000 that we agreed to pay YB for the distribution rights of Youngblood as discussed above. |
| (2) | Payroll and benefits expenses – includes wages, stock-based compensation, payroll taxes and employee benefits. |
| (3) | Selling, general and administrative expenses – includes all overhead costs except for payroll, depreciation and amortization and legal and professional fees that are reported as a separate expense item. |
| (4) | Acquisition costs – includes agreed upon payment to the sellers of Special Projects for the three months ended March 31, 2025. |
| (5) | Depreciation and amortization – includes the depreciation of our property and equipment and amortization of intangible assets and leasehold improvements. |
| (6) | Legal and professional fees – includes fees paid to our attorneys, fees for investor relations consultants, audit and accounting fees and fees for general business consultants. |
Other Income and Expenses
For the three months ended March 31, 2026 and 2025, other income and expenses consisted primarily of: (1) changes in fair value of convertible notes and (2) interest expense, net.
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RESULTS OF OPERATIONS
Three months ended March 31, 2026 as compared to three months ended March 31, 2025
Revenues
For the three months ended March 31, 2026 and 2025 revenues were as follows:
| For the Three Months Ended March 31, | ||||||||
| Revenues: | 2026 | 2025 | ||||||
| Entertainment publicity and marketing | $ | 12,348,245 | $ | 12,077,678 | ||||
| Content production | 455,692 | 92,033 | ||||||
| Total Revenues | $ | 12,803,937 | $ | 12,169,711 | ||||
Revenues from entertainment publicity and marketing increased by approximately $0.3 million for the three months ended March 31, 2026, respectively, as compared to the same period in the prior year. The increase for the three months ended March 31, 2026, in revenue is attributed to organic growth across substantially all of our subsidiaries.
Revenues from content production increased by approximately $0.4 million during the three months ended March 31, 2026, compared to the same period in the prior year. The increase was related to revenue from the distribution of Youngblood which was released in theaters on March 6, 2026. During the three months ended March 31, 2025, we recognized $0.1 million from the Believe film released in 2013.
Expenses
For the three months ended March 31, 2026 and 2025, our expenses were as follows:
| For Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Expenses: | ||||||||
| Direct costs | $ | 784,650 | $ | 344,414 | ||||
| Payroll and benefits | 10,715,144 | 10,304,233 | ||||||
| Selling, general and administrative | 2,047,161 | 1,772,444 | ||||||
| Acquisition costs | — | 416,171 | ||||||
| Depreciation and amortization | 537,276 | 591,552 | ||||||
| Legal and professional | 856,138 | 514,424 | ||||||
| Total expenses | $ | 14,940,369 | $ | 13,943,238 | ||||
Direct costs increased by approximately $0.4 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase in direct costs for the three months ended March 31, 2026 is primarily attributable to a minimum guaranteed payment of $0.7 million to YB for the practically worldwide (excluding Canada) distribution rights of Youngblood, which was released in theatres on March 6, 2026, offset by a decrease in production costs of events in our EPM segment of approximately $0.3 million.
Payroll and benefits expenses increased by approximately $0.4 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, primarily due to $0.8 million increase in workforce and employee cost of living pay increases. This increase was offset by the exclusion of $0.4 million of Always Alpha payroll and benefits. Always Alpha was sold in November 2025.
Selling, general and administrative expenses increased by approximately $0.3 million, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increase is mainly due to $0.1 increase in bad debt expense and $0.1 million increase in dues and subscriptions and computer expense.
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Acquisition costs for the three months ended March 31, 2025 were $0.4 million, related to an agreed upon payment with the sellers of Special Projects related to the working capital adjustment. There was no acquisition costs recorded for the three months ended March 31, 2026.
Depreciation and amortization remained consistent for the three months ended March 31, 2026 as compared to the three ended March 31, 2025.
Legal and professional fees increased by $0.3 million for the three months ended March 31, 2026, as compared to same period of the prior year. The increase is primarily due to the litigation with the sellers of Socialyte. Refer to Note 12 to the condensed consolidated financial statements elsewhere on this Quarterly Report on Form 10-Q for additional information.
Other Expenses
| Three Months Ended March 31 | ||||||||
| 2026 | 2025 | |||||||
| Other (expense) and income: | ||||||||
| Change in fair value of convertible note | $ | 10,000 | $ | 20,000 | ||||
| Interest expense, net | (547,950 | ) | (554,013 | ) | ||||
| Total | $ | (537,950 | ) | $ | (534,013 | ) | ||
Change in fair value of convertible notes – We elected the fair value option for one convertible note payable issued in 2020. The fair value of this convertible note payable is remeasured at every balance sheet date and any changes are recorded on our condensed consolidated statements of operations. For the three months ended March 31, 2026 and 2025, we recorded a gain in the change in fair value of the convertible note payable issued in 2020 in the amount of $10.0 thousand and $20.0 thousand, respectively. None of the decrease in the value of the convertible note was attributable to instrument specific credit risk and as such, all the gain or loss in the change in fair value was recorded within net loss.
Interest expense, net – Interest expense, net remained consistent for the three months ended March 31, 2026 and 2025.
Income Taxes
We recorded an income tax expense of approximately $17.7 thousand for the three months ended March 31, 2026, respectively, and approximately $21.5 thousand for the three months ended March 31, 2025, respectively, which reflects the accrual of a valuation allowance in connection with the limitations of our indefinite lived tax assets to offset our indefinite lived tax liabilities. To the extent the tax assets are unable to offset the tax liabilities, we have recorded a deferred expense for the tax liability (a “naked credit”).
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Net Loss
Net loss was approximately $2.7 million or $(0.22) per share based on 12,327,974 weighted average shares outstanding for both basic loss per share and fully diluted loss per share, for the three months ended March 31, 2026. Net loss was approximately $2.3 million or $(0.21) per share based on 11,162,026 weighted average shares outstanding for both basic loss per share and fully diluted loss per share, for the three months ended March 31, 2025. The change in net loss for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, is related to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Statement of Cash Flows Data: | ||||||||
| Net cash used in operating activities | $ | (2,041,711 | ) | $ | (1,703,425 | ) | ||
| Net cash used in investing activities | (1,850 | ) | (1,088 | ) | ||||
| Net cash (used in) provided by financing activities | (429,167 | ) | 585,931 | |||||
| Net decrease in cash and cash equivalents and restricted cash | (2,472,728 | ) | (1,118,582 | ) | ||||
| Cash and cash equivalents and restricted cash, beginning of period | 9,681,589 | 9,128,846 | ||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 7,208,861 | $ | 8,010,264 | ||||
Operating Activities
Cash used in operating activities was $2.0 million for the three months ended March 31, 2026, a change of $0.3 million from cash used in operating activities of $1.7 million for three months ended March 31, 2025. The increase in cash used in operating activities was primarily a result of a $0.4 million increase in net loss for the period, and the net change in working capital.
Investing Activities
Cash flows used in investing activities for the three months ended March 31, 2026 and 2025 were inconsequential.
Financing Activities
Cash flows used in financing activities for the three months ended March 31, 2026 were $0.4 million, which mainly related to:
Inflows:
| · | $50.0 thousand of proceeds from convertible notes payable. |
Outflows:
| · | $0.4 million of repayment of existing term loan and; |
| · | $31.0 thousand of repayment of finance leases. |
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Cash flows provided by financing activities for the three months ended March 31, 2025 were $0.6 million which mainly related to:
Inflows:
| · | $0.8 million of proceeds from convertible notes payable and; |
| · | $0.3 million of proceeds from nonconvertible notes payable. |
Outflows:
| · | $0.4 million of repayment of existing term loan and; |
| · | $21.0 thousand of repayment of finance leases. |
Debt and Financing Arrangements
Total debt amounted to $23.8 million as of March 31, 2026, compared to $24.5 million as of December 31, 2025, a decrease of $0.7 million, primarily related to the conversion of three convertible notes and the repayment of the term loan.
Our debt obligations in the next twelve months from March 31, 2026 increased to $7.3 million from $7.0 million in December 31, 2025, mainly related to an increase in the current portion of the Bank United Credit Facility (defined below in “BankUnited Loan Agreements – Refinancing Transaction”) in the amount of $40.0 thousand and a net increase in the current portion of convertible and nonconvertible notes payable in the amount of $0.3 million. We expect our current cash position, cash expected to be generated from our operations and other availability of funds, as detailed below, to be sufficient to meet our debt requirements.
2025 Lincoln Park Transaction
On August 12, 2025, we entered into a purchase agreement (the “2025 LP Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park” or “Investor”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we may sell to Lincoln Park up to $15,000,000 of shares (the “Purchase Shares”) of our common stock, par value $0.015 per share, over the thirty-six (36) month term of the 2025 LP Purchase Agreement. Concurrently with entering into the 2025 LP Purchase Agreement we also entered into a registration rights agreement with Lincoln Park, pursuant to which we agreed to provide Lincoln Park with certain registration rights related to the shares issued under the 2025 LP Purchase Agreement (the “2025 LP Registration Rights Agreement”). On October 3, 2025, we filed a new Registration Statement on Form S-1 (the “Registration Statement” with the Securities Exchange Commission (the “SEC”) covering the resale of our common stock in accordance with the terms of the 2025 LP Registration Rights Agreement. The registration statement became effective on December 1, 2025.
For the three months ended March 31, 2026, we did not sell any shares of common stock to Lincoln Park under the 2025 LP Purchase Agreement.
Convertible Notes Payable
During the three months ended March 31, 2026 and 2025 we issued one and six convertible notes payable and received proceeds of $50,000 and $775,000, respectively. As of March 31, 2026, we had twenty-nine convertible notes payable outstanding. The convertible notes payable bear interest at a rate of 10% per annum, with initial maturity dates ranging between the second anniversary and the sixth anniversary of their respective issuances.
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The balance of each convertible notes payable and any accrued interest may be converted at the noteholder’s option at any time at the following conversion prices:
| Aggregate Convertible Notes balance | Conversion Price | Floor/Conversion Price | ||||
| $ | 2,700,000 | 90-day average closing market price of our common stock | $ | 5.00 | ||
| 900,000 | 90-day average closing market price of our common stock | $ | 4.00 | |||
| 100,000 | 30-day average closing market price of our common stock | $ | 1.01 | |||
| 325,000 | Fixed conversion price | $ | 1.11 | |||
| 100,000 | Fixed conversion price | $ | 1.02 | |||
| 50,000 | Fixed conversion price | $ | 1.01 | |||
| 1,650,000 | Fixed conversion price | $ | 1.07 | |||
| 125,000 | Fixed conversion price | $ | 1.03 | |||
| 500,000 | Fixed conversion price | $ | 1.00 | |||
| 100,000 | Fixed conversion price | $ | 1.16 | |||
| 200,000 | Fixed conversion price | $ | 1.04 | |||
| 350,000 | Fixed conversion price | $ | 1.28 | |||
| 100,000 | Fixed conversion price | $ | 1.32 | |||
| 100,000 | Fixed conversion price | $ | 1.67 | |||
| 50,000 | Fixed conversion price | $ | 1.60 | |||
| 100,000 | Fixed conversion price | $ | 1.25 | |||
| $ | 7,450,000 | |||||
As of March 31, 2026 the principal balance of $1,550,000 and $5,900,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, on its condensed consolidated balance sheet under the caption convertible notes payable. As of December 31, 2025 the principal balance of $1,250,000 and $6,460,000 related to the convertible notes payable was recorded in current and noncurrent liabilities, respectively, on its condensed consolidated balance sheet under the caption convertible notes payable.
On January 26, 2026, March 9, 2026 and March 18, 2026, three holders of three convertible notes payable with an aggregate principal balance of $310,000 converted the full principal amount of each of the convertible promissory notes payable into an aggregate of 291,672 shares of our common stock, pursuant to the provisions of their respective convertible notes payable. On January 8, 2026, we issued a convertible note payable in the amount of $50,000 and received proceeds of $50,000. The note bears interest at a rate of 10% per annum, may be converted at a price of $1.60 per share and matures on the fourth anniversary of its issuance date. On May 1, 2026, the holder of two convertible promissory notes converted the aggregate principal balance of $500,000 and accrued interest of $4,167 into 504,167 shares of our common stock pursuant to the convertible notes payable.
We recorded interest expense related to these convertible notes payable of $191,136 and $136,000 during the three months ended March 31, 2026 and 2025, respectively. In addition, we made cash interest payments amounting to $192,528 and $129,556, respectively, during the three months ended March 31, 2026 and 2025, related to the convertible notes payable.
Convertible Note Payable at Fair Value
We had one convertible promissory note outstanding with aggregate principal amount of $500,000 as of March 31, 2026 for which it elected the fair value option. As such, the estimated fair value of the note was recorded on its issue date. At each balance sheet date, we record the fair value of the convertible promissory note with any changes in the fair value recorded in the condensed consolidated statements of operations.
We had a balance of $260,000 and $270,000 in noncurrent liabilities as of March 31, 2026, and December 31, 2025, respectively, on our condensed consolidated balance sheets related to the convertible promissory note payable measured at fair value.
We recorded a gain in fair value of $10,000 and $20,000 for the three months ended March 31, 2026 and 2025, respectively, on our condensed consolidated statements of operations related to this convertible promissory note at fair value.
We recorded interest expense related to this convertible note payable at fair value of $9,863 for both the three months ended March 31, 2026 and 2025. In addition, we made cash interest payments amounting to $9,863 for both the three months ended March 31, 2026 and 2025, related to the convertible note payable at fair value.
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Nonconvertible Promissory Notes
During the three months ended March 31, 2025, we issued a nonconvertible promissory note and received proceeds $250,000. We did not issue new nonconvertible promissory notes during the three months ended March 31, 2026. As of March 31, 2026, we had eleven outstanding unsecured nonconvertible promissory notes in the aggregate amount of $5,080,000, which bear interest at a rate of 10% per annum and mature between November 2026 and October 2030.
As of both March 31, 2026 and December 31, 2025, we had a balance of $500,000, recorded as current liabilities and $4,580,000 in noncurrent liabilities on our condensed consolidated balance sheets related to these unsecured nonconvertible promissory notes.
We recorded interest expense related to these nonconvertible promissory notes of $127,000 and $99,083 for the three months ended March 31, 2026 and 2025, respectively. We made interest payments of $125,778 and $97,000 for the three months ended March 31, 2026 and 2025, respectively, related to the nonconvertible promissory notes.
Nonconvertible Unsecured Promissory Note - Socialyte Promissory Note
In connection with the purchase agreement for the acquisition of Socialyte (“Socialyte Purchase Agreement”), we entered into a promissory note with the sellers of Socialyte (“the Socialyte Promissory Note”) amounting to $3,000,000. The Socialyte Promissory Note matured on September 30, 2023 and was payable in two payments: $1,500,000 on June 30, 2023 and $1,500,000 on September 30, 2023. The Socialyte Promissory Note carries an interest of 4% per annum, which accrues monthly, and all accrued interest was to be due and payable on September 30, 2023.
The Socialyte Purchase Agreement allows us to offset a working capital deficit against the Socialyte Promissory Note. As such, we deferred these installment payments until the final post-closing working capital adjustment is agreed upon with the seller of Socialyte. We filed a lawsuit against the seller of Socialyte and certain of its principals related to the Socialyte Purchase Agreement. See Note 12 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
We recorded interest expense related to this Socialyte Promissory Note of $30,000 for the three months ended March 31, 2026 and 2025, respectively. No interest payments were made during the three months ended March 31, 2026 and 2025, related to the Socialyte Promissory Note.
Nonconvertible Promissory Note from Related Parties
On June 21, 2021, we issued Dolphin Entertainment LLC (“DE LLC”), an entity wholly owned by our CEO, Bill O’Dowd, a nonconvertible promissory note with a principal balance of $1,107,873 which was to mature on December 31, 2026. On April 29, 2024 and June 10, 2024, we issued two nonconvertible promissory notes to DE LLC in the amounts of $1,000,000 and $135,000, respectively, which were to mature on April 29, 2029 and June 10, 2029, respectively, (collectively, “the DE LLC Notes”). The DE LLC Notes each bore interest at a rate of 10% per annum.
On May 12, 2025, we entered into an exchange agreement (the “Exchange Agreement”) with DE LLC, pursuant to which, we and DE LLC agreed to exchange the three DE LLC Notes in the aggregate principal amount of $2,242,873 currently held by DE LLC for three convertible promissory notes (the “DE New Notes”) in the same principal amounts. As consideration for the exchange, we and DE LLC agreed to extend the maturity dates on each of the notes by six months. One note, with a principal balance of $1,107,873 now matures on June 30, 2027, one note with a principal balance of $1,000,000 now matures on October 29, 2029 and one note with a principal balance of $135,000, now matures on December 10, 2029. The DE New Notes continue to bear interest at a rate of 10% per annum. DE LLC may convert the principal balance of the DE New Notes and any accrued interest thereon at any time before the maturity date of the DE New Notes into our common stock at a conversion price of $1.00 per share. We accounted for this exchange as an extinguishment of debt and recorded the difference between the carrying value of DE LLC Notes and the fair value of the DE New Notes of $0.8 million as a loss from extinguishment of debt in our condensed consolidated statement of operations for the year ended December 31, 2025.
As of March 31, 2026 and December 31, 2025, we had an aggregate principal balance of $2,839,556 and $2,904,357, respectively, related to the DE New Notes under the caption convertible note payable – related party in our condensed consolidated balance sheets. During the three months ended March, 31, 2026 and 2025, we did not repay any principal balance or make interest payments on the DE LLC Notes or DE New Notes.
We recorded interest expense of $55,304 for both the three months ended March 31, 2026 and 2025 related to the DE LLC Notes and the DE New Notes. As of March 31, 2026 and December 31, 2025, we had a balance in accrued interest – related parties of $543,358 and $488,054, respectively, on our condensed consolidated balance sheets related to the DE LLC Notes.
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Mock Notes
During 2024, we issued three nonconvertible promissory notes to Mr. Donald Scott Mock, the brother of Mr. O’Dowd, in the amount of $900,000, $75,000 and $8,112, respectively, and received proceeds of $983,112. The Mock Notes bear interest at a rate of 10% per annum and mature on January 16, 2029, May 28, 2029 and December 30, 2029, respectively.
As of both March 31, 2026 and December 31, 2025, we had a principal balance of $983,112 related to the Mock Notes under the caption loans from related party in our condensed consolidated balance sheets. For the three months ended March 31, 2026 and 2025, we did not repay any principal balance on the Mock Notes. During the three months ended March 31, 2026, we made interest payments in the amount of $24,578 related to the Mock Notes. No interest payments were made during the three months ended March 31, 2025 related to the Mock Notes.
We recorded interest expense of $24,578 for both the years ended December 31, 2025 and 2024 related to the Mock Notes. As of March 31, 2026 and December 31, 2025, we had a balance in accrued interest – related parties of $188,728 on our condensed consolidated balance sheets related to the Mock Notes.
BankUnited Loan Agreement
On September 29, 2023, we entered into a loan agreement with BankUnited (“BankUnited Loan Agreement”) in which an existing term loan with BankProv was repaid (the “Refinancing Transaction”). The BankUnited Loan Agreement includes: (i) $5,800,000 secured term loan (“First BKU Term Loan”), (ii) and $750,000 of a secured revolving line of credit (“BKU Line of Credit”) and (iii) $400,000 Commercial Card (“BKU Commercial Card”). The First BKU Term Loan carries a 1.0% origination fee and matures in September 2028, the BKU Line of Credit carries an initial origination fee of 0.5% and a 0.25% fee on each annual anniversary and matures in September 2026; the BKU Commercial Card does not have any initial or annual fee and matures in September 2026. The First BKU Term Loan has a declining prepayment penalty equal to 5% in year one, 4% in year two, 3% in year three, 2% in year four and 1% in year five of the outstanding balance. The BKU Line of Credit and BKU Commercial Card can be repaid without any prepayment penalty.
On December 6, 2024, we entered into a second Bank United Loan Agreement (“Second BKU Term Loan”) for $2.0 million to finance the acquisition of Elle Communications, LLC. The Second BKU Term Loan carries a 1.0% origination fee and matures in December 2027. Similar to the First BKU Term Loan, the Second BKU Term Loan has a declining prepayment penalty equal to 3% in year one, 2% in year two and 1% in year three of the outstanding balance. (The First BKU Term Loan, Second BKU Term Loan, BKU Line of Credit and BKU Commercial Card are collectively referred to as the “Bank United Credit Facility”).
Interest accrues at 8.10% fixed rate per annum on the First BKU Term Loan and 7.10% fixed rate per annum on the Second BKU Term Loan. Principal and interest are payable on a monthly basis based on a 5-year amortization for the First BKU Term Loan and 3-year amortization for the Second BKU Term Loan. Interest on the BKU Line of credit is payable on a monthly basis, with all principal due at maturity. The BKU Commercial Card payment is due in full at the end of each bi-weekly billing cycle. During the three months ended March 31, 2026 and 2025, we did not used the BKU Commercial Card. During the three months ended March 31, 2026 and 2025, we made payments in the amount of $354,621, inclusive of $68,625 and $90,722 of interest related to the First BKU Term Loan, respectively. During the three months ended March 31, 2026 and 2025, we made payments in amount of $185,995, inclusive of $23,827 and $32,187, respectively, of interest related to the Second BKU Term Loan.
Interest on the BKU Line of Credit is variable based on the Lender’s Prime Rate. During the three months ended March 31, 2026 and 2025, the Company recorded interest expense and made payments of $6,778 and $7,550, respectively, related to the BKU Line of Credit.
As of March 31, 2026, we had a balance of $1,852,548 classified as current liabilities and $2,502,601 classified as noncurrent liabilities, net of $58,894 of debt issuance costs, in our condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of December 31, 2025, we had a balance of $1,813,760 classified as current liabilities and $2,976,930 classified as noncurrent liabilities, net of $71,518 of debt issuance costs, in our condensed consolidated balance sheet related to the First BKU Term Loan and the Second BKU Term Loan. As of March 31, 2026 and December 31, 2025, we had a balance of $400,000 of principal outstanding under the BKU Line of Credit.
Amortization of debt origination costs under the Bank United Credit Facility is included as a component of interest expense in the condensed consolidated statements of operations and amounted to approximately $12,624 and $7,012, respectively, for both the three months ended March 31, 2026 and 2025.
The BankUnited Credit Facility contains financial covenants tested semi-annually, on June 30th and December 31st , on a trailing twelve-month basis that require us to maintain a minimum debt service coverage ratio of 1.25:1.00 and a maximum funded debt/EBITDA ratio of 3.00:1.00. In addition, the BankUnited Credit Facility contains a liquidity covenant that requires us to hold a cash balance at BankUnited with a daily minimum deposit balance of $2,000,000. As of March 31, 2026, we believe we are in compliance with the debt covenants.
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Critical Accounting Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions about future events that affect amounts reported in our consolidated financial statements and related notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Management evaluates its accounting policies, estimates and judgments on an on-going basis. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions. Our significant accounting policies are discussed in Note 2 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025.
An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements.
We consider the fair value estimates, including those related to acquisitions, valuations of goodwill, intangible assets and convertible debt to be the most critical in the preparation of our consolidated financial statements as they are important to the portrayal of our financial condition and require significant or complex judgment and estimates on the part of management.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 1 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, as well as statements, other than historical facts, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. These statements are often characterized by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” ”intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal” or “continue” or the negative of these terms or other similar expressions.
Forward-looking statements are based on assumptions and assessments made in light of our experience and perception of historical trends, current conditions, expected and future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of our control. You should not place undue reliance on these forward-looking statements, which reflect our views only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update these forward-looking statements in the future, except as required by applicable law.
Risks that could cause actual results to differ materially from those indicated by the forward-looking statements include those described as “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Management’s Report on the Effectiveness of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure.
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We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2026. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to material weaknesses disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 27, 2026, which have not been remediated as of the date of the filing of this report.
Remediation of Material Weaknesses in Internal Control over Financial Reporting
We have begun the process of designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate the material weaknesses. Our internal control remediation efforts include the following:
| · | Developing formal policies and procedures over the Company’s fraud risk assessment and risk management function; |
| · | Developing policies and procedures to enhance the precision of management review of financial statement information and control impact of changes in the external environment; |
| · | We have entered into an agreement with a third-party consultant that assists us in analyzing complex transactions and the appropriate accounting treatment; |
| · | We have implemented a new enterprise resource planning systems that will allow us to setup proper review and approval of transactions; |
| · | We are enhancing our policies, procedures and documentation of period end closing procedures; |
| · | Implementing policies and procedures to enhance independent review and documentation of journal entries, including segregation of duties; and |
| · | Reevaluating our monitoring activities for relevant controls. |
Management is beginning the process of implementing and monitoring the effectiveness of these and other processes, procedures and controls and will make any further changes deemed appropriate. Management believes our planned remedial efforts will effectively remediate the identified material weaknesses. As we continue to evaluate and work to improve our internal control over financial reporting, management may determine it is necessary to take additional measures to address control deficiencies or determine it necessary to modify the remediation plan described above.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter, there have been no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting for the fiscal quarter covered by this report.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 21, 2024, the Company filed a complaint in Los Angeles County Superior Court against NSL Ventures (“NSL”), the Socialyte seller, and its principals alleging that the defendants breached the Socialyte Purchase Agreement and committed acts of fraud and negligence in connection with that transaction, and that the Company is entitled to monetary damages caused by those acts. On September 16, 2024, the defendants answered the Complaint with a general denial and affirmative defenses. Also on September 16, 2024, defendant NSL also filed a Cross-complaint against the Company and Social Midco, LLC, alleging a single cause of action for breach of contract. The Company and Social Midco answered the Cross-complaint on October 1, 2024. As the case has progressed, the court appointed an independent accountant to adjudicate certain accounting issues relevant to the case. That independent accountant’s work is ongoing. In April 2026, the Court rejected Defendants’ attempt to dismiss the Company’s claims. Trial in the matter is scheduled for April 2027. Due to the stage of the proceedings an estimate of any possible loss or range of loss cannot be made at this time. The Company may be subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. In the opinion of management and based upon the advice of its outside counsels, the liability, if any, from any pending litigation is not expected to have a material effect in the Company’s financial position, results of operations and cash flows.
ITEM 1A. RISK FACTORS
Not required for a “smaller reporting company.”
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
No officers or directors, as defined in Rule
16a-1(f),
The following information is included in this Item 5 in lieu of filing a Form 8-K:
Item 1.01 Entry into a Material Definitive Agreement
On May 7, 2026, two of the Company’s wholly-owned subsidiaries, Shore Fire Media, Ltd. and The Door Marketing Group, LLC (collectively, the “Borrowers”), executed a Loan Agreement with certain Lenders and FVP Servicing, LLC (“FVP”), as agent for the Lenders providing for (i) a term loan in the amount of $2,000,000, (ii) a delayed draw term loan in the amount of $2,000,000 that, subject to certain conditions, will be become available on November 7, 2026 and (ii) a second delayed draw term loan in the amount of $1,000,000 that, subject to certain conditions, will become available on May 7, 2027 (the “Loans”). The Loans will bear interest at 12% per annum from the date they are made and will have a maturity date of May 7, 2029. The Company executed a Guaranty in favor of FVP in connection with the Loan Agreement. In addition, the Borrowers entered into a Security Agreement pursuant to which they granted FVP and the Lenders a security interest in substantially all of its assets as collateral for the loan obligations and the Company entered into a Pledge and Security Agreement granting FVP and the Lenders a security interest in the equity of the Borrowers. Proceeds from the Loans will be for general working capital purposes.
The foregoing descriptions of the Loan Agreement, Security Agreement and Pledge and Security Agreement are not complete and are qualified in their entirety by reference to the Loan Agreement, Security Agreement and Pledge and Security Agreement filed herewith as Exhibits 10.1, 10.2 and 10.3, respectively, to this Quarterly Report on Form 10-Q, and each such exhibit is incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
On May 8, 2026, the Company entered into two subscription agreements (the “Subscription Agreements”) with investors for two convertible promissory notes (each a “Notes”) in the aggregate principal amount of $500,000 and received cash proceeds of $500,000. The Notes bear interest at a rate of 10% per annum and each have a maturity date of May 8, 2031. The noteholders may convert the principal balance of the Notes and any accrued interest thereon at any time before the maturity date of the Notes into common stock of the Company (“Common Stock”) a purchase price of $1.43 per share. The conversion prices for these Notes were either above or the closing price of the Common Stock on the Nasdaq Stock Market on the respective dates of those Notes.
The foregoing description of the terms of the Subscription Agreements, the Notes, and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the form of Subscription Agreement and the form of Note, which are included as Exhibits 4.1 and 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2023 and are incorporated herein by reference.
The issuance and sale of the Notes, and any shares of common stock to be issued upon conversion thereof will be issued, by the Company in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act.
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ITEM 6. EXHIBITS
| * | Filed herewith. | |
| # | Furnished herewith. |
| 35 |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized May 12, 2026.
Dolphin Entertainment, Inc.
By:/s/William O’Dowd IV
Name: William O’Dowd IV
Chief Executive Officer
By: /s/ Mirta A. Nerini
Name: Mirta A Negrini
Chief Financial Officer
| 36 |
Exhibit 31.1
CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO SECTION 302
I I, William O’Dowd IV, Chief Executive Officer of Dolphin Entertainment Inc. (the “Registrant”), certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of the Registrant; | |
| 2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report. | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; | |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: | |
| a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and | |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. | |
Date: May 12, 2026
William O’Dowd IV
Chief Executive Officer
Exhibit 31.2
PRINCIPAL FINANCIAL OFFICER
CERTIFICATION PURSUANT TO SECTION 302
I, Mirta A Negrini, Chief Financial Officer of Dolphin Entertainment Inc. (the “Registrant”), certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of the Registrant; | |
| 2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report. | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; | |
| 4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: | |
| a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and | |
| 5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. | |
Date: May 12, 2026
Mirta A Negrini
Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report of Dolphin Entertainment, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William O’Dowd IV, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: May 12, 2026 By:
William O’Dowd IV
Chief Executive Officer
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report of Dolphin Entertainment, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mirta A Negrini, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: May 12, 2026 By:
Mirta A Negrini
Chief Financial Officer
Exhibit 10.1
EXECUTION COPY |
LOAN AGREEMENT
This LOAN AGREEMENT (this “Agreement”) dated as May 7, 2026, is made by and among SHORE FIRE MEDIA, LTD., a New York corporation (“Shore Fire”), and THE DOOR MARKETING GROUP, LLC, a New York limited liability company (“The Door”; The Door and Shore Fire, each, a “Borrower” and, together, “Borrowers”); each other Loan Party (as defined below) from time to time party hereto; each financial institution that from time to time is a Lender (as defined below) hereunder; and FVP SERVICING, LLC, a Delaware limited liability company (in its capacity as administrative agent for the Lenders, the “Administrative Agent” and together with Borrowers and the Lenders, the “Parties”, and each, a “Party”).
W I T N E S S E T H:
WHEREAS, Borrowers have requested that the Lenders extend credit to Borrowers in the form of a term loan credit facility more particularly described herein, and the Lenders are each willing to do so on the terms, conditions and provisions set forth herein.
NOW, THEREFORE, upon the terms and conditions hereinafter stated, and in consideration of the mutual premises set forth above and other adequate consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1 As used in this Agreement, the following terms shall have the meanings set forth below (terms defined in the singular to have the same meaning when used in the plural and vice versa):
“Administrative Agent” shall have the meaning given to such term in the introductory paragraph of this Agreement.
“Advance” means an advance of funds by Lenders under this Agreement.
“Advance Request” means a request for an Advance in respect of the Delayed Draw Term Loans delivered by Borrowers to Administrative Agent in the form of Exhibit C hereto.
“Affiliate” of any Person means any other Person that directly or indirectly controls, is controlled by or is under direct or indirect common control with such Person. A Person shall be deemed to “control” another Person if such first Person directly or indirectly possesses the power to direct (or to cause the direction of or to materially influence) the management and policies of the second Person, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding the foregoing, neither Administrative Agent nor any Lender shall be deemed to be an Affiliate of any Loan Party.
“Agreement” means this Loan Agreement and all exhibits, riders and schedules at any time executed by the Parties and made a part hereof by reference, either as originally executed or as hereafter amended, restated, modified or supplemented from time to time.
“Applicable Law” means all laws, rules and regulations applicable to the Person, conduct, transaction, covenant or Loan Documents in question, including, without limitation, all Applicable Law and equitable principles; all provisions of all applicable state and federal constitutions, statutes, rules, regulations and orders of governmental bodies; and all Orders.
“Borrower” or “Borrowers” shall have the meaning given to such term in the introductory paragraph of this Agreement.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.
“Change of Control” means any event, circumstance or occurrence that results in Guarantor holding and owning, directly or indirectly, less than 100% of the issued and outstanding equity interests, and a controlling majority of all voting equity interests, in either Borrower.
“Closing Date” means May 7, 2026.
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“Closing Date Term Loan” means the Loan in the original principal amount of $2,000,000.00 Advanced by Lenders to Borrowers on the Closing Date pursuant to Section 2.1(a) hereof.
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.
“Collateral” means all Property in which Administrative Agent is at any time granted a Lien for purposes of securing the Obligations.
“Commitment” means, collectively, each Lender’s commitment to Advance the Closing Date Term Loan and Delayed Draw Term Loans hereunder, in each case, in the applicable amount specified for such Lender and the related Loan type on Schedule I attached hereto.
“Debt” of a Person, means all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of Property or services; (c) obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations as lessee under capital leases; (e) obligations in respect of any interest rate swaps, currency exchange agreements, commodity swaps, caps, collar agreements or similar arrangements entered into by such Person providing for protection against fluctuations in interest rates, currency exchange rates or commodity prices or the exchange of nominal interest obligations, either generally or under specific contingencies; (f) obligations under acceptance facilities and letters of credit; (g) obligations under any merchant advance, factoring or similar agreement; (h) guaranties, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person, or otherwise to assure a creditor against loss, in each case, in respect of indebtedness set out in clauses (a) through (g) of a Person other than such Person; and (i) indebtedness set out in clauses (a) through (h) of any Person other than such Person secured by any lien on any asset of such Person, whether or not such indebtedness has been assumed by such Person.
“Debt Service Reserve” has the meaning given to such term in Section 2.4(d) hereof.
“Debt Service Reserve Additional Funding Date” means (a) the date that is six (6) months following the earlier to occur of (i) the Settlement Date with respect to the Delayed Draw Term Loan occurring during the Second Delayed Draw Availability Period and (ii) the last day of the Second Delayed Draw Availability Period (the earlier to occur of (i) and (ii), the “Initial Debt Service Reserve Additional Funding Date”), and (b) thereafter, each three (3) month anniversary of the Initial Debt Service Reserve Additional Funding Date.
“Default” means the occurrence of any event which, after satisfaction of any requirement for the giving of notice or the lapse of time, or both, would become an Event of Default.
“Default Rate” means the annual percentage interest rate applied to the principal of the Loan not paid when due under the terms of the applicable Loan Documents, which rate shall equal twenty percent (20%).
“Delayed Draw Term Loan” or “Delayed Draw Term Loans” means, individually or collectively, (a) the Loans in the aggregate original principal amount of the First Delayed Draw Maximum Amount Advanced by Lenders to Borrowers on the First Delayed Draw Date (or such other date in accordance with Section 2.1(a)(ii)) pursuant to Section 2.1(a)(ii) hereof, and (b) the Loans in the aggregate original principal amount of the Second Delayed Draw Maximum Amount Advanced by Lenders to Borrowers on the Second Delayed Draw Date (or such other date in accordance with Section 2.1(a)(iii)) pursuant to Section 2.1(a)(iii) hereof.
“EBITDA” means, with respect to any fiscal period, as calculated for Borrowers and their respective Subsidiaries for such period (but without duplication): (a) net income for such period, plus (b) to the extent deducted in determining net income for such period (i) interest expense, (ii) income taxes, and (iii) depreciation and amortization, in each case, as such items are determined on a consolidated basis in accordance with GAAP.
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“Event of Default” shall have the meaning given to such term in Section 7.1 hereof.
“First Delayed Draw Date” means the date of the six (6) month anniversary of the Closing Date.
“First Delayed Draw Maximum Amount” means $2,000,000.
“Funded Debt” means, with respect to any Person, all Debt of such Person (other than (x) Debt of the type referred to in clause (f) of the definition of Debt to the extent cash collateral has been posted as security therefor and (y) Debt of the types referred to in clause (h) of the definition of Debt).
“GAAP” means generally accepted accounting principles in the United States, consistently applied.
“Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government.
“Guarantor” shall mean, Dolphin Entertainment, Inc., a Florida corporation, and any other Person who from time to time executes a Guaranty as a Guarantor to guarantee the Obligations in favor of Administrative Agent and the Lenders.
“Guaranty” means that certain Guaranty Agreement dated as of the Closing Date by Guarantor in favor of Administrative Agent and the Lenders, as the same may be amended, modified, supplemented, restated, extended or renewed from time to time.
“Indemnitee” shall have the meaning given to such term in Section 11.2 hereof.
“Interest Rate” means twelve percent (12%) per annum.
“Key Person” means Bill O’Dowd.
“Key Person Event” means and shall be deemed to have occurred if Key Person (a) ceases to be the Chief Executive Officer of Guarantor, or (b) ceases involvement in the day-to-day senior management decisions of Guarantor or either Borrower, in an equivalent role, and performing equivalent substantive responsibilities, to that held and those performed as of the Closing Date.
“Law” as to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any Governmental Authority and authoritative interpretations thereon, whether now or hereafter in effect, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject.
“Lender” means, individually and collectively, each of the Persons listed on Schedule I hereto as “Lender”, together with any successor, assignee or other transferee of such Lender hereunder, and any other entity subsequently added hereto as a Lender hereunder, or any successor, assignee or other transferee thereof.
“Lien” means any mortgage, pledge, security interest, lien (statutory or otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement, or other arrangement having the practical effect of the foregoing or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as any of the foregoing).
“Loan” or “Loans” means, individually or collectively, the Closing Date Term Loan and the Delayed Draw Term Loans.
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“Loan Documents” means this Agreement, the Security Agreement, the Guaranty, the Pledge Agreement, each Note and all other instruments, agreements, documents and writings now or hereafter evidencing, securing or delivered to Administrative Agent and Lender in connection with the Obligations, as each of the foregoing may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Loan Parties” shall mean each Borrower, each Guarantor, and each other Affiliate of a Borrower or Guarantor from time to time party to any of the Loan Documents.
“Maturity Date” means the earlier of (a) the Scheduled Maturity Date, and (b) the date on which all amounts outstanding under this Agreement have been declared or have automatically become due and payable (whether by acceleration or otherwise).
“Maximum Loan Amount” means (a) with respect to the Closing Date Term Loan, $2,000,000, (b) with respect to the Delayed Draw Term Loans Advanced by Lenders to Borrowers during the First Delayed Draw Availability Period pursuant to Section 2.1(a)(ii) hereof, the First Delayed Draw Availability Period Maximum Amount, and (c) with respect to the Delayed Draw Term Loans Advanced by Lenders to Borrowers during the Second Delayed Draw Availability Period pursuant to Section 2.1(a)(iii) hereof, the Second Delayed Draw Availability Period Maximum Amount.
“Net Proceeds” means, in respect of (a) any incurrence of Debt (other than the Loan or Permitted Debt) by a Borrower, (b) any casualty or condemnation event involving Property of a Borrower (excluding any such event for which a Borrower receives net insurance proceeds of less than $100,000), or (c) any sale or assignment involving Property of a Borrower, all cash proceeds (including cash proceeds as and when received in respect of non-cash proceeds received or receivable in connection with such occurrence), net of reasonable and customary out-of-pocket costs and expenses paid or incurred in connection therewith in favor of any Person not an Affiliate of a Loan Party.
“Note” has the meaning set forth in Section 2.1(b).
“Obligations” means all loans (including the Loan), Advances, debts, liabilities and obligations (including reimbursement obligations) for monetary amounts owing by a Borrower or any other Loan Party to the Administrative Agent and the Lenders, whether due or to become due, matured or unmatured, liquidated or unliquidated, contingent or non-contingent, of any kind or nature, present or future, arising under or in respect of this Agreement or any of the Loan Documents. This term includes all principal, interest (including interest that accrues after the commencement against Borrower or any other Loan Party of any action under the Federal Bankruptcy Code), premium, reasonable and documented out-of-pocket fees and expenses, including any and all arrangement fees, delivery fees, loan fees, commitment fees, agent fees, merchant processing fees and any and all other fees, expenses, costs or other sums (including reasonable and documented out-of-pocket attorney’s fees) chargeable to a Borrower or any other Loan Party under any of the Loan Documents.
“OFAC” means the U.S. Department of Treasury’s Office of Foreign Asset Control.
“Order” as to any Person, means any order, decree, judgment, writ, injunction, settlement agreement, requirement or determination of an arbitrator or a court or other Governmental Authority, in each case, applicable to or binding on such Person or any of its properties or to which such Person or any of its properties is subject.
“Payment Date” means the first (1st) day of each calendar month during the term of this Agreement commencing with the first Payment Date after the Closing Date; provided, however, if such day is not a Business Day, the next succeeding Business Day.
“Permitted Debt” means (a) Debt existing or arising under this Agreement and any refinancing, extension or modification thereof; (b) unsecured trade Debt incurred in the ordinary course of business consistent with past practice and which is paid within sixty (60) days of the applicable date of incurrence thereof; (c) unsecured Debt owed in respect of any netting services, overdrafts and related liabilities arising from treasury, depository and cash management services in connection with any automated clearinghouse transfers of funds; (d) unsecured insurance premiums owing in the ordinary course of business which are also Debt; (e) Debt of any Borrower to another Borrower; and (f) Debt in respect of bid, payment and performance bonds, workers’ compensation claims, unemployment insurance, health, disability and other employee benefits or property, casualty or liability insurance, or guarantees of the foregoing types of Indebtedness, in the ordinary course of business.
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“Permitted Liens” means (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; (b) non-consensual Liens arising by operation of law, arising in the ordinary course of business, and for amounts which are not overdue for a period of more than thirty 30 days or that are being contested in good faith by appropriate proceedings; (c) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default; (d) the interests of lessors under operating leases and non-exclusive licensors under license agreements; (e) Liens on cash deposited to secure obligations in connection with worker's compensation or other unemployment insurance, or to secure obligations in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money or Liens on cash deposited to secure its reimbursement obligations with respect to surety or appeal bonds obtained in the ordinary course of business; (f) with respect to any real property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof; (g) non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business; and (h) rights of setoff or bankers’ liens upon deposits of funds in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business.
“Person” means a corporation, an association, partnership, an organization, a business, a business trust, a limited liability company, an individual, a government or political subdivision thereof or a governmental agency.
“Pledge Agreement” means that certain Pledge and Security Agreement, dated as of the date hereof, made by Guarantor in favor of Administrative Agent and the Lenders, as the same may be amended, modified, supplemented, restated, extended or renewed from time to time.
“Property” means the real property and personal property of a Person, and any interest of a Person in any real or personal property.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates
“Restricted Payment” means (a) any dividend or other distribution (whether in cash, securities or other Property) with respect to any equity securities of a Borrower, (b) any purchase, redemption, retirement or acquisition by a Borrower for value of any equity securities or any distribution of any kind in cash or other Property or assets in respect thereof; (c) any payment (whether in cash, securities or other Property or assets), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such equity securities or on account of any return of capital to a Borrower’s equityholders, partners or members (or the equivalent Person thereof), and (d) any management, board or director fees or similar fee to a holder of equity securities of a Loan Party, other than commercially reasonable director fees and payments of salaries, bonuses, non-cash stock incentives or other customary compensation to employees in the ordinary course of business and consistent with historical practices.
“Sanctioned Country” means a country subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx, or as otherwise published from time to time.
“Sanctioned Person” means (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time, or (b) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a Person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the United States government, including those administered by OFAC or the United States Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state, His Majesty’s Treasury of the United Kingdom, or other relevant sanctions authority having jurisdiction over any Loan Party.
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“Scheduled Maturity Date” means the three (3) year anniversary of the Closing Date.
“Second Delayed Draw Date” means the date of the twelve (12) month anniversary of the Closing Date.
“Second Delayed Draw Maximum Amount” means $1,000,000.
“Security Agreement” means that certain Security Agreement dated as of the Closing Date by Borrowers in favor of Administrative Agent and the Lenders, as the same may be modified, amended, supplemented, extended or renewed from time to time.
“Security Documents” means, collectively, the Security Agreement, the Pledge Agreement, all Uniform Commercial Code financing statements required by this Agreement to be filed with respect to the security interests created pursuant to the Security Documents and all other documents and agreements executed or delivered to Administrative Agent by a Borrower or any other Loan Party for purposes of securing the Obligations in connection with any of the foregoing documents.
“Settlement Date” means, with respect to any Advance hereunder, the date on which funds are
advanced by a Lender.
“Subsidiary” means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by a Borrower or Guarantor.
“Tax Sharing Agreement” means any tax sharing, tax allocation, tax indemnification or similar agreement between or among any Borrower, Guarantor and/or any of their respective Affiliates, as the same may be amended, restated, supplemented or modified from time to time.
1.2 Accounting Terms and Determination. Accounting terms used in this Agreement such as “net income,” “amortization,” “depreciation,” and “interest expense” shall be calculated (both as to amounts and classification of items) in accordance with GAAP.
1.3 Other Interpretive Provisions. Any pronoun used herein shall be deemed to cover all genders. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations, and all references to any instruments or agreements, including, without limitation, references to any of the Loan Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. Unless otherwise expressly stated or the context clearly indicates a different intention, then (as may be appropriate in the particular context) a singular reference to Lender used in any Loan Document includes the plural, and a plural reference to Lenders includes the singular.
1.4.Co-Borrower Provisions.
(a)The Obligations of each Borrower hereunder (each, a “Co-Borrower”) and under each other Loan Document are joint and several. Each reference to the term “Borrower” in each Loan Document, shall be deemed to refer to each Co-Borrower; each representation and warranty made by a Co-Borrower in any Loan Document shall be deemed to have been made by each Co-Borrower; each covenant and undertaking on the part of a Co-Borrower under any Loan Document shall be deemed individually applicable with respect to each Co-Borrower; and each event constituting a Default or an Event of Default hereunder shall be determined with respect to each Co-Borrower. A separate action or actions may be brought and prosecuted against any Co-Borrower whether an action is brought against any other Co-Borrower or whether any other Co-Borrower is joined in any such action or actions. Each Co-Borrower waives any right to require Administrative Agent or any Lender to: (a) proceed against any other Co-Borrower; (b) proceed against or exhaust any security held from any other Co-Borrower; or (c) pursue any other remedy in Administrative Agent’s or the Lenders’ power whatsoever. Notices under any Loan Document required to be provided by or to Co-Borrowers or any of them shall be effective if provided by or to Shore Fire. Any consent on the part of a Co-Borrower under any Loan Document shall be effective when provided by Shore Fire to the Administrative Agent or the Lenders and the Administrative Agent and the Lenders shall be entitled to rely upon any notice or consent given by Shore Fire as being notice or consent given by all Co-Borrowers under any Loan Document.
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(b)In the event any obligation of Co-Borrowers under any Loan Document is deemed to be an agreement by a Co-Borrower to answer for the debt or default of another Co-Borrower or as a hypothecation of property as security therefor, each Co-Borrower represents and warrants that: (i) no representation has been made to it as to the creditworthiness of any other Co-Borrower and (ii) it has established adequate means of obtaining from each other Co-Borrower on a continuing basis, financial or other information pertaining to each other Co-Borrower’s financial condition. Each Co-Borrower expressly waives diligence, demand, presentment, protest and notice of every kind and nature whatsoever, consents to the taking by the Administrative Agent or the Lenders of any additional security for the Obligations, or the alteration or release in any manner of any security now or hereafter held in connection with any Obligations, and consents that Administrative Agent, the Lenders and each other Co-Borrower may deal with each other in connection with said Obligations or otherwise, or alter any contracts now or hereafter existing between them, in any manner whatsoever, including, without limitation, the renewal, extension, acceleration, changes in time for payment, and increases or decreases in any rent, rate of interest or other amounts owing, all without in any way altering the liability of such Co-Borrower, or affecting any security for such Obligations. Should any default be made in the payment of any such Obligations or in the terms or conditions of any Loan Document, Administrative Agent and the Lenders are hereby expressly given the right, at Administrative Agent’s option, to proceed in the enforcement of such Obligations or Loan Document independently of any other remedy or security it may at any time hold in connection with such Obligations and it shall not be necessary for Administrative Agent or the Lenders to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce its rights against any or all Co-Borrowers. Each Co-Borrower subordinates any right of subrogation, reimbursement, exoneration, contribution, indemnification, setoff or other recourse in respect of sums paid to Administrative Agent or the Lenders by any other Co-Borrower until the payment in full of all amounts due and owing under the Loans and all other Obligations (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted). Each Co-Borrower represents and warrants to and covenants with Administrative Agent and the Lenders that (i) Co-Borrowers are engaged in operations that require financing on a joint basis and, accordingly, each Co-Borrower will materially benefit, directly or indirectly, from the Loans, and (ii) the benefits received by each Co-Borrower are reasonably equivalent to the obligations undertaken by each Co-Borrower. Each Co-Borrower agrees that Administrative Agent and the Lenders may also conclusively rely on the actions of any Co-Borrower to bind all Co-Borrowers.
2. LOANs; USE OF PROCEEDS.
2.1 The Loans.
(a) (i) Subject to the terms and conditions of this Agreement, the Lenders shall Advance to Borrowers the Closing Date Term Loan on the Closing Date, in the original principal amount of $2,000,000.00. Proceeds of the Closing Date Term Loan shall be disbursed in accordance with Exhibit B attached hereto, and shall be applied by Borrowers solely for the purposes stated therein. Without limitation of the foregoing, Administrative Agent shall retain the sum of $620,000.00 from the proceeds of the Closing Date Term Loan and shall apply the same to the funding of the Debt Service Reserve in accordance with Section 2.4 hereof. Upon the funding of the Advance of the Closing Date Term Loan on the Closing Date, the Commitment of each Lender with respect to the Closing Date Term Loan hereunder shall be terminated, and no further Advances in respect of the Closing Date Term Loan shall be permitted. Principal amounts repaid or prepaid in respect of the Closing Date Term Loan will not be available for reborrowing hereunder. The Closing Date Term Loan shall bear interest at the applicable rate provided in the provisions of Section 2.4 hereof.
(ii)So long as no Event of Default has occurred and is continuing, on the First Delayed Draw Date, Lenders shall make available to Borrowers a Delayed Draw Term Loan in the aggregate original principal amount of the First Delayed Draw Maximum Amount. In no event shall any Advance of the Delayed Draw Term Loan be made hereunder at any time during which an Event of Default has occurred and is continuing; provided, however, that to the extent an Event of Default has occurred and is continuing on the First Delayed Draw Date, then the funding of such Delayed Draw Term Loan shall be made on the day upon which the Event of Default is cured or waived in accordance with the terms of this Agreement. Upon the funding of the Advance of a Delayed Draw Term Loan hereunder on the First Delayed Draw Date, the Commitment of each Lender with respect to such Delayed Draw Term Loans shall be permanently reduced and terminated in an aggregate amount equal to the First Delayed Draw Maximum Amount. Principal amounts repaid or prepaid in respect of the Delayed Draw Term Loan Advanced on the First Delayed Draw Date will not be available for reborrowing hereunder. The Delayed Draw Term Loan shall bear interest at the applicable rate provided in the provisions of Section 2.4 hereof and, without limitation of the foregoing and notwithstanding anything herein to the contrary, Administrative Agent shall retain the sum of $240,000.00 from the proceeds of the Delayed Draw Term Loan Advanced on the First Delayed Draw Date and shall apply the same to the funding of the Debt Service Reserve in accordance with Section 2.4 hereof
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(iii)So long as no Event of Default has occurred and is continuing, on the Second Delayed Draw Date, Lenders shall make available to Borrowers a Delayed Draw Term Loan in the aggregate original principal amount of the Second Delayed Draw Maximum Amount. In no event shall any Advance of the Delayed Draw Term Loan be made hereunder at any time during which an Event of Default has occurred and is continuing; provided, however, that to the extent an Event of Default has occurred and is continuing on the Second Delayed Draw Date, then the funding of such Delayed Draw Term Loan shall be made on the day upon which the Event of Default is cured or waived in accordance with the terms of this Agreement. Upon the funding of the Advance of a Delayed Draw Term Loan hereunder on the Second Delayed Draw Date, the Commitment of each Lender with respect to such Delayed Draw Term Loans shall be permanently reduced and terminated in an aggregate amount equal to the Second Delayed Draw Maximum Amount. Principal amounts repaid or prepaid in respect of the Delayed Draw Term Loan Advanced on the Second Delayed Draw Date will not be available for reborrowing hereunder. The Delayed Draw Term Loan shall bear interest at the applicable rate provided in the provisions of Section 2.4 hereof and, without limitation of the foregoing and notwithstanding anything herein to the contrary, Administrative Agent shall retain the sum of $300,000.00 from the proceeds of the Delayed Draw Term Loan Advanced on the Second Delayed Draw Date and shall apply the same to the funding of the Debt Service Reserve in accordance with Section 2.4 hereof
(b) The Loans shall be evidenced by one or more promissory notes in the form of Exhibit A hereto (as amended, restated, replaced, supplemented, extended or renewed from time to time, each, a “Note”, and collectively, the “Notes”), in each case, payable to the order of Administrative Agent for the benefit of the applicable Lender. Each Note will be due and payable in full on the Maturity Date. Administrative Agent is authorized to note or endorse the date and amount of each Advance and each payment of the applicable Loan on a schedule annexed to and constituting a part of the Notes. Such notations or endorsements, if made, will constitute prima facie evidence of the information noted or endorsed on such schedule, but the absence of any such notation or endorsement will not limit or otherwise affect the obligations or liabilities of Borrowers thereunder and hereunder.
(c) The obligations of the Lenders under this Section 2.1 shall be several and not joint. The Commitments of each Lender with respect to the Loans are as set forth on Schedule I hereto.
2.2 Repayment.
(a) Payment of Principal and Interest. Commencing on the first Payment Date and continuing on each Payment Date thereafter through and including the eighteenth (18th) Payment Date following the Closing Date (the “Interest-Only Period”), Borrowers shall make monthly payments with respect to the Loans equal to all accrued unpaid interest on the outstanding principal amount of the Loans as of the last day of the calendar month immediately preceding the calendar month in which such Payment Date occurs. Commencing on the nineteenth (19th) Payment Date hereunder and continuing on each Payment Date thereafter through and including the Maturity Date, Borrowers shall make monthly payments with respect to the Loans in an amount equal to the sum of (i) all accrued unpaid interest on the outstanding principal amount of the Loans as of the last day of the calendar month immediately preceding the calendar month in which such Payment Date occurs, plus (ii) a principal payment in the amount of $50,000 per month. Administrative Agent’s calculation of the principal, interest and other amounts from time to time payable hereunder shall be conclusive and binding absent manifest error. Payments of all remaining outstanding principal and accrued and unpaid interest on the Loans shall be due and payable by Borrower to the Lenders on the Maturity Date.
(b) If any interest or other sum due under any Loan Document is not paid by Borrowers within ten (10) days after the date on which it is due (except for the payment due on the Maturity Date), Borrowers shall pay to Lenders upon demand, a non-refundable late fee in an amount equal to five percent (5%) of such unpaid sum or the maximum amount permitted by Applicable Law, in order to defray the expense incurred by Lenders in handling and processing such delinquent payment and to compensate Lenders for the loss of the use of such delinquent payment. Such amount shall be secured by the Loan Documents.
(c) Payment Mechanics. Except as provided below, all payments of principal of, or interest on, the Loans and all other sums due under the terms of the Loan Documents shall be made in either (i) immediately available funds by wire or ACH deposit or (ii) checks or money orders made payable to the Administrative Agent at the address and pursuant to the instructions provided by the Administrative Agent to Borrower from time to time. Administrative Agent shall promptly distribute to each Lender any payments received by Administrative Agent on behalf of such Lender.
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2.3 Use of Proceeds. Proceeds of the Loans shall be applied by Borrowers solely for purposes of (a) funding Restricted Payments by Borrowers to Guarantor accordance with Section 6.1(e) to be applied by Guarantor for working capital and general corporate purposes, (b) paying transaction costs and expenses incurred in connection herewith, (c) funding the Debt Service Reserve and (d) general working capital purposes of Borrowers.
2.4 Interest; Debt Service Reserve.
(a) During the period commencing on the Closing Date and continuing at all times thereafter, the unpaid principal amount of each Loan shall, subject to this Section 2.4, bear interest at the Interest Rate. Interest shall be computed on the basis of a 360-day year for the actual number of days in the interest period. Upon the occurrence and during the continuance of any Event of Default, the Interest Rate shall increase from the date of such Event of Default to a rate equal to the Default Rate. For the avoidance of doubt, all payments of interest on the Loans outstanding under this Agreement on each Payment Date shall be made in accordance with Section 2.2 hereof.
(b) In no contingency or event whatsoever shall the amount paid or agreed to be paid to the Administrative Agent and Lenders for the use, forbearance or detention of money advanced under this Agreement exceed the highest lawful rate permissible under Applicable Law. It is the intent hereof that Borrowers will not pay or contract to pay, and that the Administrative Agent and Lenders not receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be charged to and paid by Borrowers under Applicable Law. All interest (and charges deemed interest) paid or agreed to be paid to the Lenders shall, to the extent permitted by Applicable Law, be amortized, pro-rated, allocated and spread in equal parts throughout the full term hereof until payment in full of the principal amount of the Obligations owing hereunder (including the period of any renewal or extension hereof) so that interest on the principal amount of the Obligations outstanding hereunder for such full period will not exceed the maximum amount permitted by Applicable Law. Each determination by Administrative Agent of an interest amount hereunder shall be made in good faith and, except for manifest error, shall be final, conclusive and binding for all purposes.
(c)On the Settlement Date with respect to each Advance hereunder, Loan proceeds in such amounts specified under Section 2.1(a) hereof, shall be retained by Administrative Agent and held as a debt service reserve (the “Debt Service Reserve”). On or before each Debt Service Reserve Additional Funding Date, Borrowers will remit to Administrative Agent, for application to the Debt Service Reserve, an additional sum equal to the aggregate amount of the scheduled payments of principal, interest and Administrative Agent Fees payable in respect of the Loans for the next three (3) Payment Dates following such Debt Service Reserve Additional Funding Date. The Debt Service Reserve shall constitute cash collateral for the payment and performance of the Obligations and Borrowers shall have no right of access to or the ability to draw upon amounts comprising the Debt Service Reserve. So long as no Event of Default has occurred and is continuing, amounts held in the Debt Service Reserve shall be applied by Administrative Agent on each Payment Date to the scheduled payments of principal, interest and Administrative Agent Fees payable hereunder; provided, however, that nothing contained herein shall be deemed to limit any obligation of Borrowers hereunder to make payments in respect of the Obligations as and when required hereunder, regardless of the sufficiency of the Debt Service Reserve for the payment thereof. Upon the occurrence of any Event of Default, Administrative Agent may apply all funds held in the Debt Service Reserve to the payment of the Obligations in such order as Administrative Agent shall determine in its sole discretion.
2.5 Prepayment.
(a) Voluntary Prepayment. Borrowers shall have the right to prepay the Loan in whole or in part at any time, but subject to Borrowers having provided at least fifteen (15) days prior written notice to Administrative Agent.
(b) Mandatory Prepayments. Immediately upon the receipt by any Loan Party of any Net Proceeds, Borrower shall deliver, or cause to be delivered, to Administrative Agent an amount equal to such Net Proceeds, for application to the Obligations in accordance with Section 2.5(c) hereof.
(c) Application. Notwithstanding anything herein to the contrary, (i) except as otherwise provided in Section 2.5(c)(iii), all payments, proceeds or recoveries received by Administrative Agent or the Lenders in respect of the Obligations or the Collateral prior to the occurrence of any Event of Default hereunder shall be applied (A) first, to the payment of fees, costs and expenses due and owing to Administrative Agent or any Lender, together with the amount of any protective advances made by Administrative Agent or any Lender to preserve or protect any Collateral, until paid in full, (B) second, to the replenishment of the Debt Service Reserve, to the extent then required pursuant to Section 2.4 hereof, (C) third, to the payment of accrued unpaid interest on the Loans, until paid in full, and (D) fourth, to the payment of the outstanding principal amount of the Loans, until paid in full, (ii) following the occurrence of any Event of Default hereunder, all payments, proceeds or recoveries received by Administrative Agent or the Lenders in respect of the Obligations or the Collateral shall be applied to the Obligations in such order as Administrative Agent shall determine in its sole discretion, and (iii) with respect to any prepayments under Sections 2.5(a) or 2.5(b) hereof, so long as no Event of Default as occurred hereunder, any portion of such prepayments allocable to principal (other than scheduled periodic payments) will be applied to reduce future scheduled payments in the inverse order of maturity, and the remaining portion of such prepayment shall be applied in the order of priority specified in Section 2.5(c)(i).
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2.6 Fees.
(a) On the Closing Date, Borrower shall pay to Administrative Agent, (i) for the account of Administrative Agent, an administrative agent origination fee in the amount of $20,000 and (ii) for the account of the Lenders, a lender origination fee in the amount of $80,000, which amounts shall be fully earned and non-refundable as of the Closing Date.
(b) On each Payment Date, Borrowers shall pay to Administrative Agent, for Administrative Agent’s own account, an agent fee (the “Administrative Agent Fee”) in an amount equal to the product of (i) the average outstanding daily balance of the Loans for the calendar month immediately preceding the calendar month in which such Payment Date occurs, multiplied by (ii) 0.50% per annum. The Administrative Agent Fee shall accrue at all times from and after the Closing Date in accordance with the terms hereof, shall be nonrefundable for any reason whatsoever and shall be in addition to any other fees, costs and expenses payable pursuant to the Loan Documents. Borrowers’ obligation to pay the Administrative Agent Fee will not be subject to counterclaim or setoff or be otherwise affected by any claim or dispute the Loan Parties may have.
2.7 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or otherwise, obtain payment in respect of any principal of or interest on its portion of any of the Loan resulting in such Lender’s receiving payment of a proportion of the aggregate amount of the Loan and accrued interest thereon greater than its pro rata share thereof as provided herein, then such Lender shall (a) notify the Administrative Agent of such fact and (b) purchase (for cash at face value) participations in the portions of the Loan of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on with their respective portions of the Loan and other amounts owing them; provided, that: (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this Section 2.7 shall not be construed to apply to (x) any payment made by or on behalf of Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its portion of the Loan to any assignee or participant. Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation.
2.8 Register.
(a) Register. Administrative Agent, acting solely for this purpose as a non-fiduciary agent of Borrowers, shall maintain at its address referred to herein a register (the "Register") for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amounts of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and Borrowers, Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes. The Register shall be available for inspection by Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. This Agreement and the Loans evidenced hereby are intended to be obligations in 'registered form' within the meaning of Treasury Regulations Sections 1.871-14(c) and 5f.103-1(c), and this Section 2.8 shall be interpreted consistently with such intent.
(b) Participant Register. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrowers, maintain a register on which it enters the name, address and principal amounts (and stated interest) of each participant and its interest in the Loans (the "Participant Register"). The entries in the Participant Register shall be conclusive and binding absent manifest error. A Lender shall make the Participant Register available to Borrowers upon reasonable prior written request. No participation shall be effective unless and until recorded in the applicable Participant Register. The parties intend that participations in the Loans shall be maintained in 'registered form' within the meaning of Treasury Regulations Sections 1.871-14(c) and 5f.103-1(c).
3. CONDITIONS PRECEDENT.
3.1 Closing Date. Borrowers shall deliver and Administrative Agent and each Lender shall have received the following, each in form and substance satisfactory to the Administrative Agent, as conditions precedent to the Advance made on the Closing Date and the entering into of this Agreement and the other Loan Documents by the Lenders:
(a) a duly executed original of:
(i) this Agreement;
(ii) the Security Agreement;
(iii) each Note;
(iv)the Guaranty;
(v)the Pledge Agreement; and
(vi)each of the other Loan Documents and Security Documents, each in form and substance satisfactory to the Administrative Agent and each Lender.
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(b) a validly executed officer’s certificate with respect to each Borrower and Guarantor, in form and substance acceptable to the Administrative Agent and attaching (i) a fully executed copy of such Person’s certificate of formation, certificate or article of incorporation, articles of organization or certificate of partnership (as applicable) bylaws, operating agreements or partnership agreements (as applicable) and all amendments thereto, (i) resolutions evidencing such Person’s authorization of the Loan; (iii) evidence of such Person’s good standing; and (iv) incumbency certificate;
(c)an opinion letter of counsel to Borrowers and Guarantors, in form and substance acceptable to Administrative Agent;
(d)Administrative Agent and Lenders shall have received such other documents and information as Administrative Agent may request; and
(e)on the Closing Date, the following statements shall be true and correct and Borrowers, by requesting and accepting the Closing Date Term Loan, shall be deemed to have represented and certified that:
(i) the representations, warranties and covenants of Borrowers and Guarantors set forth in this Agreement are true and correct; and
(ii)no Default or Event of Default shall exist immediately before or immediately after giving effect to the Loans.
3.2 Future Advances. The obligation of the Administrative Agent and the Lenders to honor any request for a Delayed Draw Term Loan Advance following the Closing Date is subject to the Administrative Agent and the Lenders’ receipt of a duly executed Advance Request and satisfaction of each of the following conditions precedent, unless waived by the Administrative Agent:
(a) the representations and warranties contained in this Agreement and in each of the other Loan Documents shall be true and correct in all material respects on and as of the Settlement Date of such Advance;
(b) no Default or Event of Default shall exist immediately before or immediately after giving effect to the requested Advance; and
(c) Administrative Agent shall have received such documentation and other items as required to evidence that the conditions to such Advance, as set forth in this Agreement, have been satisfied.
4. LOAN PARTY REPRESENTATIONS AND WARRANTIES.
4.1 To induce Administrative Agent and each Lender to enter into this Agreement, each Loan Party represents and warrants to Administrative Agent and each Lender as follows:
(a) Existence; Compliance with Laws. Each Loan Party is duly formed, validly existing and in good standing under the laws of the state of its jurisdiction of organization and has the requisite power and authority, and the legal right, to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. Each Loan Party is in compliance with all Laws and Orders except to the extent that the failure to comply therewith could not be expected to have a material adverse effect on such Loan Party’s financial condition or the ability of such Loan Party to perform its obligations under each of the Loan Documents.
(b) Power and Authority. Each Loan Party has the power and authority, and the legal right, to execute and deliver each of the Loan Documents to which it is a party and to perform its obligations hereunder.
(c) Authorization; Execution and Delivery. The execution and delivery of each of the Loan Documents by Loan Parties and the performance of their respective obligations thereunder have been duly authorized by all necessary corporate or limited liability company (as applicable) action in accordance with all Applicable Laws. Each Loan Party has duly executed and delivered each of the Loan Documents to which it is a party.
(d) No Approvals. No consent or authorization of, filing with, notice to or other act by, or in respect of, any Governmental Authority or any other Person is required in order for any Loan Party to execute, deliver, or perform any of its obligations under the Loan Documents.
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(e) No Violations. The execution and delivery of each of the Loan Documents and the consummation by each of the Loan Parties of the transactions contemplated hereby and thereby do not and will not (i) violate any provision of any Loan Party’s organizational documents; (ii) violate any material Law or Order applicable to any Loan Party or by which any of its material properties or assets may be bound; or (iii) constitute a material default under any material agreement or contract by which any Loan Party may be bound.
(f) Enforceability. Each of the Loan Documents to which a Loan Party is a party is a valid, legal and binding obligation of such Loan Party, enforceable against each Loan Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or by equitable principles affecting the enforceability of creditors’ rights generally.
(g) No Litigation. No action, suit, litigation, investigation or proceeding of, or before, any arbitrator or Governmental Authority is pending or threatened by or against any Loan Party or any principal, general partner, manager, sole member, managing member or majority shareholder of any Loan Party or any of its Property or assets (i) with respect to the Loan Documents or any of the transactions contemplated hereby or (ii) that could reasonably be expected to materially adversely affect any Loan Party’s financial condition or the ability of any Loan Party to perform its obligations under any of the Loan Documents.
(h) [Reserved].
(i) No Bankruptcy Filing. No bankruptcy or insolvency proceedings are pending or contemplated by any Loan Party or, to the best knowledge of each Loan Party, against any principal, general partner, manager, sole member, managing member or majority shareholder of any Loan Party. No petition in bankruptcy has been filed against any Loan Party or any principal, general partner, manager, sole member, managing member or majority shareholder of any Loan Party, as applicable, and no Loan Party any principal, general partner, manager, sole member, managing member or majority shareholder of any Loan Party has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors.
(j) Title. Each Loan Party has good title to the Collateral owned and to be pledged by such Loan Party pursuant to the applicable Loan Documents, free and clear of all Liens except the Permitted Liens. The Security Agreement and any UCC Financing Statements required to be filed in connection therewith, will create a valid, perfected first priority lien (subject to Permitted Liens) on each Loan Party’s interest in all Collateral, whether now owned or hereafter acquired.
(k) Full and Accurate Disclosure. No statement of fact made by any Loan Party in any Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained therein not misleading. There is no material fact presently known to any Loan Party that has not been disclosed to the Administrative Agent or the Lenders which adversely affects, or, as far as any Loan Party can foresee, could reasonably be expected to materially adversely affect the Collateral or the business, operations or condition (financial or otherwise) of any Loan Party. All financial data, including the statements of cash flow and income and operating expense, that have been delivered to Administrative Agent in respect of any Loan Party (i) are true, complete and correct in all material respects, (ii) accurately represent the financial condition of such Loan Party as of the date of such reports, and (iii) have been prepared in accordance with GAAP, consistently applied throughout the periods covered, except as disclosed therein. Each Loan Party represents that it does not have any contingent liabilities, liabilities for taxes (other than (A) taxes not yet due and payable, (B) taxes that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, and (C) deferred tax liabilities arising in the ordinary course of business and recognized in accordance with GAAP), unusual forward or long-term commitments, unrealized or anticipated losses from any unfavorable commitments or any liabilities or obligations not expressly permitted by this Agreement unless otherwise disclosed in the financial statements delivered to Administrative Agent. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operations or business of any Loan Party from that set forth in said financial statements.
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(l) Fraudulent Transfer. No Loan Party has entered into the Loan Documents or consummated any of the transactions contemplated thereby with the actual intent to hinder, delay, or defraud any creditor, and each Loan Party has received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the transactions contemplated by the Loan Documents, the fair saleable value of each Loan Party’s assets (on a going concern basis) exceeds and will, immediately following the execution and delivery of the Loan Documents, exceed such Loan Party’s probable total liabilities, including subordinated, unliquidated, disputed or contingent liabilities, including the maximum amount of its contingent liabilities or its debts as such debts become absolute and matured. No Loan Party’s assets currently, and immediately following the execution and delivery of the Loan Documents will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. No Loan Party intends to, and no Loan Party believes that it will, incur debts and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of such Loan Party).
(m) ERISA. No Loan Party has an employee pension benefit plan.
(n) No Broker. No broker or finder introduced by any Loan Party to Administrative Agent or any Lender, brought about this transaction, or is entitled to any commission in connection therewith and Borrower agrees to indemnify and hold Administrative Agent and Lenders harmless from and against any and all claims, demands, liabilities or expenses from brokers or other claims for commissions or fees including but not limited to reasonable and documented out-of-pocket attorneys’ fees and expenses on account of the making of the loan secured hereby. Each Loan Party’s indemnity hereunder shall survive any discharge of the Collateral, if any, and payment in full of the Obligations.
(o) Ownership. Guarantor owns and holds 100% of the issued and outstanding equity interests (including all voting equity interests) in each Borrower. All ownership interests in each Borrower are owned free and clear of any Lien (other than the Liens granted in connection with the Pledge Agreement).
(p) Name; Principal Place of Business. No Loan Party uses, and no Loan Party will use, any trade name, and no Loan Party has done, and no Loan Party will do, business under any name other than its actual name set forth herein. The principal place of business of each Loan Party is its primary address for notices as set forth in Section 10.1, and no Loan Party has any other place of business.
(q) Other Debt; Liens. No Borrower has any Debt, other than Permitted Debt. No Property of any Borrower is subject to any Lien, other than Permitted Liens.
(r)Doing Business As. No Borrower or Guarantor are known by any assumed, trade or fictitious name.
(s)Regulatory Compliance; Sanctions. (i)No Loan Party or any of their respective Affiliates or Subsidiaries, or, to the knowledge of any Loan Party, any of their respective officers, directors or employees, is a Person (A) listed on the Specially Designated Nationals and Blocked Person List maintained by OFAC, the Department of the Treasury, or any other similar lists maintained by OFAC or any other governmental authority pursuant to any authorizing statute, Executive Order or regulation; (B) designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation, or any other similar Executive Orders; or (C) subject to any trade restrictions under any applicable law, including those referenced in clauses (A) and (B) of this Section. Each Loan Party and its respective Affiliates, Subsidiaries, officers, directors and employees are and will remain in full compliance with all applicable Bank Secrecy Act (“BSA”) laws, regulations, and government guidance on BSA compliance and on the prevention and detection of money laundering violations or terrorist activities or threats.
(ii)No Loan Party or any of their respective Affiliates or Subsidiaries, or, to the knowledge of any Loan Party, any of their respective officers, directors or employees (A) is an “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), as amended, (B) is in violation of (1) the Trading with the Enemy Act, as amended, (2) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or (3) the PATRIOT Act, (C) is a Sanctioned Person, or (D) has assets in, or derives income from, Sanctioned Countries or Sanctioned Persons. No part of the proceeds of any Loan hereunder shall be used, directly or indirectly, to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.
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5. AFFIRMATIVE COVENANTS.
5.1 Affirmative Covenants. During the term of this Agreement, and thereafter for so long as there are any outstanding Obligations to the Administrative Agent or any Lender (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted), each Loan Party covenants that, unless otherwise consented to by Administrative Agent in writing, it shall:
(a) Maintenance of Existence. (i) Preserve, renew and maintain in full force and effect its corporate or organizational existence and (ii) take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, except, in each case, where the failure to do so could not be expected to materially adversely affect any Loan Party’s financial condition or the ability of any Loan Party to perform its obligations under the Loan Documents.
(b) Compliance. Comply with (i) all of the terms and provisions of its organizational documents; (ii) its obligations under its material contracts and agreements, except where the failure to do so could not be expected to materially adversely affect any Loan Party’s financial condition or the ability of any Loan Party to perform its obligations under the Loan Documents; and (iii) all Laws and Orders applicable to it and its business, except where the failure to do so could not be expected to materially adversely affect any Loan Party’s financial condition or the ability of any Loan Party to perform its obligations under the Loan Documents.
(c) Payment Obligations; Notice of Cross-Default. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings, and reserves in conformity with GAAP with respect thereto have been provided on its books. In the event any Loan Party receives notification regarding any default for failure to pay when due any of its Debt in excess of $50,000 in the aggregate or any interest or premium thereon when due (whether by scheduled maturity, acceleration, demand or otherwise), it shall provide a copy of such notification of default to Administrative Agent within five (5) Business Days of such Loan Party’s receipt thereof.
(d) Notice of Events of Default. As soon as possible and in any event within five (5) Business Days after it becomes aware that an Event of Default has occurred, notify Administrative Agent and each Lender in writing of the nature and extent of such Event of Default and the action, if any, it has taken or proposes to take with respect to such Event of Default.
(e) Further Assurances. Each Loan Party shall, on the request of Administrative Agent and at the expense of Loan Parties: (a) promptly correct any defect, error or omission which may be discovered in the contents of this Agreement or in the contents of any of the other Loan Documents; (b) promptly execute, acknowledge, deliver and record or file such further instruments (including, without limitation, further security agreements, financing statements and continuation statements) and promptly do such further acts as may be necessary, desirable or proper to carry out more effectively the purposes of this Agreement and the other Loan Documents and to subject to the liens and security interests hereof and thereof any property intended by the terms hereof and thereof to be covered hereby and thereby, including specifically, but without limitation, any renewals, additions, substitutions, replacements or appurtenances to the Collateral; and (c) promptly execute, acknowledge, deliver, procure and record or file any document or instrument (including specifically, without limitation, any financing statement) reasonably deemed advisable by Administrative Agent to protect, continue or perfect the liens or the security interests hereunder against the rights or interests of third persons.
(f) Monthly and Quarterly Documents. As soon as practicable or available after the end of each calendar month, but no later than twenty (20) calendar days after the end of each calendar month, Borrowers must prepare and deliver to Administrative Agent, with respect to Borrowers, monthly profit and loss statements (including a statement of the cash balance) and the certification thereto by each Borrower’s Chief Financial Officer or other appropriate officer. As soon as practicable or available after the end of each of the first three (3) fiscal quarters of each year, commencing with the fiscal quarter ending June 30, 2026, but no later than 45 calendar days after the end of each respective fiscal quarter of Guarantor, Guarantor must prepare and deliver to the Administrative Agent, with respect to Guarantor (which may be on a consolidated basis, if permitted or required pursuant to GAAP): (i) a profit and loss statement (both actual and pro-forma for the following twelve (12) months), (ii) balance sheet, and (iii) cashflow and income statement.
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(g) Annual Financial Statements. Commencing with the fiscal year ending December 31, 2026, as soon as practicable or available after the end of each fiscal year of Guarantor, and in any event within 120 calendar days after the close of each fiscal year, Guarantor must prepare and deliver to Administrative Agent the annual audited financial statement of Guarantor. Such annual financial statements (a) must include the types of financial statements and information required on a quarterly basis under Section 5.1(f) as well as a reconciliation of consolidated net worth and capital accounts, (b) must be prepared in accordance with GAAP consistently applied and (c) must be prepared by, and include the audit opinion (which shall contain no “going concern” or other qualification not acceptable to Administrative Agent, in its sole discretion, other than a “going concern” or like qualification or exception solely as a result of the final maturity date of any Debt being scheduled to occur within twelve (12) months from the date of such opinion) of, an independent certified public accounting firm acceptable to Administrative Agent in its reasonable discretion. On or before each date on which annual financial statements are delivered or are required to be delivered by Borrowers pursuant to this Section 5.1(g), Borrowers shall deliver to Administrative Agent a compliance certificate stating whether or not Borrowers are in compliance with the covenants set forth in Section 5.1(m) hereof, including all calculations evidencing the same and the certification thereto by each Borrower’s Chief Financial Officer or other appropriate officer. Borrowers shall also deliver no later than sixty (60) days after the end of each fiscal year of Borrowers, a comprehensive budget forecasting the revenues, expenses and cash position of Borrowers on a month-to-month basis for the upcoming fiscal year, in form and substance reasonably acceptable to Administrative Agent. Upon request, Borrowers shall promptly provide any other documentation or information reasonably requested by Administrative Agent and in form and substance reasonable acceptable to Administrative Agent.
(h) Tax Returns. Within 45 days after the date that any Borrower or Guarantor files any federal income tax return with the IRS (including, to the extent Borrowers or Guarantor are members of a consolidated group, any consolidated IRS Form 1120 or applicable state equivalent), Borrowers must deliver a complete copy thereof to the Administrative Agent.
(i) Insurance. Borrowers and Guarantors shall maintain insurance on the Collateral and their respective businesses in such amounts and in such types as are reasonable and customary for similar businesses, and such Collateral insurance shall include a lender’s loss payee endorsement in favor of the Administrative Agent. In addition, Key Person shall at all times maintain a life insurance policy in an amount not less than $5,000,000 with an insurer acceptable to Administrative Agent, and such policy and all benefit payments thereunder shall be collaterally assigned to Administrative Agent pursuant to a collateral assignment in form and substance acceptable to Administrative Agent in its sole discretion. The Loan Parties shall deliver to Administrative Agent copies of such insurance certificates, on the Closing Date and as reasonably requested by Administrative Agent thereafter.
(j) Collateral. Loan Parties will warrant and defend the title to the Collateral, and the validity and priority of all Liens granted or otherwise given to Administrative Agent under the Loan Documents, subject only to Permitted Liens, against the claims of all Persons. Without Administrative Agent’s prior written consent, Loan Parties shall not create, incur, assume, permit or suffer to exist any Lien on all or any portion of the Collateral or any direct legal or beneficial ownership interest in any Borrower or Guarantor, except Liens in favor of Administrative Agent and Permitted Liens.
(k) Books and Records; Inspection and Examination. Each Loan Party will keep accurate books of record and account for itself pertaining to the Collateral, and the business and financial condition of Borrowers and Guarantors and such other matters as Administrative Agent may from time to time reasonably request in which true and complete entries will be made in accordance with GAAP consistently applied and, upon request of and reasonable notice by Administrative Agent, will permit any officer, employee, auditor, attorney or accountant for Administrative Agent or any Lender to audit, review, make extracts from or copy any and all corporate and financial books and records of any Loan Party at all reasonable times during ordinary business hours, and to discuss the affairs of Loan Parties with any of its members, employees or agents and to conduct a review and audit of each Loan Party’s books and records (the foregoing is collectively referred to herein as “Audit Activities”). Loan Parties will reimburse Administrative Agent upon demand for all reasonable and documented out-of-pocket costs and expenses incurred by Administrative Agent or any Lender in connection with Audit Activities; provided that such Audit Activities will be conducted no more often than once every twelve (12) months, unless an Event of Default has occurred and is continuing.
(l) New Subsidiaries. Concurrently with the formation by any Borrower of any Subsidiary after the Closing Date, Loan Parties will deliver to Administrative Agent (i) a joinder to the Guaranty to add such Subsidiary as a “Guarantor,” and “Loan Party” hereunder and under the other Loan Documents, and (ii) a joinder to Security Agreement granting to Administrative Agent, for the benefit of the Lenders, a first priority Lien on all assets of and all ownership interests in such Subsidiary, in each case, in form and substance acceptable to Administrative Agent.
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(m)Financial Covenants.
(i)Cash Flow Leverage Ratio. Borrowers shall maintain at all times their ratio of (i) Funded Debt as of the applicable testing date, to (ii) EBITDA for the period of twelve (12) consecutive calendar months ending as of the applicable testing date, at not greater than 3.00 to 1.00, as tested on December 31 of each calendar year commencing on December 31, 2026; and
(ii)Minimum Liquidity. Borrowers, on a combined basis, shall maintain at all times a minimum of $500,000 in unrestricted cash or cash equivalents, as tested on the last day of each fiscal quarter of Borrowers.
6. NEGATIVE COVENANTS.
6.1 Negative Covenants. During the term of this Agreement, and thereafter for so long as there are Obligations outstanding (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted), each Borrower hereby covenants that unless Administrative Agent and each Lender has first consented thereto in writing, no Borrower, nor any Subsidiary of any Borrower, will (directly or indirectly):
(a) Indebtedness. Incur, create or assume any Debt, other than Permitted Debt.
(b) Liens. Incur, create, assume or suffer to exist any Lien on any of its Property or assets, whether now owned or hereinafter acquired other than Permitted Liens.
(c) Line of Business. Enter into any business, directly or indirectly, except for (i) those businesses in which Borrowers are engaged on the Closing Date or that are reasonably related thereto, and (ii) other businesses, the entering into of which by Borrowers could not be reasonably expected to cause a material adverse effect on any Loan Party’s financial condition or the ability of any Loan Party to perform its obligations under any of the Loan Documents.
(d) Transactions With Affiliates. Enter into, or permit to exist, any material transaction or agreement with any Affiliate except transactions and agreements in the ordinary course and on terms and conditions not less favorable to them than could be obtained on an arm’s-length basis from unrelated third parties.
(e) Restricted Payments. Make any Restricted Payment or incur any obligation (contingent or otherwise) to do so other than a Restricted Payment from a Subsidiary of any Borrower to such Borrower; provided, however, that so long as (i) no Event of Default has occurred and is continuing, and (ii) Loan Parties are in compliance with all financial covenants hereunder both before and after giving effect to such payment, on a pro forma basis, (x) Borrowers may make cash distributions to Guarantor in order for Guarantor to pay the federal, state, and local income taxes imposed with respect to the net taxable income of Borrowers attributable to the consolidated group of which Guarantor is the common parent (including any taxes owing pursuant to any Tax Sharing Agreement); and (y) (i) Loan Parties may make Restricted Payments to Borrowers and (ii) Borrowers may make Restricted Payments to Guarantor in an aggregate amount not to exceed the Maximum Loan Amount plus any profits of such Borrower (as reflected in the financial statements delivered to Administrative Agent pursuant to Section 5.1(f)); provided, however, that the aggregate amount of Restricted Payments to Guarantor permitted under this clause (ii) shall not exceed the Maximum Loan Amount unless, as of the date of such Restricted Payment to Guarantor, Borrowers are in compliance with the minimum liquidity covenant set forth in Section 5.1(m)(ii) hereof, as of the applicable distribution date, and upon giving effect to such Restricted Payment.
(f) Certain Prohibited Actions. Directly or indirectly do any of the following: (i) change its principal place of business or chief executive office without first giving Administrative Agent and each Lender ten (10) days’ prior notice; (ii) make or permit any change, amendment or modification to its certificate of formation or incorporation, operating agreement, by-laws or other organizational documents in any manner adverse to Administrative Agent; provided that, for the avoidance of doubt, a change in the U.S. federal income tax classification of any Borrower pursuant to Treasury Regulation Section 301.7701-3 shall not in itself constitute an amendment or modification to such Borrower's organizational documents for purposes of this clause (ii), provided that such change in tax classification does not adversely affect the rights of Administrative Agent or the Lenders under the Loan Documents; (iii) cancel or otherwise forgive or release any claim or Debt owed to such Person by any other Person, except for adequate consideration and in the ordinary course of such Person’s business in its reasonable judgment; (iv) take any action which could result in Administrative Agent and the Lenders not having a perfected Lien in all of the assets of and the ownership interests in Borrower and Guarantor, subject only to Permitted Liens; (v) sell, lease, assign, transfer or otherwise dispose of any Collateral or any other material portion of such Person’s Property; (vi) consolidate with or merge into any Person, or permit any other Person to merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially all the assets of any other Person; (vii) purchase or acquire, or make any commitment to purchase or acquire any equity interests of any kind of, or any obligations or other securities of, or any interest in, any Person, including the establishment or creation of any Subsidiary; (viii) make or purchase, or commit to make or purchase, any advance, loan, extension of credit or capital contribution to or any other investment in, any Person; or (ix) liquidate, dissolve or suspend its business operations.
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7. EVENTS OF DEFAULT.
7.1 List of Events of Default. The occurrence of any one or more of the following conditions or events shall constitute an “Event of Default”:
(a) Failure to Pay. Borrowers fail to pay (i) any principal amount of the Loans when due or (ii) interest, fees or any other amount when due under the Loan Documents and such failure continues for more than two (2) Business Days.
(b) Breach of Representations and Warranties. Any material representation or warranty made by any Loan Party to Administrative Agent and/or Lender in any Loan Document is incorrect in any material respects on the date as of which such representation or warranty was made.
(c) Breach of Covenants. Any Loan Party fails to perform or observe any other covenant, condition or agreement of (i) Sections 5.1(a), (f), (g), (i), and (m) or Section 6 of this Agreement; or (ii) any other provision of this Agreement or any of the other Loan Document (other than to the extent the same constitutes an Event of Default under any provision of this Section 7.1 other than this Section 7.1(c)(ii), and such event or circumstance, if capable of being cured, is not cured within (A) fifteen (15) days following the occurrence thereof; or (B) if shorter, the applicable grace period, if any, specified in such other Loan Document; provided, however, that if the Event of Default cannot by its nature be cured within such period or cannot after diligent attempts by Borrowers be cured within such period, and such Event of Default is likely to be cured within a reasonable time, then such Loan Party shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such Event of Default, and within such reasonable time period the failure to have cured such Event of Default shall not be deemed an Event of Default.
(d) Cross-Defaults. Any Loan Party fails to pay when due any of its Debt in excess of $100,000 in the aggregate or any interest or premium thereon when due (whether by scheduled maturity, acceleration, demand or otherwise) and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt (except for Debt arising under the Loan Documents).
(e) Bankruptcy. (i) Any Loan Party or any of its Subsidiaries commences any case, proceeding or other action (A) under any existing or future Law relating to bankruptcy, insolvency, reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any Loan Party or any of its Subsidiaries makes a general assignment for the benefit of its creditors; (ii) there is commenced against any Loan Party or any of its Subsidiaries any case, proceeding or other action of a nature referred to in Section 7.1(e)(i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; (iii) there is commenced against any Loan Party or any Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which has not been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; (iv) any Loan Party or any of its Subsidiaries takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in Section 7.1(e)(i), Section 7.1(e)(ii) or Section 7.1(e)(iii) above; or (v) any Loan Party or any of its Subsidiaries is generally not, or shall be unable to, or admits in writing its inability to, pay its debts as they become due.
(f) Judgments. One or more judgments or decrees aggregating at least $100,000 (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied or disputed coverage) shall be entered against any Loan Party or any of its Subsidiaries and all of such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within thirty (30) days from the entry thereof.
(g) Change in Condition. If the Administrative Agent shall have determined in its reasonable discretion that one or more conditions exist or events have occurred which have resulted or may result in a material adverse change in the business, properties or financial condition of any Loan Party.
(h) Change of Control. The occurrence of any Change of Control.
(i) Key Person Event. The occurrence of any Key Person Event.
(j) Criminal Acts. Any Loan Party is (i) criminally indicted or convicted of a felony; or (ii) charged under any applicable law that could reasonably be expected to lead to forfeiture of any material portion of the Collateral or a material adverse effect on the financial condition, business prospects, properties or operations of such Person.
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8. REMEDIES.
8.1 Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Administrative Agent may at its option, take any action that it deems advisable to protect and enforce all available rights and remedies of Administrative Agent and the Lenders hereunder, under each of the other Loan Documents or which may otherwise be available at law or in equity, including, without limitation, all rights and remedies with respect to Borrowers, each other Loan Party or the Collateral; and Administrative Agent may, at its option and without notice or demand (a) declare all outstanding Obligations owing or payable hereunder or under any other Loan Document to be immediately due and payable and terminate all Commitments of Lenders hereunder, and when any Event of Default described in subsection (e) of Section 7.1 exists, then all outstanding Obligations shall immediately and automatically become due and payable together with all other amounts payable under the Loan Documents without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrowers and each other Loan Party; (b) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents; and (c) exercise any or all of its rights, powers or remedies under Applicable Law. Notwithstanding the foregoing, if any Event of Default shall occur under Section 7.1(e), the principal of and accrued interest on the Loan shall become immediately due and payable, and all Commitments of Lenders hereunder shall terminate, without any notice, declaration or other act on the part of the Administrative Agent or any Lender.
8.2 If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of Borrowers or any other Loan Party against any and all of the obligations of Borrowers or such other Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or its Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrowers or such other Loan Party may be contingent or unmatured or are owed to a branch office or Affiliate of such Lender different from the branch office or Affiliate holding such deposit or obligated on such Debt. The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify Borrowers and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.
8.3 Standards for Exercising Remedies. To the extent that applicable law imposes duties on the Administrative Agent and/or Lender to exercise remedies in a commercially reasonable manner, each Loan Party acknowledges and agrees that it is not commercially unreasonable for the Administrative Agent and/or Lender (a) to fail to incur expenses deemed significant by the Administrative Agent and/or Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as the Borrower or any other Loan Party, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Administrative Agent and/or Lender against risks of loss, collection or disposition of Collateral or to provide to the Administrative Agent and/or Lender a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Administrative Agent and/or Lender, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Lender in the collection or disposition of any of the Collateral. Each Loan Party acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by the Administrative Agent and/or Lender would not be commercially unreasonable in the Administrative Agent’s and/or Lender’s exercise of remedies against the Collateral and that other actions or omissions by the Administrative Agent and/or Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to the Borrower or to impose any duties on the Administrative Agent and/or Lender that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.
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9. WAIVERS.
Failure by Administrative Agent or any Lender to exercise any right, remedy or option under this Agreement, any other Loan Document, any other documents relating to the Obligations, or as provided by Applicable Law, or any delay by Administrative Agent or any Lender in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Administrative Agent or any Lender shall only be granted as provided herein. To the extent permitted by Applicable Law, neither the Administrative Agent nor any Lender, nor any party acting as attorney for the Administrative Agent or any Lender, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder. The rights and remedies of the Administrative Agent and the Lenders under this Agreement shall be cumulative and not exclusive of any other right or remedy that the Administrative Agent or the Lenders may have.
10. NOTICES.
10.1 Written Notices.
(a) All notices and other communications to any party herein to be effective shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by email, as follows:
If to a Borrower or Guarantor:
Dolphin Entertainment, Inc.
150 Alhambra Circle, Suite 1200
Coral Gables, FL 33134
Attention: Bill O’Dowd, CEO
E-mail: [email protected]
If to Administrative Agent and/or Lenders:
c/o FVP Servicing, LLC
1140 Broadway, Ste 1503
New York, NY 10001
Attn: Keith Lee / Tom Betts
Telephone: 646.902.6645
E-mail:[email protected] / [email protected]
(b) Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received; and (ii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by a return e-mail or other written acknowledgment).
(c) Any party hereto may change its address for notices and other communications hereunder by notice to the other parties hereto. All such notices and other communications shall, when transmitted by overnight delivery, be effective when delivered for overnight (next-day) delivery, or if mailed, upon the third Business Day after the date deposited into the mails or if delivered, upon delivery.
(d) Any agreement of Administrative Agent or any Lender herein to receive certain notices by telephone or e-mail is solely for the convenience and at the request of Borrowers. Administrative Agent and each Lender shall be entitled to rely on the authority of any Person purporting to be a Person authorized by a Loan Party to give such notice and neither Administrative Agent nor any Lender shall have any liability to any Loan Party or other Person on account of any action taken or not taken by Administrative Agent or any Lender in reliance upon such telephonic or e-mail notice. The obligation of Borrowers to repay the Loan and all other obligations hereunder shall not be affected in any way or to any extent by any failure of Administrative Agent or any Lender to receive written confirmation of any telephonic or e-mail notice or the receipt by Administrative Agent or any Lender of a confirmation which is at variance with the terms understood by Administrative Agent or any Lender to be contained in any such telephonic or e-mail notice.
10.2 Electronic Communications.
(a) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and internet or intranet websites) pursuant to procedures approved by Administrative Agent; provided that the foregoing shall not apply to notices to Administrative Agent or any Lender pursuant to Section 2 hereof unless Administrative Agent or such Lender has agreed to receive notices under such Section by electronic communication and have agreed to the procedures governing such communications. Any Party may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
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(b) Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by a return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
11. EXPENSES AND INDEMNIFICATION.
11.1 Costs and Expenses. Borrowers shall reimburse Administrative Agent and each Lender upon demand for all reasonable and documented out-of-pocket costs and expenses (including reasonable and documented out-of-pocket attorneys’ fees and disbursements) incurred by Administrative Agent and each Lender in connection with the Loan and other transactions contemplated hereby, including (i) the preparation, negotiation, execution and delivery of the Loan Documents and the consummation of the transactions contemplated thereby; (ii) Borrowers’ ongoing performance under and compliance with the Loan Documents, including confirming compliance with environmental and insurance requirements; (iii) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications of or under any Loan Document and any other documents or matters requested by Administrative Agent; (iv) filing and recording of any Loan Documents; (v) the creation, perfection or protection of Administrative Agent’s and Lenders’ Liens in the Collateral (including reasonable and documented out-of-pocket fees and expenses for title and lien searches, intangibles taxes, personal property taxes, due diligence expenses, travel expenses, accounting firm fees, costs of appraisals, environmental reports, surveys and engineering reports); (vi) enforcing or preserving any rights in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting any Borrower, any other Loan Party, the Loan Documents, the Collateral, or any other security given for the Obligations; and (vii) enforcing any obligations of or collecting any payments due from Borrowers or any other Loan Party under any Loan Document or with respect to the Collateral or in connection with any refinancing or restructuring of the Loan in the nature of a “work-out”, or any insolvency or bankruptcy proceedings. All obligations provided for in this Section 11.1(a) shall survive the termination of this Agreement and/or the repayment of the Obligations.
11.2 Indemnity. Borrowers shall indemnify Administrative Agent and each Lender, each Affiliate and Subsidiary of Administrative Agent and each Lender, and each investment manager, servicer, partner, member, officer, director, employee, agent and advisor of Administrative Agent and each Lender (each, an “Indemnitee”) against, and hold each of them harmless from, any and all Specified Losses (defined below) unless such Specified Losses incurred by any such Indemnitee are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from (i) the gross negligence, bad faith or willful misconduct of such Indemnitee; or (ii) a claim brought by Borrowers, any other Loan Party or any third Person against such Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document. For purposes of this Section, the term “Specified Losses” means all reasonable and documented out-of-pocket costs, losses, liabilities, claims, damages and related expenses, including the reasonable and documented out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee, which may be incurred by any Indemnitee, or asserted against any Indemnitee by Borrowers, any other Loan Party or any third Person, arising out of, in connection with or as a result of (a) the execution or delivery of this Agreement or any other agreement or instrument contemplated hereby and the performance by Administrative Agent or any Lender of its respective obligations hereunder or the consummation of any of the transactions contemplated hereby, (b) the Loan or any actual use of the proceeds therefrom, (c) any actual claim, litigation, investigation or proceeding relating to any of the foregoing, or (d) any actual claim, litigation or proceeding by any third party, so long as all Indemnitees are in compliance with Applicable Law related to such third party, collections or exercise of remedies relating to any third party.
11.3 Taxes.
(a) Borrowers shall pay all stamp, documentary, court, intangible, recording, filing and other similar taxes, if any, imposed by any Governmental Authority solely on the execution, delivery or registration of this Agreement or any other Loan Document, to the extent such taxes are imposed on Borrowers under Applicable Law. Borrowers shall have no obligation to gross up any payment made hereunder for, or to indemnify any Lender or Administrative Agent against, (i) any tax imposed on or measured by a Lender's or Administrative Agent's net income, revenues or profits, (ii) any franchise, branch profits or similar tax imposed on a Lender or Administrative Agent, (iii) any withholding tax to the extent attributable to a Lender's or Administrative Agent's failure to provide required tax documentation, (iv) any tax arising solely from a Lender's transfer or assignment of its interest in the Loan to another Person, or (v) any withholding imposed under Code Sections 1471 through 1474 (including any regulations, agreements or intergovernmental agreements entered into in connection therewith).
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(b) Withholding Tax Certificates
| (i) | Each Lender that is a United States person within the meaning of Code Section 7701(a)(30) shall deliver to Borrowers and Administrative Agent, on or prior to the Closing Date (or, in the case of a Lender that becomes a party hereto after the Closing Date, on or prior to the date such Lender becomes a party hereto), and at such other times as reasonably requested by Borrowers, a properly completed and duly executed IRS Form W-9 (or any applicable successor form) certifying that such Lender is exempt from U.S. federal backup withholding. |
| (ii) | Each Lender that is not a United States person within the meaning of Code Section 7701(a)(30) shall deliver to Borrowers and Administrative Agent, on or prior to the Closing Date (or, in the case of a Lender that becomes a party hereto after the Closing Date, on or prior to the date such Lender becomes a party hereto), and at such other times as reasonably requested by Borrowers, whichever of the following is applicable: (A) IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding tax pursuant to an applicable income tax treaty; (B) IRS Form W-8ECI establishing that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States; or (C) IRS Form W-8IMY (together with any required supporting documentation). |
| (iii) | Each Lender shall promptly notify Borrowers and Administrative Agent if any previously delivered tax form becomes expired, obsolete or inaccurate, and shall promptly deliver an updated and properly completed replacement form. Borrowers shall not be obligated to make any payment under this Agreement with respect to any tax that would not have been imposed but for the failure of a Lender to deliver or update a required tax form under this Section. |
| (iv) | Each assignee or successor Lender shall, as a condition to the effectiveness of any assignment under Section 13.2, deliver to Borrowers and Administrative Agent the applicable tax forms required under this Section 11.3(b) on or prior to the effective date of such assignment. |
11.4 Reimbursement by Lenders. To the extent that Borrowers for any reason fail to indefeasibly pay any amount required under this Section 11 to be paid by them to the Administrative Agent (or any sub-agent thereof) or any Related Party thereof, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided, further that, the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), or against any Related Party thereof acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this Section 11.4 are subject to the provisions of Section 2.1(c).
11.5 Waiver of Damages. To the fullest extent permitted by applicable law, no Loan Party shall assert, and each Loan Party hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee referred to in Section 11.2 above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby unless the same are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee.
11.6 Payment. All amounts due under this Section shall be payable promptly after written demand therefor.
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11.7 Survival. The agreements and indemnity provisions of this Section 11 shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations.
11.8 Payments Set Aside. To the extent that any payment by or on behalf of Borrowers or any other Loan Party is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the federal funds rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
12. Administrative Agent.
12.1 Appointment and Authority. Each of the Lenders hereby irrevocably appoints the Administrative Agent to act on its behalf as the administrative agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are incidental thereto. The provisions of this Section are solely for the benefit of the Administrative Agent and the Lenders, and Borrowers shall have no rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
12.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
12.3 Exculpatory Provisions.
(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract. Without limiting the generality of the foregoing, the Administrative Agent (a) shall not be subject to any fiduciary or other implied duties except as expressly set forth in this Agreement, regardless of whether a Default has occurred and is continuing; (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Lenders, provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law; and (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
(b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lenders or (ii) in the absence of its own gross negligence, bad faith or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by Borrowers, or a Lender.
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(c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
12.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to reasonably rely upon, and shall not incur any liability for reasonably relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may reasonably rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is reasonably satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Borrowers shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower.
12.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
12.6 Resignation of Administrative Agent. The Administrative Agent may resign as Administrative Agent at any time by giving thirty (30) days advance notice thereof to the Lenders and Borrower and, thereafter, the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. Upon any such resignation, the Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Lenders, or have accepted such appointment within thirty (30) days after the Administrative Agent’s giving of notice of resignation, then the Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 12.6 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. If no successor has accepted appointment as Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Lenders appoint a successor agent as provided for above.
12.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
12.8 [Reserved].
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12.9 Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to a Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loan and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
(c) and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent hereunder.
13. Miscellaneous.
13.1 Entire Agreement; Amendment. This Agreement and the other Loan Documents embody the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, and any prior agreements, whether written or oral, with respect thereof, are expressly superseded hereby. This Agreement, or any term contained herein, may not be modified, waived or amended except by an agreement in writing signed by Borrowers and Administrative Agent .
13.2 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that no Loan Party may assign this Agreement, any other Loan Document, or any right or benefit hereunder to any Person. Any Lender may assign any or all of its rights and obligations hereunder at any time and to any Person, upon Administrative Agent’s prior written consent and the execution and delivery of an assignment and assumption agreement by such assigning Lender to the proposed assignee, in form and substance acceptable to Administrative Agent. From and after the effective date of any such assignment, the assignee shall be a party to this Agreement and, to the extent of the interest assigned, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Lender, be released from its obligations under this Agreement. Upon request, Borrowers shall execute and deliver a Note to the assignee Lender. Subject to the foregoing, any Lender shall have the right to enter into one or more participations with respect to the Obligations without prior notice or consent of Borrowers. Notwithstanding anything in this Agreement to the contrary, (A) no assignment of any Lender's interest in the Loans shall be effective until recorded in the Register maintained by Administrative Agent pursuant to Section 2.8; and (B) no participation in the Loans shall be effective until recorded in the applicable Participant Register maintained by the selling Lender pursuant to Section 2.8.
13.3 Governing Law. This Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any of the other Loan Documents and the transactions contemplated hereby shall be governed by the laws of the State of New York.
13.4 Submission to Jurisdiction.
(a) Each Loan Party hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of or relating to this Agreement and the other Loan Documents may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York and (ii) submits to the exclusive jurisdiction of any such court in any such action, suit or proceeding. Final judgment against any Loan Party in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment. Nothing in this Section 13.4 shall affect the right of Administrative Agent and each Lender to (i) commence legal proceedings or otherwise sue any Loan Party in any other court having jurisdiction over such Loan Party or (ii) serve process upon any Loan Party in any manner authorized by the laws of any such jurisdiction.
(b) In accordance with Rule 9, Accelerated Adjudication Actions, as set forth in Section 202.70(g) of the Rules of the Commercial Division of the Supreme Court, subject to the requirements for a case to be heard in the Commercial Division of the Supreme Court of the State of New York, Borrower hereby agrees to submit to the exclusive jurisdiction of the Commercial Division, New York State Supreme Court, and to the application of the such Court’s accelerated procedures, in connection with any dispute, claim or controversy arising out of or relating to this Agreement or any other Loan Document, or the breach, termination, enforcement or validity thereof.
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13.5 Venue. Each Loan Party irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement and the other Loan Documents in any court referred to in Section 13.4 and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
13.6 Advertising. Administrative Agent and each Lender, and their affiliates, in their sole and absolute discretion, may disclose publicly (including on its website) for marketing and promotional purposes that the Borrower is in such Administrative Agent’s and Lender’s portfolio, including but not limited to a royalty-free, non-exclusive, worldwide, irrevocable license in any intellectual property required for use solely in marketing and promotional materials; provided that Administrative Agent or such Lender shall submit a copy of any announcement or advertisement to Borrowers for their prior approval (such approval not to be unreasonably withheld, conditioned, or delayed).
13.7 Waiver of Jury Trial. EACH LOAN PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.
13.8 Counterparts; Effectiveness. This Agreement and the other Loan Documents and any amendments, waivers, consents or supplements hereto may be executed in counterparts, each of which shall constitute an original, but all taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement.
13.9 Waiver of Notice. Each Loan Party hereby waives demand for payment, presentment for payment, protest, notice of payment, notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums owing hereunder.
13.10 USA PATRIOT Act. Administrative Agent and each Lender hereby notifies each Loan Party that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify, and record information that identifies such Loan Party, which information includes the name and address of each Loan Party and other information that will allow Administrative Agent and each Lender to identify such Loan Party in accordance with the US PATRIOT Act, and each Loan Party agrees to provide such information from time to time to the Administrative Agent.
13.11 Interpretation. For purposes of this Agreement (i) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (ii) the word “or” is not exclusive; and (iii) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. The definitions given for any defined terms in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Unless the context otherwise requires, references herein: (x) to Schedules, Exhibits and Sections mean the Schedules, Exhibits and Sections of this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement and the other Loan Documents shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted.
13.12 Amendments and Waivers. No term of this Agreement may be waived, modified or amended except by an instrument in writing signed by the parties hereto, except as otherwise provided in Section 13.1 hereto. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.
13.13 Headings. The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit any of the terms or provisions hereof.
13.14 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of the Administrative Agent or any Lender, of any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Applicable Law.
13.15 Electronic Execution. The words “execution,” “signed,” “signature,” and words of similar import in this Agreement shall be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which shall be of the same effect, validity and enforceability as manually executed signatures or a paper-based recordkeeping system, as the case may be, to the extent and as provided for under Applicable Law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 USC § 7001 et seq.), the Electronic Signatures and Records Act of 1999 (N.Y. State Tech. Law §§ 301-309), or any other similar state laws based on the Uniform Electronic Transactions Act.
13.16 Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
[signatures appear on following page]
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IN WITNESS WHEREOF, the undersigned, by their duly authorized officers, have executed this Agreement and it is effective as of the day and year first above written.
BORROWERS:
| SHORE FIRE MEDIA, LTD., a New York corporation | ||
| By:/s/ Bill O’Dowd | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory | ||
| THE DOOR MARKETING GROUP, LLC, a New York limited liability company | ||
| By: /s/ Bill O’Dowd | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory |
GUARANTOR:
| DOLPHIN ENTERTAINMENT, INC., a Florida corporation | ||
| By: /s/ Bill O’Dowd | ||
| Name: Bill O’Dowd | ||
| Title: CEO | ||
[SIGNATURE PAGE TO LOAN AGREEMENT]
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ADMINISTRATIVE AGENT:
FVP SERVICING, LLC,
a Delaware limited liability company
By:/s/ Keith Lee
Name: Keith Lee
Title: Manager
LENDER:
FHIS FINANCE, LLC,
a Delaware limited liability company
By: /s/ Keith Lee
Name: Keith Lee
Title: Authorized Signatory
[SIGNATURE PAGE TO LOAN AGREEMENT]
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SCHEDULE I TO LOAN AGREEMENT
LENDER COMMITMENT SCHEDULE
| LENDER | COMMITMENT |
| FHIS Finance, LLC | Closing Date Term Loan Commitment: $2,000,000 Delayed Draw Term Loan Commitment: $3,000,000
|
SI-1
EXHIBIT A TO LOAN AGREEMENT
THIS NOTE IS INTENDED TO BE AN OBLIGATION IN 'REGISTERED FORM' WITHIN THE MEANING OF TREASURY REGULATIONS SECTIONS 1.871-14(c) AND 5f.103-1(c). THIS NOTE MAY ONLY BE TRANSFERRED THROUGH THE REGISTER MAINTAINED BY ADMINISTRATIVE AGENT PURSUANT TO THE LOAN AGREEMENT
NOTE
$[________][______ __], 20[__]
FOR VALUE RECEIVED, SHORE FIRE MEDIA, LTD., a New York corporation, and THE DOOR MARKETING GROUP, LLC, a New York limited liability company (each, a “Borrower” and, together, “Borrowers”), on a joint and several basis, hereby promise to pay to the order of FVP SERVICING, LLC, a Delaware limited liability company, as administrative agent (“Administrative Agent”), for the benefit of FHIS FINANCE, LLC, a Delaware limited liability company (the “Noteholder”), the principal amount of $[______] (or, the aggregate outstanding principal amount of all Advances to Borrowers in respect of the Loans (or portion thereof) held by Noteholder, in accordance with the provisions of that certain Loan Agreement dated as of May 7, 2026, by and among Borrowers, the Noteholder, the other Lenders party thereto, Administrative Agent and the other Loan Parties party thereto (the “Loan Agreement”)). Capitalized terms used herein shall have the meanings set forth in the Loan Agreement.
Borrowers promise to pay interest on the unpaid principal amount of this Note (this “Note”) at such interest rates and at such times as provided in the Loan Agreement. All payments of principal and interest shall be made to Administrative Agent, for the benefit of Noteholder, in immediately available funds by wire, checks or money orders made payable to Administrative Agent in accordance with Section 2.2 of the Loan Agreement. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest at a rate, to be paid as set forth in the Loan Agreement.
This Note is entitled to the benefits of the Loan Agreement and may be prepaid in whole or in part subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Loan Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as and to the extent provided in the Loan Agreement. Administrative Agent may attach schedules to this Note and endorse thereon the date, amount and maturity of its Advances under the Loan Agreement and payments with respect thereto.
Each Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, Borrowers have caused this Note to be executed and delivered and it is effective as of the date first written above.
BORROWERS:
| SHORE FIRE MEDIA, LTD., a New York corporation | ||
| By:_______________ | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory | ||
| THE DOOR MARKETING GROUP, LLC, a New York limited liability company | ||
| By:_______________ | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory |
[SIGNATURE PAGE TO NOTE]
A-1
EXHIBIT B TO LOAN AGREEMENT
FLOW OF FUNDS MEMORANDUM
| Source of Funds: | Amount | |
| Closing Date Term Loan Proceeds | $2,000,000.00 | |
| Expense Deposit | $20,000.00 | |
| Use of Funds | Amount | Payee/Wire Transfer Instructions |
Lender Due Diligence Fees
|
$1,108.66 | To be withheld by Administrative Agent from Expense Deposit and applied to payment. |
| Administrative Agent Origination Fee | $20,000.00 | To be withheld by Administrative Agent from Loan Proceeds for the account of the Administrative Agent. |
| Lender Origination Fee | $80,000.00 | To be withheld by Administrative Agent from Loan Proceeds for the account of the Lenders. |
| Debt Service Reserve | $620,000.00 | To be withheld by Administrative Agent from Loan Proceeds pursuant to section 2.4 (c). |
| Attorneys’ Fees of Administrative Agent and Lender | $37,800.00 | Kutak Rock Account Name: Kutak Rock LLP Account Address: 1650 Farnam Street, Omaha, NE, 68102 Bank Name: First National Bank of Omaha Bank Address: 1620 Dodge Street, Omaha, Nebraska Account #: 24-690470 ABA Routing #: 104000016 Reference: Invoice No. 3741569 |
| Closing Date Net Term Loan proceeds to Borrower for uses outlined in Section 2.3. | $1,261,091.34 | Shore Fire Media. LTD Account Name: The Door Marketing Group LLC Account Address: 600 Third Avenue, 23rd Floor, New York, NY 10016 Bank Name: BankUnited Bank Address: 7765 NW 148th St, Miami Lakes, FL 33016 Account #: 9855091037 ABA Routing #: 267090594 Reference: Feenix TL Funding |
B-1
EXHIBIT C TO LOAN AGREEMENT
FORM OF ADVANCE REQUEST
[DATE]
FVP Servicing, LLC
1140 Broadway, Ste 1503
New York, NY 10001
Attn: Keith Lee / Tom Betts
Telephone: 646.902.6645
E-mail: [email protected] / [email protected]
Re: Request for Advance of Delayed Draw Term Loans under that certain Loan Agreement (the “Loan Agreement”) dated as of May 7, 2026 by and among Shore Fire Media, Ltd. and The Door Marketing Group, LLC, as borrowers (each, a “Borrower” and, together, “Borrowers”), FVP Servicing, LLC, a Delaware limited liability company, as administrative agent for the “Lenders” party thereto from time to time (the “Administrative Agent”), and the other parties thereto from time to time. Capitalized terms used herein shall have the meanings set forth in the Loan Agreement.
Ladies and Gentlemen:
The undersigned Borrowers hereby deliver this Advance Request to the Administrative Agent and the Lenders and hereby request the Lenders to advance the requested funds to Borrowers in accordance with and in reliance upon the following instructions and certifications:
| Type of Loan Requested | Delayed Draw Term Loan |
| Total Loan Amount Requested (not to exceed Maximum Loan Amount for subject Loan type) | $[ ] |
| Requested Settlement Date | [ ], 20[ ] |
In connection with this Advance Request, the undersigned Borrowers hereby represent and certify to the Administrative Agent and the Lenders as follows, which representations and certifications are accurate and complete as of the date hereof and as of the Settlement Date for the Advance requested hereunder: (i) the proceeds of the requested Advance will be used for purposes that are authorized under the Loan Agreement and otherwise in compliance with the terms of the Loan Agreement; and (ii) all conditions precedent for the Advances requested hereby under the Loan Agreement, as set forth in Sections 2.1 and 3.2 of the Loan Agreement, have been satisfied.
The Lenders and Administrative Agent are hereby irrevocably authorized and instructed to arrange for and to disburse the proceeds of the requested Advance in accordance with the instructions below:
Bank: [_________] Routing No.: [___]
Account No.: [_______] Account Name: [______]
C-1
IN WITNESS WHEREOF, this Advance Request is hereby executed, delivered and effective as of the date first written above.
BORROWERS:
| SHORE FIRE MEDIA, LTD., a New York corporation | ||
| By:/s/ Bill O’Dowd | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory | ||
| THE DOOR MARKETING GROUP, LLC, a New York limited liability company | ||
| By: /s/ Bill O’Dowd | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory |
C-2
Exhibit 10.2
EXECUTION COPY |
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and effective as of May 7, 2026, by and among each “Grantor” identified on the signature pages hereto, and each other direct or indirect Subsidiary of any Grantor added as a “Grantor” hereunder (each, a “Grantor”; collectively, the “Grantors”), in favor of FVP SERVICING, LLC, a Delaware limited liability company, as administrative agent (including any successor, participant, assignee or transferee thereof, “Administrative Agent”) for itself and the Lenders (as defined in the Loan Agreement referred to below).
R E C I T A L S
WHEREAS, pursuant to that certain Loan Agreement (as amended, restated, supplemented, extended or otherwise modified from time to time, the “Loan Agreement”) dated as of the date hereof by and among Shore Fire Media, Ltd. (“Shore Fire”), The Door Marketing Group, LLC (“The Door”; The Door and Shore Fire, each, a “Borrower” and, together, “Borrowers”), Administrative Agent and the Lenders from time to time party thereto, each Grantor is required to have executed and delivered this Security Agreement encumbering substantially all of each Grantor’s tangible and intangible personal property assets in favor of Administrative Agent for the ratable benefit of itself and the Lenders; and
WHEREAS, each Grantor has determined that it is in its best interest to execute this Security Agreement.
NOW, THEREFORE, for good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) and intending to be legally bound hereby, each Grantor and Administrative Agent hereby agree as follows:
Article
1
SECURITY INTEREST, COLLATERAL ASSIGNMENT AND PLEDGE
1.1 Grant of Security.
To secure the prompt payment and performance in full when due of the Secured Obligations, each Grantor (as of the effective date of becoming a signatory hereto) hereby grants to Administrative Agent, for the ratable benefit of itself and the Lenders, a continuing security interest in such Grantor’s right, title and interest in and to all of the following (collectively, the “Collateral”): (a) all Accounts; (b) all cash and currency; (c) all Chattel Paper; (d) those certain Commercial Tort Claims set forth on Schedule 2.10 hereto; (e) all Copyrights; (f) all Copyright Licenses; (g) all Deposit Accounts; (h) all Documents; (i) all Domain Names; (j) all Equipment; (k) all Fixtures; (l) all General Intangibles; (m) all Instruments; (n) all Inventory; (o) all Investment Property; (p) all Letter-of-Credit Rights; (q) all Other Intellectual Property; (r) all Patents; (s) all Patent Licenses; (t) all Pledged Equity and dividends and distributions thereon; (u) all Software; (v) all Supporting Obligations; (w) all Trademarks; (x) all Trademark Licenses; (y) all Goods and other personal property of any kind; and (z) all Accessions and all Proceeds of any and all of the foregoing, in each instance (whether or not expressly specified above), wherever located, and whether now existing, owned, leased or licensed or hereafter acquired, leased, licensed, arising, developed, generated, adopted or created for or by any Grantor, and howsoever any Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).
Notwithstanding the foregoing, the Collateral shall not include (1) any rights or interest in any contract, lease, permit, license, franchise, charter, authorization or license agreement covering real or personal property of a Grantor if under the terms of such contract, lease, permit, license, franchise, charter, authorization or license agreement, or Applicable Law with respect thereto, the grant of a security interest or lien therein is prohibited as a matter of law or under the terms of such contract, lease, permit, license, franchise, charter, authorization or license agreement and such prohibition or restriction has not been waived or the consent of the other party to such contract, lease, permit, license, franchise, charter, authorization or license agreement has not been obtained (provided that the foregoing exclusions of this clause shall in no way be construed (x) to apply to the extent that any described prohibition or restriction is ineffective under Section 408-406, 9-407, 9-408, or 9-409 of the UCC or other Applicable Law, or (y) to apply to the extent that any consent or waiver has been obtained that would permit Administrative Agent’s security interest or lien to attach notwithstanding the prohibition or restriction on the pledge of such contract, lease, permit, license, franchise, charter, authorization or license agreement); (2) any United States intent-to-use trademark applications to the extent that, and solely during the period in which the grant of a security interest therein would impair the validity or enforceability of or render void or result in the cancellation of, any registration issued as a result of such intent-to-use trademark applications under applicable law; provided that upon submission and acceptance by the USPTO of an amendment to allege pursuant to 15 U.S.C. Section 1060(a) or any successor provision, such intent-to-use trademark application shall be considered Collateral; (3) any other assets to the extent a security interest in such assets would result in material adverse tax consequences to any Grantor or any of its Subsidiaries, as determined by such Grantor in consultation with the Administrative Agent; (4) any leasehold interest (including any ground lease interest) in real property; and (5) any Excluded Accounts (collectively, the “Excluded Assets”); provided, however (y) that “Excluded Assets” shall not include any Proceeds, products, substitutions or replacements of any Excluded Assets (unless such Proceeds, products, substitutions or replacements would otherwise constitute Excluded Assets); and (z) if any assets constitute “Excluded Assets” as a result of the failure of the applicable Grantor that is a party hereto to obtain consent as described in clause (1) of this definition, such Debtor shall use commercially reasonable efforts to obtain such consent, and, upon obtaining such consent, such property shall cease to constitute “Excluded Assets”.
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1.2 Security for Secured Obligations. This security interest created hereby in the Collateral secures the payment and performance in full when due of (a) all Obligations and (b) all reasonable and documented out-of-pocket costs and expenses incurred by Administrative Agent or any Lender in enforcing and collecting the Obligations (collectively, the “Secured Obligations”).
1.3 Continuing Security Interest; Assignment; Termination. This Security Agreement creates a continuing security interest in the Collateral and will remain in full force and effect until terminated in accordance with the Loan Agreement. This Security Agreement is binding upon each Grantor and its successors, transferees and assignees, and (together with the rights and remedies of Administrative Agent hereunder) inures to the benefit of Administrative Agent and its permitted successors, transferees, participants and assignees. Upon any such termination, (a) all security interests arising under this Security Agreement automatically shall be released, discharged and terminated (without representation, warranty, recourse or liability of any kind by Administrative Agent) and (b) Administrative Agent (at Grantors’ request and sole expense) (i) will execute and deliver such UCC termination statements and other documentation and instruments (all in form and substance reasonably acceptable to Administrative Agent) as may be reasonably requested and provided to Administrative Agent to effect such releases and terminations, and (ii) will deliver to a Grantor or to another Person designated by a Grantor or, if required by applicable law, to another Person that Administrative Agent reasonably believes may be entitled thereto (without any representation, warranty or recourse of any kind whatsoever) all stock certificates, and instruments representing or evidencing Collateral being physically held by Administrative Agent hereunder.
1.4 Security Interest Absolute. All rights of Administrative Agent and the Lenders and the security interests granted to Administrative Agent hereunder, and all obligations of each Grantor hereunder, are absolute and unconditional, irrespective of the occurrence of any one or more of the following:
(a) Any lack of validity or enforceability of any Loan Document; or
(b) The failure of Administrative Agent or any Lender or any holder of any Note:
(i) To assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise, or
(ii) To exercise any right or remedy against any other Grantor of, or any collateral securing, any obligations of any Borrower or any other Grantor owing to any Lender; or any change in the time, manner or place of payment of, or in any other term of, any Secured Obligation; or
(c) Any other extension, increase, refinancing, restructuring, compromise or renewal of any Secured Obligation; or
(d) Any reduction, limitation, impairment or termination of any Secured Obligation for any reason (other than payment in full of the Secured Obligations), including any waiver, release, surrender, alteration or compromise; or
(e) Any amendment to, rescission, waiver, or other modification of, or any consent to departure from, the terms of any Loan Document; or
(f) Any addition, exchange, release, surrender or nonperfection of any collateral (including the Collateral), or any amendment to or waiver or release of or addition to or consent to departure from any guaranty, for any Secured Obligation; or
(g) Any other circumstances which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or its obligations hereunder, including, without limitation, any and all suretyship defenses (other than payment in full of the Secured Obligations).
Each Grantor hereby waives any right to or any claim of any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of any invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligation.
1.5 Collateral Assignment of Contracts.
(a) Grant of Security Interest. Subject to Section 1.1, without limiting the generality thereof, each Grantor grants a security interest in and collaterally assigns to Administrative Agent all of such Grantor’s right, title and interest in and to all of such Grantor’s contracts, licenses, leases and other agreements and all rights, interests, powers, privileges and other benefits thereunder (including the rights to receive all proceeds and payments under each such contract, license, lease and other agreement. This collateral assignment of each contract, license, lease and other agreement constitutes a fully perfected security interest and collateral assignment; provided, however, that so long as no Event of Default has occurred and is continuing, each Grantor may exercise all rights and powers under and may receive all payments and enjoy all other benefits of each such contract, license, lease and other agreement, subject to the other terms and provisions of this Security Agreement and the other Loan Documents.
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(b) Administrative Agent’s Right to Cure. Upon the occurrence and during the continuance of an Event of Default, Administrative Agent shall have the right (but not the obligation) to cure or remedy any breach or default on the part of any Grantor under any contract, license, lease or other agreement included in the Collateral. The exercise by Administrative Agent of any of its rights hereunder will not release any Grantor from any of its duties or obligations under any such contracts, licenses, leases or other agreements included in the Collateral. Neither Administrative Agent nor any Lender has any obligation or liability under any such contracts, licenses, leases or other agreements included in the Collateral by reason of this Security Agreement, nor is Administrative Agent or any Lender obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
1.6 Collateral Interest. Notwithstanding anything to the contrary herein, Administrative Agent’s interest in the Collateral is as a security interest and not as an absolute assignment.
1.7 No Foreign Perfection. Notwithstanding anything to the contrary, there shall be no requirement for (and no Event of Default under the Loan Documents shall arise out of the lack of) actions in, or required by the Laws of, any non-U.S. jurisdiction in order to create, perfect or maintain any security interests in any assets.
Article
2
REPRESENTATIONS AND WARRANTIES
Each Grantor hereby represents and warrants to Administrative Agent, as of the Closing Date and as of the Settlement Date for each Advance, as set forth in this Article 2.
2.1 Location of Collateral. Schedule 2.1 identifies (a) all of the locations at which the Collateral is located (other than (i) Inventory or Equipment in transit to any location of a Grantor or (ii) in the possession of employees of a Grantor and used on a remote basis in the ordinary course of business) and (b) the location of the chief executive office of each Grantor.
2.2 Ownership. Grantors own or have the right to possess and use the Collateral and full corporate, partnership or limited liability company authority, as applicable, to grant a security interest in the Collateral. There exists no “adverse claim” within the meaning of Section 8-102 of the UCC with respect to the Pledged Equity of any Grantor.
2.3 Government Contracts. Except as identified on Schedule 2.3, no Grantor is a party to any federal, state or local government contract (either domestic or foreign).
2.4 Negotiable Documents, Instruments, Certificated Securities and Chattel Paper. Contemporaneously with the execution hereof, each Grantor has delivered to Administrative Agent possession of all originals of all certificated Pledged Equity, Instruments, Documents or Tangible Chattel Paper (other than checks received in the ordinary course of business) owned or held by such Grantor on the date hereof (duly endorsed in blank, if requested by Administrative Agent).
2.5 Intellectual Property Collateral. With respect to each item of Intellectual Property Collateral:
(a) Schedule 2.5(a) sets forth a complete and accurate list of all (i) applications and registrations for Intellectual Property Collateral owned by any Grantor, (ii) all Copyright Licenses, Patent Licenses, and Trademark Licenses and (iii) all Software (including customized applications and systems integration software licenses, but excluding “off-the-shelf” mass market, non-customized software licenses).
(b) To each Grantor’s knowledge, the Intellectual Property Collateral is subsisting, valid and enforceable; and the Intellectual Property Collateral owned by such Grantor has not been adjudged invalid or unenforceable, in whole or in part.
(c) To each Grantor’s knowledge, no claim has been made that the use of any Intellectual Property Collateral does or may violate the rights of any Person.
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(d) Each Grantor has performed all acts and has paid all required fees and taxes to maintain the Intellectual Property Collateral owned by any grantor in full force and effect in the jurisdictions in which it engages in commerce and it deems it reasonably necessary, as applicable, except where such fees and taxes are being contested in good faith with diligent prosecution.
(e) Each Grantor owns, or is entitled to use by license or otherwise, all Intellectual Property Collateral necessary for or used in the conduct of its business, except where the failure to maintain could not reasonably be expected to be materially adverse to Grantor’s business. To the extent any such Intellectual Property Collateral was developed, authored, conceived or created, in whole or in part, for or on behalf of any Grantor by any Person (except in the case of a Copyright, by an employee of any Grantor acting within the scope of such employee’s employment), then such Grantor has entered into a written agreement with such Person in which such Person has assigned all right, title and interest in and to such Intellectual Property Collateral to such Grantor.
(f) To each Grantor’s knowledge, neither the operation of its business nor any slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Grantor violates, infringes or misappropriates any rights held by any other Person, except where such violation, infringement or misappropriation could not reasonably be expected to be materially adverse to Grantor’s business. To each Grantor’s knowledge, no claim or litigation regarding any of the foregoing is pending or threatened.
2.6 Pledged Equity. With respect to any Pledged Equity constituting Collateral, which is set forth on Schedule 2.6, all of such Pledged Equity is validly issued, fully paid, and non-assessable and, except as set forth on Schedule 2.6, constitutes all of the issued and outstanding shares or interests (and other rights) of equity ownership of each Subsidiary owned by any Grantor.
2.7 Valid and Perfected Security Interest. This Security Agreement creates a valid security interest in the Collateral and proceeds thereof securing the payment and performance in full of the Secured Obligations. Upon (a) the filing of UCC financing statements (i) naming each Grantor as “debtor”, (ii) naming Administrative Agent as “secured party” and (iii) describing the Collateral, in the state of formation of such Grantor, (b) in the case of the Pledged Equity consisting of certificated Securities or evidenced by Instruments, in addition to filing of such UCC financing statements, delivery of the certificates representing such certificated Securities and delivery of such Instruments to Administrative Agent, in each case duly endorsed or accompanied by duly executed instruments of assignment or transfer in blank, (c) in the case of Collateral consisting of the Intellectual Property Collateral, in addition to the filing of such UCC financing statements, the recordation of a grant of security interest with the PTO, the United States Copyright Office or any other Official Body, as applicable, (d) in the case of Equipment that is covered by a certificate of title, the filing with the registrar of motor vehicles or other appropriate authority in the applicable jurisdiction of an application requesting the notation of the security interest created hereunder on such certificate of title, and (e) in the case of Collateral consisting of a Deposit Account or Securities Account or held in a Securities Account, the execution and delivery by the applicable Grantor, the applicable Bank or Securities Intermediary and Administrative Agent of an agreement granting control to Administrative Agent over such Collateral, the security interests in the Collateral granted to Administrative Agent for the ratable benefit of Lenders will constitute perfected security interests therein prior to all other Liens (except for Permitted Liens).
2.8 Authorization and Approval. Except with respect to the approvals obtained by the Grantor with respect to its governing documents, no authorization, approval or other action by (and no notice to or filing with) any Official Body or other Person is required either (a) for the grant by any Grantor of the security interest granted hereby, or (b) for the execution, delivery and performance of this Security Agreement by any Grantor, or (c) for the perfection by Administrative Agent of its rights and interests hereunder (other than as set forth in Section 2.7 hereof), or (d) for the exercise by Administrative Agent of its rights and remedies hereunder.
2.9 Type of Collateral. None of the Collateral consists of, or is the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes or standing timber.
2.10 Commercial Tort Claims. As of the date hereof, no Grantor has any Commercial Tort Claims other than as set forth on Schedule 2.10 hereto.
2.11 Partnership and Limited Liability Company Interests. Except as set forth on Schedule 2.11 hereto, none of the Collateral (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is an investment company security, (iv) is held in a Securities Account or (v) constitutes a Security or a Financial Asset.
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2.12 Title. The Collateral is free and clear of all Liens except (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; (b) non-consensual Liens arising by operation of law, arising in the ordinary course of business, and for amounts which are not overdue for a period of more than thirty 30 days or that are being contested in good faith by appropriate proceedings; and (c) Permitted Liens (as defined in the Loan Agreement).
2.13 Litigation. No action, suit, litigation, investigation or proceeding of, or before, any arbitrator or Governmental Authority is pending or, to the knowledge of any Grantor, threatened by or against any Grantor (i) with respect to this Agreement or any of the transactions contemplated hereby or (ii) that could reasonably be expected to materially adversely affect any Grantor’s financial condition or the ability of any Grantor to perform its obligations hereunder.
Article
3
COVENANTS
Each Grantor covenants and agrees that, so long as this Security Agreement remains effective, each Grantor will comply with the covenants set forth in this Article 3, unless Administrative Agent otherwise consents in writing.
3.1 Pledged Equity.
(a) Powers and Appointments. Each Grantor will promptly deliver to Administrative Agent all such certificates, powers, appointments, instruments and similar documents (satisfactory in form and substance to Administrative Agent) constituting Pledged Equity. Prior to delivery to Administrative Agent, all such certificates constituting Pledged Equity shall be held in trust by such Grantor for the benefit of Administrative Agent pursuant hereto. From time to time at Administrative Agent’s request after the occurrence and during the continuance of any Event of Default, each Grantor will promptly transfer any Pledged Equity or other shares of capital stock or ownership interests constituting Collateral into the name of any nominee designated by Administrative Agent.
(b) Pledged Equity. Each Grantor will warrant and defend the right and title herein granted to Administrative Agent in and to the Pledged Equity (and all right, title, and interest represented by the Pledged Equity) against the claims and demands of all Persons.
(c) Voting Rights.
(i) So long as no Event of Default shall have occurred and be continuing, (A) each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Equity or any part thereof for any purpose not prohibited by the terms of this Security Agreement or the Loan Agreement; provided, no Grantor shall exercise or refrain from exercising any such right if Administrative Agent shall have notified such Grantor that, in Administrative Agent’s reasonable judgment, such action would infringe on the interests of the Administrative Agent in the Collateral in a material manner and such Grantor shall promptly notify Administrative Agent in writing of material infringements detected, and (B) each Grantor shall be entitled to receive and retain any and all dividends, other distributions, principal and interest paid in respect of the Pledged Equity.
(ii) Upon the occurrence and during the continuation of an Event of Default, (A) upon written notice from Administrative Agent to any Grantor, all rights of such Grantor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease, and all such rights shall thereupon become vested in Administrative Agent who shall thereupon have the sole right to exercise such voting and other consensual rights; (B) all rights of such Grantor to receive the dividends and other distributions which it would otherwise be authorized to receive and retain pursuant hereto shall cease, and all such rights shall thereupon become vested in Administrative Agent who shall thereupon have the sole right to receive and hold as Collateral such dividends and other distributions; and (C) all dividends and other distributions which are received by such Grantor contrary to the provisions of clause (B) above shall be received in trust for the benefit of Administrative Agent, shall be segregated from other funds of such Grantor and shall forthwith be paid over to Administrative Agent as Collateral in the same form as so received (with any necessary endorsements as determined by Administrative Agent). Upon the cure or waiver by the Administrative Agent of any such Event of Default, the provisions of clause (c)(i) above shall apply.
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(iii) In order to permit Administrative Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder upon the occurrence and during the continuation of an Event of Default, (A) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to Administrative Agent all such proxies, dividend payment orders and other instruments as Administrative Agent may from time to time reasonably request, and (B) without limiting the effect of clause (A) above, each Grantor hereby grants to Administrative Agent an irrevocable proxy to vote the Pledged Equity and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Equity would be entitled (including giving or withholding written consents of holders of equity interests, calling special meetings of holders of equity interests and voting at such meetings) upon the occurrence and during the continuation of an Event of Default, which proxy shall be effective automatically and without the necessity of any action (including any transfer of any Pledged Equity on the record books of the issuer thereof) by any other Person (including the issuer of the Pledged Equity or any officer or agent thereof), upon the occurrence of an Event of Default and which proxy shall only terminate upon the payment in full of the Secured Obligations, the cure of such Event of Default or waiver thereof as evidenced by a writing executed by Administrative Agent.
3.2 As to Intellectual Property Collateral. With respect to each item of Intellectual Property Collateral:
(a) No Grantor (i) will fail to use a commercially appropriate standard of quality (which may be consistent with such Grantor’s past practices) in the manufacture, sale and delivery of products and services sold or delivered under or in connection with Trademarks owned by or licensed to such Grantor, or (ii) will fail to employ with all Trademarks (whether or not registered with any Official Body) an appropriate notice of such Trademark, or (iii) will fail to employ with all Copyrights an appropriate notice of such Copyright, or (iv) will fail to employ with all Patents registered with the PTO, or with an Official Body in a foreign country, an appropriate notice of such registration.
(b) No Grantor will do or permit any act (or omit to do any act) whereby any Intellectual Property Collateral owned by Grantor may lapse or become abandoned, forfeited, invalid, dedicated to the public or unenforceable (except upon expiration of the end of an unrenewable term of a registration thereof) without the prior written consent of Administrative Agent; provided that so long as no Default or Event of Default has occurred or is continuing, no Grantor shall be obligated to protect, defend or maintain any such Intellectual Property Collateral that such Grantor determines, in the good faith and reasonable exercise of its business judgment, is no longer material to such Grantor, to Grantors taken as a whole, or to the business or operations of such Grantor or Grantors taken as a whole (but provided further, that after the occurrence and during the continuance of a Default or Event of Default, Administrative Agent may require a Grantor to protect, defend or maintain such Intellectual Property Collateral and thereafter protect, defend or maintain such Intellectual Property Collateral in such jurisdictions as Administrative Agent deems necessary or desirable).
(c) Subject to clause (b) above, each Grantor will promptly notify Administrative Agent if such Grantor believes (or has reason to believe) that (i) any application to register or registration relating to any Intellectual Property Collateral may become abandoned, dedicated to the public, placed in the public domain, invalid or unenforceable, or (ii) there has been or will be an adverse determination or development (including the institution of, or any determination or development in, any proceeding in the PTO, the United States Copyright Office or any other Official Body) regarding such Grantor’s ownership of any Intellectual Property Collateral, its right to register the same, or its right to use, keep, maintain and enforce the same.
(d) If any Grantor files an application for the registration of any Intellectual Property Collateral with the PTO, the United States Copyright Office or any other Official Body, then such Grantor must notify Administrative Agent thereof within 90 calendar days thereafter, and upon request of Administrative Agent, must promptly execute and deliver any and all agreements, instruments, documents and papers that Administrative Agent may request to evidence Administrative Agent’s security interest in such Intellectual Property Collateral.
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(e) Subject to clause (b) above, each Grantor will perform all acts and will pay all required fees and taxes (including in any proceeding before the PTO, the United States Copyright Office or any other Official Body) to maintain all Intellectual Property Collateral owned by such Grantor (including Domain Names registered by or on behalf of Grantor) in full force and effect in such jurisdictions as is necessary (in such Grantor’s reasonable business judgment, unless otherwise provided in Section 3.2(b)) for the proper conduct of such Grantor’s business and to pursue any application for registration filed with respect to such Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, and interference and cancellation proceedings.
(f) Upon any Grantor’s acquisition of any Intellectual Property Collateral, the acquisition of which must be recorded in order to perfect such Grantor’s interest therein, then such Grantor will promptly record its interest therein.
(g) Subject to clause (b) above, each Grantor (i) will protect, defend and maintain the validity and enforceability of all the Intellectual Property Collateral and (ii) will use commercially reasonable efforts to detect violations, infringements and misappropriations of such Intellectual Property Collateral and promptly notify Administrative Agent in writing of material violations, infringements and/or misappropriations detected.
(h) Each Grantor, on a continuing basis, will apply to register such Grantor’s Trademarks, pursue patent protection for such Grantor’s inventions, and register the most recent versions of any of such Grantor’s Copyrights and Other Intellectual Property to the extent that any such registration would be consistent with customary industry practice or such Grantor’s historical business practices or the failure to register could reasonably be expected to be materially adverse to Grantor’s business.
(i) No Grantor will enter into any agreement that would impair or conflict with such Grantor’s obligations hereunder with respect to the Intellectual Property Collateral, except as otherwise permitted hereby or under the Loan Agreement.
(j) Each Grantor, on a continuing basis, will make, execute, acknowledge and deliver, and will file and record in the proper filing and recording places in the United States and any state thereof, all such instruments, collateral agreements and filings (including all appropriate financing and continuation statements) with the PTO, the United States Copyright Office or any other Official Body, as applicable, and will take all such action as Administrative Agent may reasonably deem to be necessary to perfect Administrative Agent’s security interest in all Intellectual Property Collateral and otherwise to carry out the intent and purpose of this Security Agreement, or for assuring and confirming to Administrative Agent the grant or perfection of a security interest in all Intellectual Property Collateral.
(k) Each Grantor, on a continuing basis, will ensure that it has appropriate measures in place to ensure that all material that may constitute Intellectual Property Collateral created by or on behalf of such Grantor has been appropriately assigned by any developer to such Grantor.
3.3 As to Customer and Material Business Records and Computer Software, and Trade Secrets. Each Grantor will utilize standard industry precautions to safeguard the utility, value and confidentiality of all such records, materials and information covered by this Section.
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3.4 Issuance or Acquisition of Equity Interests. No Grantor shall, without executing and delivering, or causing to be executed and delivered, to Administrative Agent such agreements, documents and instruments as Administrative Agent may reasonably require, issue or acquire any Pledged Equity consisting of an interest in a partnership or a limited liability company that (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is an investment company security, (iv) is held in a Securities Account or (v) constitutes a Security or a Financial Asset.
3.5 Further Assurances. Each Grantor (from time to time at its own expense) will promptly execute and deliver all further instruments and documents, and will take all further action, that may be necessary (or that Administrative Agent may reasonably request) in order to perfect any security interest, collateral assignment or pledge granted or purported to be granted hereby or to enable Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall:
(a) If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, or if any Property constituting Collateral shall be stored or shipped subject to a Document, ensure that such Instrument, Tangible Chattel Paper or Document is either in the possession of such Grantor at all times or, if requested by Administrative Agent to perfect its security interest in such Collateral, is delivered to Administrative Agent duly endorsed in a manner satisfactory to Administrative Agent. Such Grantor shall ensure that any Collateral consisting of Tangible Chattel Paper is marked with a legend acceptable to Administrative Agent indicating Administrative Agent’s security interest in such Tangible Chattel Paper.
(b) Execute and deliver all agreements, assignments, instruments or other documents as reasonably requested by Administrative Agent for the purpose of obtaining and maintaining control with respect to any Collateral consisting of (i) Deposit Accounts (other than Excluded Accounts), (ii) Investment Property, (iii) Letter-of-Credit Rights and (iv) Electronic Chattel Paper.
(c) If any Collateral is at any time in the possession or control of a warehouseman, bailee or any agent or processor of such Grantor and Administrative Agent so requests (i) notify such Person in writing of Administrative Agent’s security interest therein, (ii) instruct such Person to hold all such Collateral for Administrative Agent’s account and subject to Administrative Agent’s instructions and (iii) use reasonable best efforts to obtain a written acknowledgment from such Person that it is holding such Collateral for the benefit of Administrative Agent.
(d) To the extent that any Grantor shall, now or at any time hereafter, hold or acquire a Commercial Tort Claim, such Grantor shall immediately notify Administrative Agent in a writing signed by such Grantor of the particulars thereof and grant to Administrative Agent, for the benefit of the Lenders and Administrative Agent, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Security Agreement, with such writing to be in form and substance reasonably satisfactory to Administrative Agent.
(e) Will execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices as may be necessary (or as Administrative Agent may reasonably request) in order to perfect the security interests, collateral assignments, pledges and other rights granted or purported to be granted to Administrative Agent hereby.
(f) Will furnish to Administrative Agent (from time to time at Administrative Agent’s request) statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Administrative Agent may reasonably request, all in reasonable detail.
(g) Will notify Administrative Agent in writing immediately upon such Grantor becoming a party to any federal, state or local government contract (either domestic or foreign), and, upon the request of Administrative Agent, promptly take all actions required under the Federal Assignment of Claims Act or any similar state, local or foreign laws as Administrative Agent may reasonably request.
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3.6 Joinder. Each Grantor added after the date hereof shall execute the joinder in the form attached hereto as Schedule 3.6, whereupon such party shall be deemed to be a party to, and shall be subject to all of the terms and conditions of, this Agreement as if it were a Grantor on the date of this Agreement.
3.7 Liens. Each grantor covenants and agrees not to create, assume or suffer to exist any Lien on any of its Property or assets, whether now owned or hereinafter acquired other than Permitted Liens.
3.8 [Reserved].
With respect to the foregoing and the grant of the security interest hereunder, each Grantor hereby authorizes Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of such Grantor where permitted by law. A carbon, photographic or other reproduction of this Security Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.
Article
4
LENDER
4.1 Administrative Agent Appointed Attorney-in-Fact. Upon the occurrence of and during the continuance of an Event of Default, each Grantor hereby irrevocably appoints Administrative Agent as such Grantor’s attorney-in-fact, with full authority in the name, place and stead of such Grantor or otherwise, from time to time in Administrative Agent’s reasonable discretion, to take any action and to execute any instrument which Administrative Agent may deem reasonably necessary to accomplish the purposes of this Security Agreement. This authority includes the power:
(a) To ask, demand, collect, sue for, recover, compromise, restructure, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral including proceeding against any of the Collateral; and/or
(b) To notify the parties obligated on any of the Collateral to make payment to Administrative Agent of any amount due or to become due in connection therewith; and/or
(c) To receive, endorse, and collect any drafts, checks or other instruments, documents and chattel paper in connection with clause (a) of this Section 4.1; and/or
(d) To file any claims or take any action or institute any proceedings which Administrative Agent may deem reasonably necessary for the collection of any of the Collateral or otherwise to enforce the rights of Administrative Agent, any Lender or any Grantor with respect to any of the Collateral; and/or
(e) To execute (in the name, place and stead of any Grantor) endorsements, assignments, powers and other instruments of conveyance or transfer with respect to all or any of the Collateral; and/or
(f) To exercise all rights with respect to any Pledged Collateral of such Grantor hereunder; and/or
(g) To perform any and all of the affirmative obligations and covenants of such Grantor hereunder (with notice thereof to be provided to such Grantor by Administrative Agent within a reasonable time thereafter).
Each Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section 4.1 is irrevocable and coupled with an interest, but that it will terminate upon the termination of this Security Agreement pursuant to Section 1.3.
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4.2 Administrative Agent May Perform. From time to time, Administrative Agent (at its option) may perform (or may cause the performance of) any act which any Grantor agrees hereunder to perform and which such Grantor fails to perform after being requested in writing so to perform (it being understood that no such request need be given during the continuance of an Event of Default), and Administrative Agent from time to time (at its option) may also take any other action (or may cause the performance of any action) which Administrative Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein or collateral assignments or pledges thereof and which such Grantor fails to perform after being requested in writing so to perform (it being understood that no such request need be given during the continuance of an Event of Default). The costs and expenses of Administrative Agent incurred in connection with any such performance will be payable by Grantors (jointly and severally) and shall be Secured Obligations.
4.3 Administrative Agent Has No Duty. The rights and powers conferred upon Administrative Agent hereunder are solely to protect Administrative Agent’s and each Lender’s interest in the Collateral and do not impose any duty on Administrative Agent to exercise any such rights or powers. Except for reasonable care of any Collateral in Administrative Agent’s possession in accordance with Section 4.4 and the accounting for moneys actually received by it hereunder, Administrative Agent has no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
4.4 Reasonable Care. Administrative Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, however, Administrative Agent will be deemed to have exercised such reasonable care in the custody and preservation of any of the Collateral if Administrative Agent takes such action for that purpose as any Grantor reasonably requests in writing at times other than after the occurrence or during the continuance of a Default. Notwithstanding the foregoing, any failure or refusal by Administrative Agent at any time to comply with any such request by any Grantor will not in itself be deemed a failure to exercise reasonable care.
Article
5
DEFAULTS AND REMEDIES
5.1 Certain Remedies. If any Event of Default occurs and is continuing:
(a) In addition to other rights and remedies provided for herein (including under Article 4 and Section 5.10 hereof) or otherwise available to Administrative Agent or any Lender (including under the other Loan Documents and/or applicable law), Administrative Agent may also exercise in respect of the Collateral all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected Collateral). Upon the occurrence and during the continuance of any Event of Default, Administrative Agent will have the immediate right to enforce and realize upon any and all collateral security granted under the Loan Documents (including the Collateral hereunder) in any manner or order that Administrative Agent deems expedient without regard to any equitable principles of marshalling or otherwise. All rights and remedies available to Administrative Agent or any Lender are to be considered cumulative in nature.
(b) Without notice, except as expressly specified herein or required by applicable law, Administrative Agent may also sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of Administrative Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Administrative Agent may deem commercially reasonable. To the extent notice of sale is required by law with respect to any portion of the Collateral, each Grantor agrees that prior notice to a Grantor of at least ten (10) calendar days indicating the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale (without further notice) may be made at the time and place to which it was so adjourned.
(c) Administrative Agent may require Grantors to, and each Grantor hereby agrees (at its expense) that it will, forthwith assemble all or part of the Collateral as directed by Administrative Agent and make such Collateral available to Administrative Agent at a place designated by Administrative Agent that is reasonably convenient to both Administrative Agent and Grantors.
(d) Unless Administrative Agent otherwise consents, each Grantor will remit to Administrative Agent all cash proceeds received in respect of any sale of, or collection from, or other realization upon all or any part of the Collateral. All cash proceeds received by Administrative Agent from any Grantor or otherwise in respect of any sale of, collection from, or other realization upon all or any part of the Collateral (in the discretion of Administrative Agent) may be held by Administrative Agent as additional Collateral for the Secured Obligations, and/or then or at any time thereafter may be applied in whole or in part by Administrative Agent against all or any part of the Secured Obligations in an order consistent with the designated application of payments provided for in the Loan Agreement. Any surplus of such cash or cash proceeds held by Administrative Agent and remaining after payment in full of all the Secured Obligations will be paid over to a Grantor or to whomsoever Administrative Agent reasonably believes may be lawfully entitled to receive such surplus.
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(e) To the extent any of the Collateral represents an interest in a partnership, a limited liability company or other unincorporated enterprise, in addition to any other rights and remedies available to Administrative Agent or any Lender under the Loan Documents or applicable law, Administrative Agent (at its option but with notice to the relevant Grantor) may also exercise all rights and privileges of the holder of such interest under the agreements governing such Collateral and the Organizational Documents for the related organization or may instruct such Grantor how to exercise such rights and privileges (with which instructions each Grantor hereby agrees to comply). Each Grantor, in addition, covenants and agrees (at Administrative Agent’s request) to amend (and to use commercially reasonable efforts to cause others to amend) any of the Organizational Documents for such organization in order to authorize Administrative Agent to so exercise any such rights and privileges associated with such Collateral (including voting rights and the rights to participate in management decisions). The rights of Administrative Agent under this Section 5.1(e) may be transferred to and exercised by any subsequent acquiror or transferee of the Collateral pursuant to any sale of or foreclosure on such Collateral. Each Grantor hereby agrees that the rights of Administrative Agent and each Lender (or any subsequent acquiror or transferee of the Collateral) under this Section 5.1(e) may be enforced by specific performance or otherwise.
5.2 Special Securities-Related Remedies--Compliance with Restrictions. Each Grantor agrees that, in any sale of any of the Pledged Equity upon the occurrence and during the continuance of an Event of Default, Administrative Agent is authorized to comply with any limitation or restriction in connection with the type of such sale pursued as Administrative Agent may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Official Body. Each Grantor further agrees that such compliance will not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor will Administrative Agent or any Lender be liable or accountable to any Grantor for any discount allowed by reason of the fact that such Collateral is sold at foreclosure or otherwise in compliance with any such limitation or restriction or by reason of the fact that such Pledged Equity may represent a minority interest in any Grantor.
5.3 Special IP-Related Remedies (License of Intellectual Property Collateral). Each Grantor hereby grants Administrative Agent a royalty-free, non-exclusive, worldwide, irrevocable license (the “Remedies License”) under all present and future Intellectual Property Collateral of such Grantor to make, have made, use, sell, offer for sale, import, rent, lease, reproduce, display, distribute, perform, prepare derivative works (including the right to sub-license such rights to another Person), in any and all media now known or hereafter developed and in all channels of distribution, without restriction, from time to time after the occurrence and during the continuance of any Event of Default and delivery of notice thereof by Administrative Agent (unless such Event of Default is under Section 7.1(e) of the Loan Agreement, in which case no such notification shall be required) in connection with the maintenance, preservation, preparation, sale, disposition, collection, foreclosure, or other realization of, upon, or with respect to the Collateral or payment of the Secured Obligations in accordance with the Loan Documents, with the use of registered Trademarks subject to a commercially appropriate standard of quality. The Remedies License shall remain in full force and effect until this Security Agreement is terminated in accordance with Section 1.3 (but any sub-license or transfer of the Remedies License prior to the termination of the Remedies License shall survive such termination of the Remedies License unless otherwise provided on such sub-license or transfer document). The rights of Administrative Agent under the Remedies License are assignable by Administrative Agent (without the consent of such Grantor) in connection with (a) any sale or other disposition of Collateral in accordance with the Loan Documents to the extent necessary to permit the purchaser of such Collateral to have continuing and royalty free, worldwide rights with respect to the items of Collateral sold to such purchaser or (b) any assignment or other transfer by Administrative Agent of all or any part of its rights under and in accordance with the Loan Documents. Upon or at any time after the occurrence and during the continuance of any Event of Default, each Grantor will deliver (or cause to be delivered) to Administrative Agent (at Administrative Agent’s request but at such Grantor’s expense) a copy of all such Intellectual Property Collateral and all related other Collateral in a form requested by Administrative Agent. Administrative Agent’s rights, as a licensee under this Section 5.3, constitute a separately enforceable contract from the balance of this Security Agreement.
5.4 Retention of Collateral. In addition to the rights and remedies hereunder, upon the occurrence and during the continuance of an Event of Default, Administrative Agent may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Secured Obligations. Unless and until Administrative Agent shall have provided such notices, however, Administrative Agent shall not be deemed to have retained any Collateral in satisfaction of any Secured Obligations for any reason.
5.5 Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which Administrative Agent or the Lenders are legally entitled, the Grantors shall be jointly and severally liable for the deficiency, together with interest thereon as provided in the Loan Agreement, together with the costs of collection and the fees, charges and disbursements of counsel. Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Grantors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.
5.6 [Reserved].
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5.7 Delivery of Payments and Distributions. If any Grantor receives any payment, distribution or any other funds or property in contravention of the provisions hereof or any other Loan Document, then such Grantor must immediately deliver such payment, distribution or other funds or property (or proceeds thereof) to Administrative Agent in precisely the form received (except for the endorsement or assignment without recourse of such Grantor where necessary) for application to the Secured Obligations (or, at Administrative Agent’s option, held as additional Collateral therefor), whether or not then due or mature in accordance with the provisions of the Loan Agreement. Until such funds or property are delivered to Administrative Agent, such Grantor must hold such payment, distribution or other funds or property (or proceeds thereof) (a) in trust for the benefit of and as property of Administrative Agent and (b) separate from (i.e., not commingled with) its other assets. If a Grantor fails or refuses to make any such endorsement or assignment, then Administrative Agent (or any of its officers or employees) is hereby irrevocably authorized by such Grantor to make the endorsement and/or assignment.
5.8 Cooperation and Assistance. Each Grantor agrees (during the existence of an Event of Default) to take any actions that Administrative Agent may reasonably request in order to enable Administrative Agent and each Lender to receive the full rights and benefits granted to Administrative Agent and each Lender by the Loan Documents. Each Grantor further agrees that each Grantor will assist and cooperate with Administrative Agent (and will use its commercially reasonable efforts to cause others to assist and cooperate with Administrative Agent) to ensure that each Grantor continues (a) to operate in the normal course of business, (b) to fulfill all of its legal, regulatory and contractual obligations and (c) to otherwise be properly and professionally managed. At Administrative Agent’s request and the expense of Grantors (jointly and severally), at any time during the existence of an Event of Default, such assistance and cooperation may include the employment of (and, to the maximum extent not prohibited by the rules, regulations and orders of any Official Body with jurisdiction, the delegation of appropriate management authority to) one or more qualified and independent consultants and professional managers acceptable to Administrative Agent to assist in the interim operations of Grantors; all of which each Grantor hereby agrees not to challenge.
5.9 Standards for Exercising Remedies. To the extent that applicable law imposes duties on the Administrative Agent and/or Lender to exercise remedies in a commercially reasonable manner, each Borrower and each other Grantor acknowledges and agrees that it is not commercially unreasonable for the Administrative Agent and/or Lender (a) to fail to incur expenses deemed significant by the Administrative Agent and/or Lender to prepare the Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Administrative Agent and/or Lender against risks of loss, collection or disposition of Collateral or to provide to the Administrative Agent and/or Lender a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Administrative Agent and/or Lender, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Lender in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by the Administrative Agent and/or Lender would not be commercially unreasonable in the Administrative Agent’s and/or Lender’s exercise of remedies against the Collateral and that other actions or omissions by the Administrative Agent and/or Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to the Grantors or to impose any duties on the Administrative Agent and/or Lender that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.
Article
6
DEFINITIONS
6.1 Loan Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, capitalized terms used in this Security Agreement (including the preamble and recitals hereof) have the meanings provided in the Loan Agreement.
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6.2 Rules of Construction. The rules of interpretation and construction set forth in the Loan Agreement apply to the interpretation and construction of this Security Agreement.
6.3 Certain Terms. The following terms (whether or not underscored) when used in this Security Agreement (including the preamble and recitals hereof) have the following meanings:
“Administrative Agent” is defined in the introductory paragraph hereof.
“Borrower” is defined in the introductory paragraph hereof.
“Collateral” is defined in Section 1.1.
“Copyright License” means any agreement, whether written or oral, providing for the grant by or to a Grantor of any right under any Copyright.
“Copyrights” means all copyright and similar rights under the laws of the United States (including all proprietary rights afforded pursuant to Title 17 of the United States Code, including, without limitation, all rights in copyrights, works of authorship, original designs and mask works) and all other countries for the full term thereof (and including all rights accruing by virtue of bilateral or international copyright treaties and conventions), whether registered or unregistered, including, but not limited to, all registrations, applications for registration, renewals, extensions, reversions or restorations thereof now or hereafter provided for by law, all rights to make applications for registrations and recordations, and all adaptations, derivations, and versions thereof, regardless of the medium of fixation or means of expression, now existing or hereafter applied for, registered, created, or acquired.
“Domain Names” means all internet domain names and applications therefor and all URLs.
“Excluded Account” means (i) any Deposit Account specifically and exclusively used for payroll, payroll taxes, workers’ compensation or unemployment compensation premiums or benefits, pension benefits, and other employee wage and benefit payments to or for the benefit of any Debtor’s employees, (ii) any Deposit Accounts held in a trustee, fiduciary, agency or similar capacity or otherwise for the benefit of a third party and (iii) Deposit Accounts specifically and exclusively for holding any other taxes required to be collected or withheld by a Debtor (including, without limitation, federal and state sales, use and excise taxes, customs duties, import duties and independent customs brokers’ charges) for which any Debtor is or may reasonably be expected to be liable.
“Excluded Assets” has the meaning provided in Section 1.1 hereof.
“Grantor” is defined in the introductory paragraph hereof.
“Intellectual Property Collateral” means, collectively, all Copyrights, all Domain Names, all Patents, all Software, all Trademarks, all Trade Secrets, and all Other Intellectual Property owned and/or used by a Grantor which are material to the operation of a Grantor’s business, and all Copyright Licenses, all Patent Licenses, and all Trademark Licenses granted by or to a Grantor which are material to the operation of a Grantor’s business.
“Loan Agreement” is defined in the recitals hereof.
“Other Intellectual Property” means all worldwide intellectual property rights, industrial property rights, proprietary rights and common-law rights, whether registered or unregistered, not otherwise included in Copyrights, Copyright Licenses, Domain Names, Patents, Patent Licenses, Trademarks, Trademark Licenses and Trade Secrets, including, without limitation, all rights to and under all new and useful inventions, discoveries, technology, confidential information, methods, processes, designs, technology, art, brands, formulas, algorithms, software, concepts, protocols, electronic or other databases, tangible embodiments (in whatever form or medium), and all improvements thereof and all know-how related thereto, together with the rights to all related past, present and future causes of action and any and all interests, claims, and rights for damages, profits, and other awards or remedies by reason of any infringement, unauthorized use, dilution, misappropriation, or other violation of intellectual property rights, now existing or hereafter created or acquired.
“Patent License” means any agreement, whether written or oral, providing for the grant by or to a Grantor of any right under any Patent.
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“Patents” means all letters patent and patent applications in the United States and all other countries (and all letters patent that issue therefrom), including all industrial designs, industrial models, utility models, certificates of invention and other indices of invention ownership, and all reissues, reexaminations, extensions, renewals, substitutes, divisions and continuations (including continuations-in-part and continuing prosecution applications) thereof, all rights to make applications for issuance and recordations, for the full term thereof, now existing or hereafter applied for, issued, or acquired.
“Pledged Equity” means, with respect to each Grantor, (a) 100% of the issued and outstanding equity interests of each Subsidiary (other than a foreign Subsidiary as set forth in clause (b)) that is directly owned by Grantor, and (b) 66% (or such greater percentage that, due to a change in an applicable law after the date hereof, (i) could not reasonably be expected to cause the undistributed earnings of such foreign Subsidiary as determined for United States federal income tax purposes to be treated as a deemed dividend to such foreign Subsidiary’s United States parent and (ii) could not reasonably be expected to cause any material adverse tax consequences) of the issued and outstanding equity interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding equity interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each foreign Subsidiary that is directly owned by such Grantor, including the equity interests of the Subsidiaries owned by such Grantor as set forth on Schedule 2.6 hereto, in each case together with the certificates (or other agreements or instruments), if any, representing such equity interests, and all options and other rights, contractual or otherwise, with respect thereto, including, but not limited to, (A) all equity interests representing a dividend thereon, or representing a distribution or return of capital upon or in respect thereof, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder thereof, or otherwise in respect thereof; and (B) in the event of any consolidation or merger involving the issuer thereof and in which such issuer is not the surviving Person, all shares of each class of the equity interests of the successor Person formed by or resulting from such consolidation or merger, to the extent that such successor Person is a direct Subsidiary of such Grantor.
“Secured Obligations” is defined in Section 1.2.
“Security Agreement” means this Security Agreement and all exhibits, schedules and supplemental addenda hereto, all as may be amended and otherwise modified from time to time hereafter.
“Software” means computer software (including source code and object code), data, databases and all documentation related thereto.
“Trade Secrets” means any data or information of any Grantor that is not commonly known by or available to the public, and which (a) derives economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
“Trademark License” means any agreement, written or oral, providing for the grant by or to Grantor of any right to use any Trademark.
“Trademarks” means all trademark and service mark rights, statutory and common-law trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, trade dress, logos and other source or business identifiers and indicia of commercial source or origin, together with all translations, adaptations, derivations and combinations thereof, and the goodwill associated therewith, all registrations and applications for registration thereof, and all rights to make applications for registrations and recordations, under the laws of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise, for the full term and all renewals thereof, now existing or hereafter applied for, registered, adopted, or acquired.
6.4 UCC Definitions. The following terms shall have the meanings ascribed to such terms as defined in the Uniform Commercial Code in effect from time to time in the State of New York except as such terms may be used in connection with the perfection of the Collateral and then the applicable jurisdiction with respect to such affected Collateral shall apply (the “UCC”): Accession, Account, As-Extracted Collateral, Bank, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit Right, Manufactured Home, Proceeds, Securities Entitlement, Securities Account, Securities Intermediary, Security, Software, Supporting Obligation and Tangible Chattel Paper.
Article
7
MISCELLANEOUS PROVISIONS
7.1 Loan Document. This Security Agreement and each separate assignment executed in connection herewith are Loan Documents executed pursuant to the Loan Agreement and (unless otherwise expressly indicated herein) are to be construed, administered and applied in accordance with the terms and provisions thereof.
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7.2 Amendments. No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor herefrom, shall in any event be effective unless such amendment, waiver or consent is in writing and signed by Administrative Agent and Grantor. Any such waiver or consent will be effective only in the specific instance and for the specific purpose for which given.
7.3 Notices.
(a) Written Notices.
(i) All notices and other communications to any party herein to be effective shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail, as follows:
If to Grantor:
150 Alhambra Circle, Suite 1200
Coral Gables, FL 33134
Attention: Bill O’Dowd, CEO
E-mail: [email protected]
If to Administrative Agent:
FVP Servicing, LLC
1140 Broadway, Ste 1503
New York, NY 10001
Attn: Keith Lee / Tom Betts
Telephone: 646.902.6645
E-mail: [email protected] / [email protected]
(ii) Notices if (a) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been given when received; and (b) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgment).
(iii) Any party hereto may change its address for notices and other communications hereunder by notice to the other parties hereto. All such notices and other communications shall, when transmitted by overnight delivery, be effective when delivered for overnight (next-day) delivery, or if mailed, upon the third Business Day after the date deposited into the mails or if delivered, upon delivery; provided, that notices delivered to Lenders shall not be effective until actually received by such Person at its address specified in this Section 7.3.
7.4 Severability. Wherever possible, each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under applicable law. If any provision of this Security Agreement shall be prohibited by or invalid under such law, then such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement.
7.5 Entire Agreement. This Security Agreement and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements (written or oral) with respect thereto.
7.6 Reinstatement. To the maximum extent not prohibited by applicable law, this Security Agreement shall continue to be effective or be reinstated if at any time any amount received by Administrative Agent or any Lender in respect of the Loan Agreement or any other Loan Document is rescinded or must otherwise be restored or returned by Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Grantor or upon the appointment of any receiver, intervenor, conservator, trustee or similar official for any Grantor or any substantial part of any Grantor’s assets, or otherwise, all as though such payments had not been made.
7.7 Conflict Provision. In the event of any irreconcilable conflict between the terms and conditions of this Security Agreement and the terms and conditions of the Loan Agreement, the terms and conditions of the Loan Agreement shall govern.
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7.8 Administrative Agent. References in this Security Agreement to Administrative Agent shall mean either to Administrative Agent in such capacity or (where appropriate) to Administrative Agent for the benefit of itself and other Lenders. Unless otherwise indicated in this Security Agreement or the other Loan Documents, all Collateral held and all payments received by Administrative Agent are deemed to be held and received, respectively, for the benefit of itself and the other Lenders.
7.9 Waiver of Suretyship Defenses. Each Grantor hereby waives any and all defenses and rights of discharge based on suretyship or impairment of collateral (including any lack of attachment or perfection with respect thereto) that it may now have or may hereafter acquire with respect to Administrative Agent or any Lender or any of such Grantor’s obligations hereunder or under any other agreement that it may have or hereafter enter into with Administrative Agent or any Lender.
7.10 Subordination of Subrogation. Until this Security Agreement is terminated in accordance with Section 1.3, each Grantor hereby irrevocably subordinates any claim or other rights which it may now have or may hereafter acquire against any other Grantor that arise from the existence, payment, performance or enforcement of any Grantor’s obligations under this Security Agreement or any other Loan Document, including any right of subrogation, reimbursement, contribution, exoneration, or indemnification, any right to participate in any claim or remedy of Administrative Agent or any Lender against any other Grantor or any collateral which Administrative Agent or any Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law.
7.11 Waiver of Notice; Waiver of Bond. Each Grantor waives all rights of notice and hearing of any kind prior to the exercise by Administrative Agent or any Lender of its rights during the continuance of any Event of Default to repossess the Collateral with judicial process or to replevy, attach or levy upon the Collateral. Each Grantor waives the posting of any bond otherwise required of Administrative Agent or any Lender in connection with any judicial process or proceeding to obtain possession of, replevy, attach or levy upon Collateral or other security for the Secured Obligations, to enforce any judgment or other court order entered in favor of Administrative Agent or any Lender, or to enforce by specific performance, temporary restraining order or preliminary or permanent injunction this Security Agreement or any other Loan Document.
7.12 [Reserved].
7.13 Counterparts. This Security Agreement may be executed in any number of counterparts with the same effect as if all the signatures on such counterparts appeared on one document. Each counterpart will be deemed to be an original, but all counterparts together will constitute one and the same instrument. A signature page hereto sent or delivered by facsimile or other electronic transmission shall be as legally binding and enforceable as a signed original for all purposes.
7.14 Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL. The terms of Sections 13.3, 13.4, 13.5 and 13.7 of the Loan Agreement with respect to governing law, submission to jurisdiction, venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned, by their duly authorized officers, have executed this Security Agreement, and it is effective as of the day and year first above written.
| GRANTORS: | SHORE FIRE MEDIA, LTD., a New York corporation | |
| By:/s/ Bill O’Dowd | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory | ||
| THE DOOR MARKETING GROUP, LLC, a New York limited liability company | ||
| By: /s/ Bill O’Dowd | ||
| Name: Bill O’Dowd | ||
| Title: Authorized Signatory |
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ADMINISTRATIVE
AGENT:FVP SERVICING, LLC,
a Delaware limited liability company,
as Administrative Agent
By:/s/ Keith Lee
Name:Keith Lee
Title:Manager
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Schedule 2.1
Location of Collateral
| Grantor | Address |
| Shore Fire Media, Ltd. | 32 Court Street, Suite 1800, Brooklyn, NY 11201 |
| The Door Marketing Group, LLC | 600 Third Avenue, 23rd Floor, New York, NY 10016 |
Schedule 2.3
Government Contracts
None.
Schedule 2.5A
Intellectual Property Collateral
None.
Schedule 2.6
Pledged Equity
All issued and outstanding equity interests in each of the following Pledged Entities: None.
Schedule 2.10
Commercial Tort Claims
None.
Schedule 2.11
Pledged Interests – Securities
See Schedule 2.6.
Schedule 3.6
Form Joinder
JOINDER BY __________________
TO SECURITY AGREEMENT
The undersigned, _________________, a _____________________ (“New Grantor”) hereby joins in the Security Agreement dated as of May 7, 2026 (the “Security Agreement”) by and among the Grantors thereto (collectively, the “Grantor”) and FVP SERVICING, LLC, as administrative agent (including any successor, participant, assignee or transferee thereof, “Administrative Agent”) for itself and the Lenders (as defined in the Loan Agreement). All terms not defined herein shall have the meanings ascribed to them in the Security Agreement. New Grantor has received and reviewed a copy of the Security Agreement and hereby acknowledges and affirms:
1. the continuing validity of the Security Agreement and the other Loan Documents to which New Grantor is a party;
2. all of the terms, conditions and obligations contained in the Security Agreement and other Loan Documents to which New Grantor is a party, which terms, conditions and obligations are and shall remain in full force and effect;
3. that the Security Agreement and other Loan Documents to which New Grantor is a party are the legal, valid and binding obligations of New Grantor as a party thereto, and the obligations and liabilities thereunder shall not be diminished by the execution hereof; and
4. that this instrument is executed by New Grantor as an inducement to the Administrative Agent and each Lender to continue the Loan, and with the knowledge that the Administrative Agent and each Lender shall rely on the statements made herein.
Dated: ________________, 20______________________
| Address for Notice: | By: ___________________________ |
| __________________ | Print Name:_____________________ |
| __________________ | Print Title:______________________ |
| __________________ | |
Exhibit 10.3
EXECUTION COPY |
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the “Agreement”) is dated as of May 7, 2026, and is by DOLPHIN ENTERTAINMENT, INC., a Florida corporation (“Pledgor”), in favor of FVP SERVICING, LLC, in its capacity as administrative agent for the Lenders under the Loan Agreement (as defined below) (the “Administrative Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such term in the Loan Agreement.
BACKGROUND
1.Pledgor is the owner of the number of the Equity Interests listed next to its name on Schedule A in SHORE FIRE MEDIA, LTD., a New York corporation, and THE DOOR MARKETING GROUP, LLC, a New York limited liability company (each, a “Pledged Entity” and, together, “Pledged Entities”).
2.Contemporaneously with the execution of this Agreement, the Pledged Entities, as borrowers (each, a “Borrower” and, together, “Borrowers”), are entering into a Loan Agreement (as amended, modified, supplemented, extended, restated or renewed from time to time, the “Loan Agreement”) with Administrative Agent and the lenders party thereto (collectively, the “Lenders”), pursuant to which, among other things, the Lenders have agreed to make one or more term loans to Borrowers in the aggregate original principal amount of up to $5,000,000 (the “Loan”).
3.As a condition to entering into the Loan Agreement, Administrative Agent requires that Pledgor pledge and grant a security interest in favor of Administrative Agent, for the benefit of itself and the Lenders, in all of Pledgor’s right, title and interest in and to all Equity Interests in each Pledged Entity to secure, inter alia, the repayment of the Loan and the due and prompt payment and performance of all other Obligations (as hereinafter defined) under the Loan Documents.
4.Pledgor will derive substantial direct and indirect benefits from the making of the Loan by the Lenders to Borrower and the consummation of the transactions contemplated by the Loan Agreement, and is willing to execute and deliver this Agreement to induce Administrative Agent to enter into the Loan Agreement.
NOW THEREFORE, the parties agree as follows:
AGREEMENT
1.Definitions. As used in this Agreement, the following terms shall have the meanings specified below:
“Distributions” means all dividends, distributions, liquidation proceeds, cash, profits, instruments and other property and payments or economic benefits or interests to which the Pledgor is entitled with respect to the Pledged Equity whether or not received by or otherwise distributed to Pledgor, whether such dividends, distributions, liquidation proceeds, cash, profits, instruments and other property and economic benefits are paid or distributed by any Pledged Entity in respect of operating profits, sales, exchanges, refinancing, condemnations or insured losses of the company’s assets, the liquidation of the company’s assets and affairs, management fees, guaranteed payments, repayment of loans, reimbursement of expenses or otherwise in respect of or in exchange for any or all of the Pledged Equity.
“Equity Interests” means (a) partnership interests (general or limited) in a partnership; (b) membership interests in a limited liability company; (c) shares or stock interests in a corporation, and (d) the beneficial ownership interests in a trust.
“Event of Default” means any “Event of Default” as defined in the Loan Agreement.
“Obligations” means the “Obligations” as defined in the Loan Agreement.
“Organizational Agreement” means the partnership agreement, limited partnership agreement, operating agreement, limited liability company agreement, articles or certificate of organization, by-laws, certificate of formation and other organizational or governing documents, as applicable, of each Pledged Entity.
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“Pledged Equity” means all Equity Interests issued by each Pledged Entity owned or held by or on behalf of Pledgor, whether beneficially or of record, and whether now owned or hereafter acquired, including all such Equity Interests described in Schedule A hereto, and all certificates, instruments and other documents, if any, representing or evidencing such Equity Interests and all interests of a Pledgor on the books and records of each Pledged Entity with respect to such Equity Interests, and all Distributions or other dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Equity Interests.
“Security Interest” has the meaning assigned to such term in Section 2a hereof.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction.
2.Security Interest.
a.Grant of Security. As security for the payment and performance in full of the Obligations and the Pledgor’s obligations under this Agreement, whether allowed or allowable as claims (whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, including without limitation the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a)) (collectively, the “Secured Obligations”), Pledgor hereby grants, pledges, hypothecates, transfers and assigns to Administrative Agent, for the benefit of itself and the Lenders, a first priority (except to the extent of any Permitted Liens) and continuing lien on and security interest in (the “Security Interest”), and, in furtherance of such grant, pledge, hypothecation, transfer and assignment, hereby transfers and assigns to Administrative Agent, for the benefit of itself and the Lenders, as collateral security, all of Pledgor’s right, title, ownership, equity or other interests in and to the following, whether now owned or hereafter acquired, now existing or hereafter arising and wherever located (collectively, the “Collateral”):
(i)The legal and beneficial ownership interests in and to the Pledged Equity;
(ii)all rights, privileges, general intangibles, payments intangibles, voting rights, authority and power arising from its interest in the Pledged Equity;
(iii)the capital of the Pledgor and any and all profits, losses, Distributions, and allocations attributable to the Pledged Equity as well as the proceeds of any Distribution thereof, whether arising under the terms of any Organizational Agreement or otherwise;
(iv)all Distributions and all other payments, if any, due or to become due, to the Pledgor and all other present or future claims by Pledgor against each Pledged Entity, or in respect of the Pledged Equity, under or arising out of (i) any Organizational Agreement, (ii) monies loaned or advanced, for services rendered or otherwise, (iii) any other contractual obligations, commercial tort claims, supporting obligations, damages, insurance proceeds, condemnation awards or other amounts due to Pledgor from each Pledged Entity or with respect to the Pledged Equity;
(v)Pledgor’s claims, rights, powers, privileges, authority, options, security interests, liens and remedies, if any, under or arising out of the ownership of the Pledged Equity;
(vi)to the extent permitted by applicable law, Pledgor’s rights, if any, in each Pledged Entity pursuant to any Organizational Agreement, or at law, to exercise and enforce every right, power, remedy, authority, option and privilege of Pledgor relating to the Pledged Equity, including without limitation, the right to (i) execute any instruments and to take any and all other action on behalf of and in the name of Pledgor in respect of the Pledged Equity, (ii) exercise any and all voting, consent and management rights of Pledgor in or with respect to each Pledged Entity, (iii) exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval with respect to each Pledged Entity, (iv) enforce or execute any checks, or other instruments or orders of each Pledged Entity, and (v) file any claims and to take any action in connection with any of the foregoing, together with full power and authority to demand, receive, enforce or collect any of the foregoing or any property of each Pledged Entity;
(vii)all Investment Property (as such term is defined in Section 9-102 of the UCC) issued by or relating to each Pledged Entity, or otherwise relating to the Pledged Equity;
(viii)all additional Equity Interests or other property, securities, or assets now existing or hereafter acquired by Pledgor relating to each Pledged Entity, including, without limitation, as a result of any consolidation, combinations, mergers, reorganizations, acquisitions, exchange offers, recapitalizations of any type, contributions to capital, splits, spin-offs, or similar actions or the exercise of options or other rights relating to the Pledged Equity;
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(ix)all partnership certificates, member certificates, stock certificates, or any other instrument, note, chattel paper or certificate (including, without limitation, all “certificated securities” within the meaning of Section 8-102 of the UCC) (whether or not qualifying as Investment Property) representing the Pledged Equity in each Pledged Entity and any interest of Pledgor in the entries on the books of any financial intermediary pertaining to such certificates or writings, and all options and warrants for the purchase of such Equity Interests now or hereafter held in the name of Pledgor (collectively, “Certificated Securities”), and all Certificated Securities in each Pledged Entity from time to time acquired by Pledgor in any manner, and any interest of Pledgor in the entries on the books of any financial intermediary pertaining to such Certificated Securities, and all securities convertible into and options, warrants, dividends, cash, instruments and other rights and options from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Certificated Securities (including all rights to request or cause the issuer thereof to register any or all of the Collateral under federal and state securities laws to the maximum extent possible under any agreement for such registration rights), and all put rights, tag-along rights or other rights pertaining to the sale or other transfer of such Collateral, together in each case with all right under any Organizational Agreements pertaining to such rights; and
(x)(i) all “proceeds” (as such term is defined in Section 9-102 of the UCC) of any or all of the foregoing (whether cash or non-cash proceeds, including insurance proceeds), (ii) whatever is receivable or received when any of the Collateral is sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, all rights to payment, including return premiums, with respect to any insurance relating thereto and also includes all interest, dividends and other property receivable or received on account of any of the Collateral or proceeds thereof, and in any event, shall include all Distributions or other income from any of the Collateral, all collections thereon or all Distributions with respect thereto, and (iii) all proceeds, products, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the Collateral. The inclusion of proceeds in the Collateral does not authorize Pledgor to sell, dispose of or otherwise use the Collateral in any manner not specifically authorized hereby.
b.Continuing Perfection and Priority. Pledgor hereby covenants and agrees that, if at any time on or after the date hereof any asset or property acquired, owned or held by or on behalf of Pledgor that constitutes or would constitute Collateral hereunder is not subject to the Security Interest in favor of the Administrative Agent hereunder with the perfection or priority required hereby, then Pledgor shall, at its own cost and expense, promptly (i) notify Administrative Agent thereof and (ii) execute and deliver any and all agreements, instruments and other documents, and take all further action (including the filing and recording of financing statements and other documents), that may be necessary or reasonably requested by the Administrative Agent to cause such asset or property to become subject to a perfected lien and security interest in favor of the Administrative Agent hereunder (including, where applicable, perfection by establishing “sole dominion and control” under applicable law and “control” within the meaning of the UCC), with the priority required hereby.
c.Security for Obligations. This Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 262(a) of Title 11 of the United States Code, or any similar provision of any other bankruptcy, insolvency, receivership or other similar law), of all Secured Obligations.
d.No Assumption of Liability. Notwithstanding anything to the contrary herein, the Security Interest is granted as security only and shall not subject the Administrative Agent to, or in any way alter or modify, any obligation or liability of Pledgor with respect to or arising out of the Pledged Equity.
3.Representations, Warranties and Covenants.
a.Representations and Warranties. Pledgor represents and warrants to the Administrative Agent, for the benefit of itself and the Lenders that:
i.Pledgor’s full and correct legal name and the address of Pledgor’s chief executive office is specified on Schedule A.
ii.Pledgor owns the applicable Equity Interests in each Pledged Entity specified next to its name on Schedule A. Pledgor has good and valid title to the Pledged Equity specified next to its name on Schedule A and all related Collateral, and Pledgor does not have any outstanding options or rights or other agreements to acquire or sell or otherwise transfer all or any portion of any Pledged Equity or other Collateral.
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iii.All actions and consents, including all filings, notices, registrations and recordings, necessary or desirable to create, perfect or ensure the priority of the Security Interest in the Pledged Equity and the other Collateral or for the exercise by the Administrative Agent of any voting or other rights provided for in this Agreement or the exercise of any remedies in respect of the Pledged Equity and the other Collateral have been made or obtained.
iv.The Pledged Equity and other Collateral of Pledgor is owned by Pledgor free and clear of any lien, security interests or other encumbrance, other than pursuant to a Permitted Lien. No Pledgor has filed or authorized the filing of (A) any financing statement or analogous document under the UCC or any other applicable laws covering the Pledged Equity or any other Collateral, or (B) any assignment in which Pledgor assigns any of the Pledged Equity or other Collateral, or any pledge agreement or similar instrument covering any of the Pledged Equity or other Collateral, with any foreign governmental authority or other office, in each case which financing statement, analogous document, assignment or other instrument, as applicable, is still in effect.
v.The Pledged Equity has been duly authorized and is validly issued.
vi.The Pledged Equity constitutes all of the issued and outstanding Equity Interests of each Pledged Entity.
vii.The pledge of the Pledged Equity and the other Collateral pursuant to this Agreement creates a valid and, upon the filing of a financing statement in accordance with the UCC, to the extent such security interest can be perfected by filing of a financing statement under the UCC, or other appropriate method, perfected security interest in the Pledged Equity and the other Collateral securing the payment and performance of the Secured Obligations. The taking possession by the Administrative Agent of the Certificated Securities (if any) described on Schedule A hereto, together with endorsed stock or unit powers duly executed in blank, will perfect the Administrative Agent’s Security Interest in all of the Pledged Equity and related Collateral evidenced by such Certificated Securities.
viii.Except for consents already obtained by Pledgor in connection with this Agreement, no consent of any other person or entity and no authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required (A) for the pledge by Pledgor of the Pledged Equity pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor, (B) for the perfection or maintenance of the Security Interest created hereby or (C) for the exercise by Administrative Agent of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Equity and other Collateral pursuant to this Agreement (except as may be required in connection with any disposition of any portion of the Pledged Equity by laws affecting the offering and sale of securities generally).
ix.There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived.
x.Pledgor has, independently and without reliance upon Administrative Agent, and based on such documents and information as Pledgor has deemed appropriate, and following consultation with Pledgor’s independent legal counsel, made its own credit analysis and decision to enter into this Agreement.
xi.Except as expressly provided in this Agreement or the Loan Agreement, Pledgor will not sell, convey or otherwise dispose of any of the Pledged Equity or other Collateral, nor will Pledgor create, incur or permit to exist any lien, security interest or other encumbrance with respect to any of the Pledged Equity or other Collateral.
xii.There are no contractual restrictions upon the voting rights or the transfer of the Pledged Equity.
xiii.The execution, delivery and performance hereof, and the grant of the Security Interest in the Pledged Equity and the other Collateral hereunder, to Pledgor’s knowledge, do not contravene any law, rule or regulation or any judgment, decree or order of any governmental authority or any agreement or instrument to which Pledgor is a party or by which Pledgor or any of Pledgor’s property is bound or affected or constitute a default thereunder.
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xiv.Attached hereto as Exhibit B are true, correct, and complete copies of the Organizational Agreement of each Pledged Entity. Each Organizational Agreement is in full force and effect and has not been modified or amended except as attached hereto. No Pledgor is in default of any of its obligations under the Organizational Agreements. No Pledgor shall allow any Pledged Entity to (A) amend any provision of its Organizational Agreements in any manner adverse to Administrative Agent, (B) cause any of its Equity Interests to become Certificated Securities after the date hereof to the extent such Equity Interests are not currently Certificated Securities unless Pledgor complies with the requirements of this Agreement as to such Certificated Securities, (C) dissolve, liquidate, wind-up, merge or consolidate with any other entity, (D) transfer any of its respective assets and properties to any person or entity (or otherwise) except as permitted by the Loan Documents, or (E) take any action, or refrain from taking any action, in either case, to the extent the same would constitute an Event of Default. The Organizational Agreements of each Pledged Entity provide that (A) all owners of Equity Interests therein are authorized to pledge or assign such Equity Interests to Administrative Agent, and that such pledge or assignment shall include all voting, management and control rights and is not limited to economic rights; (B) neither the exercise by Administrative Agent of any right or remedy under the Loan Documents, including, foreclosure of the Collateral, nor the transfer to Administrative Agent or its successors or assigns of title to any Collateral, shall constitute a default or breach, or give rise to any right of first refusal or option to purchase under the Organizational Agreement of each Pledged Entity; (C) until the Secured Obligations are paid in full (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted): (1) Pledgor shall not be entitled to withdraw from any Pledged Entity or assign, encumber, or convey any interest in any Pledged Entity (except in favor of Administrative Agent pursuant to the Loan Documents); (2) [reserved]; (3) [reserved]; (4) [reserved]; and (5) upon foreclosure or other transfer of the Pledged Equity by Administrative Agent or its successors or assigns pursuant to the Loan Documents or applicable law, Administrative Agent has the right to terminate all non-member managers of each Pledged Entity.
b.Covenants and Agreements. Pledgor hereby covenants and agrees as follows:
i.Pledgor will promptly notify the Administrative Agent in writing of any change in Pledgor’s legal name, the address at which Pledgor maintains its chief executive office, maintains books or records relating to any of the Pledged Equity or Pledgor’s tax identification number. Pledgor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Pledged Equity and the other Collateral with the priority required hereby.
ii.Pledgor shall maintain, at Pledgor’s own cost and expense, such complete and accurate records with respect to the Pledged Equity as is consistent with Pledgor’s current practices, but in any event to include complete accounting records indicating all Distributions received with respect to any part of the Pledged Equity, and, at such time or times as the Administrative Agent may reasonably request (but in no event more than one time in any calendar year, unless an Event of Default has occurred and is continuing), promptly to prepare and deliver to the Administrative Agent a duly certified schedule or schedules in form and detail satisfactory to the Administrative Agent showing the identity and amount of any and all such Pledged Equity.
iii.Pledgor shall, at Pledgor’s own cost and expense, take any and all actions reasonably necessary to defend title to the Pledged Equity and the other Collateral against all persons and to defend the Security Interest in the Pledged Equity and the other Collateral and the priority thereof against any lien, security interest or other encumbrance, and in furtherance thereof, no Pledgor shall take, or permit to be taken, any action not otherwise expressly permitted by the Loan Agreement that could reasonably be expected to impair the Security Interest or the priority thereof or the Administrative Agent’s rights in or to the Pledged Equity or the other Collateral.
iv.Upon reasonable prior written notice, the Administrative Agent and such persons as the Administrative Agent may designate shall have the right, at the cost and expense of Administrative Agent (except during the continuance of an Event of Default, in which event such cost and expense shall be the sole responsibility of Pledgor), to inspect all of Pledgor’s records (and to make extracts and copies from such records) concerning the Pledged Equity and to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Pledged Equity or the other Collateral.
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v.At its option after the occurrence and during the continuance of an Event of Default, Administrative Agent may discharge past due taxes, assessments, charges, fees, liens, security interests or other encumbrances at any time levied or placed on the Pledged Equity or the other Collateral, and may pay for the maintenance and preservation of the Pledged Equity or the other Collateral to the extent Pledgor fails to do so as required hereby and by the Loan Documents, and Pledgor agrees to reimburse the Administrative Agent on demand for any payment made or any reasonable expense incurred by the Administrative Agent pursuant to the foregoing authorization; provided, however, that nothing in this paragraph shall be interpreted as excusing Pledgor from the performance of, or imposing any obligation on the Administrative Agent to cure or perform, any covenants or other promises of Pledgor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the Loan Documents.
vi.Pledgor shall observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Pledged Equity and the other Collateral, all in accordance with the terms and conditions thereof, and Pledgor agrees to indemnify and hold harmless the Administrative Agent from and against any and all liability to perform such conditions and obligations, except if caused by the gross negligence or willful misconduct of Administrative Agent.
vii.No Pledgor shall make, or permit to be made, an assignment, pledge or hypothecation of the Pledged Equity or the other Collateral or grant any other lien, security interest or other encumbrance in respect of the Pledged Equity or the other Collateral. No Pledgor shall make or permit to be made any transfer of the Pledged Equity or the other Collateral except as permitted by the Loan Agreement, and the Pledgor shall remain the owner, beneficially and of record, of the Pledged Equity and the other Collateral except as permitted by the Loan Agreement.
4.Pledged Equity Interests.
a.Pledged Equity; Certificated Securities. Pledgor represents and warrants that, except as otherwise specified on Schedule A hereto, none of the Pledged Equity is issued in the form of Certificated Securities. Pledgor represents and warrants that it has delivered to Administrative Agent all Certificated Securities constituting the Pledged Equity, duly indorsed in blank within the meaning of the UCC, and all such Certificated Securities have been in the physical possession of the applicable Pledgor at all times prior to such delivery to Administrative Agent. Pledgor covenants and agrees that it shall not permit each Pledged Entity to convert existing Equity Interests, or issue new Equity Interests, except in accordance with the terms hereof. Notwithstanding the foregoing, Pledgor shall promptly notify Administrative Agent if any Equity Interests with respect to each Pledged Entity (whether now owned or hereafter acquired by Pledgor) is not evidenced by a Certificated Security, and shall promptly thereafter take all actions required to perfect the security interest of Administrative Agent in such Pledged Equity under applicable law as required under Section 2. Pledgor further agrees to take such additional actions as Administrative Agent deems necessary or desirable to effect the foregoing and to permit Administrative Agent to exercise any of its rights and remedies hereunder and agrees to provide an opinion of counsel satisfactory to Administrative Agent with respect to any such pledge of Equity Interests which are not Certificated Securities promptly upon request of Administrative Agent. WITHOUT LIMITING THE EFFECT OF THE IMMEDIATELY PRECEDING CLAUSE AND SUBJECT TO SECTION 2 HEREOF, PLEDGOR HEREBY GRANTS TO ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY TO, FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, VOTE THE PLEDGED EQUITY AND TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED EQUITY WOULD BE ENTITLED (INCLUDING WITHOUT LIMITATION (A) GIVING OR WITHHOLDING WRITTEN CONSENTS, (B) CALLING SPECIAL MEETINGS, (C) VOTING AT SUCH MEETINGS, AND (D) VOTING AT ANY TIME OR PLACE) WITH RESPECT TO ANY ACTION, DECISION, DETERMINATION OR ELECTION BY THE PLEDGED ENTITIES OR THE HOLDERS OF THE RESPECTIVE EQUITY INTERESTS THEREIN THAT THE PLEDGED EQUITY (OR ANY NEW OR ADDITIONAL EQUITY INTEREST IN SUCH PLEDGED ENTITIES) BE, OR CEASE TO BE, A CERTIFICATED SECURITY, AND ALL OTHER MATTERS RELATED TO ANY SUCH ACTION, DECISION, DETERMINATION OR ELECTION, WHICH PROXY SHALL BE EFFECTIVE AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED EQUITY ON THE RECORD BOOKS OF THE ISSUER THEREOF BY ANY OTHER PERSON (INCLUDING THE ISSUER OF THE PLEDGED EQUITY OR ANY OFFICER OR AGENT THEREOF) AS OF THE DATE HEREOF) AND WHICH PROXY SHALL ONLY TERMINATE UPON THE CURE OF SUCH EVENT OF DEFAULT. THE PROXIES AND POWERS GRANTED BY PLEDGOR PURSUANT TO THIS AGREEMENT ARE COUPLED WITH AN INTEREST AND ARE GIVEN TO SECURE THE PERFORMANCE OF PLEDGOR’S OBLIGATIONS UNDER THIS AGREEMENT.
b.Registration in Nominee Name; Denominations. Pledgor hereby agrees that upon the occurrence and during the continuance of an Event of Default (i) the Administrative Agent shall have the right (in its sole and absolute discretion) to hold any Pledged Equity in its own name as Administrative Agent or in the name of its nominee, (ii) at the Administrative Agent’s request, Pledgor will promptly give to Administrative Agent copies of any material notices or other communications received by it with respect to any Pledged Equity registered in its name, and (iii) the Administrative Agent shall at all times have the right to exchange any certificates, instruments or other documents representing or evidencing any Pledged Equity owned or held by or on behalf of Pledgor for certificates, instruments or other documents of smaller or larger denominations for any purpose consistent with this Agreement.
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c.Pledged Equity. Pledgor shall (a) deliver to Administrative Agent any Certificated Securities representing the Pledged Equity, in form and content reasonably acceptable to Administrative Agent, duly endorsed or subscribed in blank, or accompanied by appropriate stock or unit powers or other instruments of transfer, pledge or assignment, and enter into such other arrangements as may be necessary to give control of any Investment Property to Administrative Agent within the meaning of Section 8-106 of the UCC, (b) cause each Pledged Entity to execute and deliver the Agreement and Acknowledgment to Pledge attached hereto as Exhibit A (the “Agreement and Acknowledgment”), and (c) promptly take all other actions required to perfect the security interest of Administrative Agent in the Collateral under applicable law. It is the intention of Pledgor and Administrative Agent that at all times while any Secured Obligations under the Loan Agreement remains outstanding, the Pledged Equity shall constitute Investment Property, and, to that end, Pledgor shall take, and shall cause each Pledged Entity to take, all necessary action to obtain such classification pursuant to the UCC.
d.Issuance or Acquisition of Equity Interests. No Pledgor shall, without executing and delivering, or causing to be executed and delivered, to the Administrative Agent such agreements, documents and instruments as the Administrative Agent may reasonably require, issue or acquire any Equity Interests that (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security (as defined in the UCC) governed by Article 8 of the UCC, (iii) is an investment company security, (iv) is held in a Securities Account (as defined in the UCC) or (v) constitutes a Security or a Financial Asset (each as defined in the UCC).
e.Voting and Distributions.
i.Unless and until an Event of Default shall have occurred and for so long as same is continuing:
(1)Pledgor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of the Pledged Equity, or any part thereof, for any purpose consistent with the terms of this Agreement and the other Loan Documents; provided, however, that no Pledgor will exercise any such right if the result thereof is reasonably likely to adversely affect the rights inuring to a holder of the Pledged Equity or the rights and remedies of the Administrative Agent under this Agreement or any of the other Loan Documents.
(2)Pledgor shall be entitled to receive, retain or use any cash Distributions paid on the Pledged Equity not in connection with a partial or total liquidation or dissolution, return of capital, capital surplus or paid-in surplus, in each case, to the extent expressly permitted pursuant to the terms of the Loan Agreement.
(3)All non-cash Distributions paid or payable in cash or otherwise in connection with a partial or total liquidation or dissolution, return of capital, capital surplus or paid-in surplus, and all other Distributions (other than distributions referred to in the preceding sentence) made on or in respect of the Pledged Equity, whether paid or payable in cash or otherwise, whether resulting from a subdivision, combination or reclassification of the outstanding Pledged Equity or received in exchange for the Pledged Equity, or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Equity, and, if received by Pledgor, shall not be commingled with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Administrative Agent and the Lenders hereunder and shall be forthwith delivered to the Administrative Agent in the same form received (with any necessary endorsement).
ii.Without limiting the generality of the foregoing, upon the occurrence and during the continuance of an Event of Default, all rights of Pledgor to receive and retain Distributions and to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to the above, and the obligations of the Administrative Agent in connection therewith, shall cease, and all such rights shall thereupon become vested in the Administrative Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers.
iii.All Distributions received by or on behalf of Pledgor contrary to the provisions of this Agreement or the Loan Agreement shall be held in trust for the benefit of Administrative Agent, shall be segregated from other property or funds of Pledgor and shall be forthwith delivered to the Administrative Agent upon demand in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Administrative Agent pursuant to the provisions of this Section shall be applied by Administrative Agent to the Secured Obligations in such order as Administrative Agent shall determine in its sole discretion.
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5.Further Assurances
Pledgor hereby covenants and agrees, at the cost and expense of Pledgor, to execute, acknowledge, deliver and/or cause to be duly filed all such further agreements, instruments and other documents (including favorable legal opinions), and take all such further actions, that are necessary to preserve, protect and perfect to the extent contemplated hereby (including without limitation as a result of any change in applicable law) the Pledged Equity and the Security Interest granted by Pledgor and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with its execution and delivery of this Agreement, the granting by Pledgor of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith. In addition, to the extent permitted by applicable law, Pledgor hereby irrevocably authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Pledged Equity and the other Collateral and agrees that a photographic or other reproduction of this Agreement or of a financing statement shall be sufficient as a financing statement and may be filed as a financing statement in any and all jurisdictions. Pledgor hereby further irrevocably authorizes Administrative Agent to file a record or records, including financing statements, in all jurisdictions and with all filing offices that Administrative Agent may determine, in its sole and absolute discretion, are necessary, advisable or prudent to perfect the Security Interest granted by Pledgor and agrees that such financing statements may describe the Pledged Equity and the other Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner that the Administrative Agent may determine, in its sole and absolute discretion, is necessary, advisable or prudent to perfect the Security Interest granted by Pledgor.
6.Administrative Agent Appointed Attorney-In-Fact
Pledgor hereby appoints the Administrative Agent as Pledgor’s true and lawful agent and attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest and is effective only upon the occurrence and during the continuance of an Event of Default. The Administrative Agent shall have the right, with power of substitution for Pledgor and in Pledgor’s name or otherwise, for the use and benefit of the Administrative Agent, only upon the occurrence and during the continuance of an Event of Default, (i) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Pledged Equity, the other Collateral or any part thereof; (ii) to demand, collect, receive payment of, give receipt for, and give discharges and releases of, any of such Pledged Equity or other Collateral; (iii) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on any of the Pledged Equity or the other Collateral or to enforce any rights in respect of any of such Collateral; (iv) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to any of such Pledged Equity or other Collateral; (v) to notify, or to require Pledgor to notify, issuers or obligors to make payment directly to the Administrative Agent, and (vi) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Pledged Equity or the other Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Administrative Agent were the absolute owner of such Pledged Equity or other Collateral for all purposes; provided, however, that nothing herein contained shall be construed as requiring or obligating the Administrative Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Administrative Agent, or to present or file any claim or notice, or to take any action with respect to any of the Pledged Equity, the other Collateral or the moneys due or to become due in respect thereof or any property covered thereby, and no action taken or omitted to be taken by the Administrative Agent with respect to any of the Pledged Equity or the other Collateral shall give rise to any defense, counterclaim or offset in favor of Pledgor or to any claim or action against Administrative Agent. The provisions of this Section 5 shall in no event relieve Pledgor of any of its obligations hereunder or under the other Loan Documents with respect to any of the Pledged Equity or the other Collateral or impose any obligation on the Administrative Agent to proceed in any particular manner with respect to any of the Pledged Equity or the other Collateral, or in any way limit the exercise by the Administrative Agent of any other or further right that it may have on the date of this Agreement or hereafter, whether hereunder, under any Loan Document, by law or otherwise.
7.Remedies Upon Default
a.Remedies Generally.
i.General Rights. If any Event of Default shall have occurred and is continuing, the Administrative Agent shall have all the rights and remedies of a secured party under the UCC or otherwise available at law or in equity and, in addition, the Administrative Agent may without being required to give any notice, (i) liquidate any of the Pledged Equity or the other Collateral for cash for application to the payment of the Secured Obligations, absolutely free of any right or claim of Pledgor of any kind. If Administrative Agent should be required by law to give any notice to Pledgor of the sale of any Pledged Equity or other Collateral, Pledgor agrees that notice mailed postage prepaid to Pledgor in accordance with Section 17 below at least ten (10) days before the sale shall be reasonable. Without limiting the generality of the foregoing, Pledgor agrees that the Administrative Agent shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of any of the Pledged Equity or the other Collateral at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate. At any such sale, the Pledged Equity and the other Collateral, or any portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as Administrative Agent may determine. The Administrative Agent shall be irrevocably authorized at any such sale of the Pledged Equity or other Collateral (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing such Pledged Equity or other Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale, the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Pledged Equity or other Collateral so sold. Each such purchaser at any sale shall hold the property sold absolutely free from any claim or right on the part of Pledgor and Pledgor waives and releases, to the extent permitted by law, any right of equity of redemption of the Pledged Equity and the other Collateral, stay or appraisal which Pledgor now has or at any time in the future may have under any rule of law or statute, now existing or hereafter enacted. Administrative Agent shall not be required to proceed against the Pledged Equity and the other Collateral in any order and Administrative Agent may proceed against any and all of the Pledged Equity and the other Collateral in any order it deems advisable in its sole discretion.
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ii.Application of Proceeds of Sale. The Administrative Agent may apply the proceeds of any collection or sale of the Pledged Equity or the other Collateral, as well as any Collateral consisting of cash, to the Secured Obligations in such order as Administrative Agent shall determine. The Administrative Agent shall have sole discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement.
8.Reimbursement of Administrative Agent
In the event that Pledgor shall breach or fail to timely perform any provisions of this Agreement, Pledgor shall, immediately upon demand by Administrative Agent, pay all of Administrative Agent’s and each Lender’s reasonable and documented out-of-pocket costs and expenses (including court costs and attorneys’ fees) incurred by Administrative Agent and Lenders in the enforcement hereof or the preservation of all of Administrative Agent’s and each Lender’s rights hereunder, together with interest thereon from the date requested by Administrative Agent until the date of payment to Administrative Agent and Lenders. The covenant contained in this Section shall survive the payment and performance of the Secured Obligations.
9.Waivers; Amendment
No failure or delay of the Administrative Agent in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent are cumulative and are not exclusive of any rights or remedies that Administrative Agent would otherwise have. No waiver of any provision of this Agreement or any other agreement or consent to any departure by Pledgor or any Pledged Entity therefrom 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 purpose for which given. No notice to or demand on Pledgor in any case shall entitle Pledgor to any other or further notice or demand in similar or other circumstances. Neither this Agreement nor any provision hereof may be waived, amended, supplemented or otherwise modified, or any departure therefrom consented to, except pursuant to an agreement or agreements in writing entered into between the Administrative Agent and Pledgor to which such waiver, amendment, supplement, modification or consent relates.
10.Security Interest Absolute
All rights of the Administrative Agent hereunder, the Security Interest and all obligations of Pledgor hereunder shall be absolute and unconditional irrespective of (i) any lack of validity or enforceability of any of the Loan Documents, any agreement with respect to any of the Secured Obligations, or any other agreement or instrument relating to any of the foregoing, in each case, other than this Agreement, (ii) 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 waiver, amendment, supplement or other modification of, or any consent to any departure from any of the Loan Documents or any other agreement or instrument relating to any of the foregoing, (iii) any exchange, release or non-perfection of any lien on any other collateral, or any release or waiver, amendment, supplement or other modification of, or consent under, or departure from, any guaranty, securing or guaranteeing all or any of the Secured Obligations, or (iv) any other circumstance that might otherwise constitute a defense available to, or a discharge of, Pledgor in respect of the Secured Obligations or in respect of this Agreement, any other Loan Document, or any other agreement or instrument between Pledgor and Administrative Agent and/or any Lender other than payment in full of the Secured Obligations (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).
11.Waivers; Obligations Not Waived
Pledgor waives presentment, demand of payment and protest in connection with any of the Obligations or the Note and also waives notice of acceptance of its pledge hereunder and notice of protest for nonpayment. To the fullest extent permitted by applicable law, the obligations of Pledgor hereunder shall not be affected by (i) the failure of the Administrative Agent to assert any claim or demand or to enforce or exercise any right or remedy against Borrowers or any guarantor under the provisions of the Loan Documents, or any other document or instrument, or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from, any of the terms or provisions of any other document or instrument, any guarantee or any other agreement (other than this Agreement) or (iii) the failure to perfect any security interest in, or the release of, any of the security held by or on behalf of the Administrative Agent or any Lender.
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12.Defenses Waived
Pledgor waives any defense based on or arising out of any defense of Borrowers or any guarantor of the Secured Obligations or the unenforceability of the Secured Obligations or any part thereof from any cause, or the cessation from any cause of the liability of Borrowers or any guarantor of the Secured Obligations, other than the payment in full in cash paid in full (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted) and full performance of the Secured Obligations. The Administrative Agent may, at its election, following the occurrence and during the continuance of an Event of Default, foreclose on any security held by it by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with any other person or exercise any other right or remedy available to it against any other person, without affecting or impairing in any way the liability of Pledgor hereunder except to the extent the Secured Obligations have been paid in full (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted). Pursuant to applicable law, Pledgor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of Pledgor against each Pledged Entity, or any security.
13.Agreement To Pay; Subordination
Upon payment by Pledgor of any sums to the Administrative Agent, all rights of Pledgor against any other person or entity arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full of the Secured Obligations paid in full (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted). If, notwithstanding the foregoing, any amount shall be paid to Pledgor on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such debt of any other person or entity, such amount shall be held in trust for the benefit of the Administrative Agent and shall forthwith be paid to Administrative Agent to be credited against the payment of the Secured Obligations, whether matured or unmatured.
14.Information
Pledgor assumes all responsibility for being and keeping itself informed of all circumstances bearing upon the risk of nonpayment of the Secured Obligations and the nature, scope and extent of the risks that Pledgor assumes and incurs hereunder, and agrees that the Administrative Agent will not have any duty to advise Pledgor of information known to it regarding such circumstances or risks.
15.Reasonable Care
Beyond the exercise of reasonable care to assure the safe custody of the Pledged Equity while held hereunder, under no circumstances shall Administrative Agent be deemed to assume any responsibility for or obligation or duty with respect to any part or all of the Pledged Equity or the other Collateral of any nature or kind or any matter or proceedings arising out of or relating thereto. Administrative Agent shall not have any duty or liability to collect any sums due in respect thereof or to protect or preserve its or Pledgor’s rights pertaining thereto and shall be relieved of all responsibility for any of the Pledged Equity or the other Collateral upon surrendering the same to Pledgor.
16.Marshalling
Administrative Agent shall not be required to marshal any present or future collateral security (including, but not limited to the Pledged Equity) for, or other assurances of payment of, the Secured Obligations, or any of them, or to resort to such collateral security or other assurances of payment in any particular order. All of Administrative Agent’s rights and remedies hereunder and in respect of such security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the extent that Pledgor lawfully may, Pledgor hereby agrees that it will not invoke any law relating to the marshalling of collateral that might cause delay in or impede the enforcement of Administrative Agent’s rights under this Agreement or under any other instrument evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and to the extent that it lawfully may, Pledgor hereby irrevocably waives the benefits of all such laws.
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17.Termination; Effectiveness
(a)Pledgor’s obligations hereunder shall terminate when all the Secured Obligations have been paid in full in cash and all other obligations performed thereunder (other than with respect to contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).
(b)This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any of the Secured Obligations as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable and documented out-of-pocket costs and expenses (including, without limitation, attorneys’ fees and disbursements) actually incurred by the Administrative Agent or any holder of the Secured Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations.
18.Notices
All communications and notices hereunder shall be in writing and given as provided in the Loan Agreement, in each case, at the applicable notice address specified (a) in the Loan Agreement, with respect to Administrative Agent, and (b) on Schedule A hereto (or at such other address as Pledgor may thereafter specify for such purpose in accordance with the terms of the Loan Agreement), with respect to Pledgor.
19.Binding Effect; Several Agreement; Assignments
Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of Pledgor that are contained in this Agreement shall bind and inure to the benefit of each party hereto and its successors and assigns. Notwithstanding the foregoing, no Pledgor shall have any right to assign its rights or obligations hereunder without the consent of Administrative Agent, and any such assignment in violation of this Section 18 shall be null and void.
20.Survival of Agreement; Severability
All covenants, agreements, representations and warranties made by Pledgor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Administrative Agent and shall survive the execution and delivery of hereof, regardless of any investigation made by the Administrative Agent or on its behalf, and shall continue in full force and effect until this Agreement shall terminate. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
21.Counterparts
This Agreement may be executed and delivered in any number of counterparts each of which shall constitute an original, but all of which taken together shall constitute but one and the same agreement. Delivery of an executed signature page to this Agreement by facsimile or e-mail transmission shall be effective as delivery of a manually signed counterpart of this Agreement.
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22.Headings
Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
23.Governing Law
This Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any of the other Loan Documents and the transactions contemplated hereby shall be governed by the laws of the State of New York.
24.Submission to Jurisdiction; Venue
(a)Pledgor hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of or relating to this Agreement may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York and (ii) submits to the exclusive jurisdiction of any such court in any such action, suit or proceeding. Final judgment against Pledgor in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment. Nothing in this Agreement or any other Loan Document shall affect the right of Administrative Agent to bring any action or proceeding relating to this Agreement or any other Loan Document against Pledgor, Pledged Entities or their respective properties in the courts of any jurisdiction.
(b)Pledgor irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in Section 23(a) and the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
25.Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge and Security Agreement as of the day and year first above written.
PLEDGOR:
DOLPHIN ENTERTAINMENT, INC.
By:/s/ Bill O’Dowd
Name:Bill O’Dowd
Title:CEO
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Signature
Page to Pledge and Security Agreement
ADMINISTRATIVE AGENT:
FVP SERVICING, LLC,
as Administrative Agent
By:/s/ Keith Lee
Name:Keith Lee
Title:Manager
Signature page to Pledge and Security Agreement
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SCHEDULE A
List of Pledged Equity Interests and Pledgor Information
I.Pledgor Information
| Pledgor | Pledgor Notice Address |
| Dolphin Entertainment, Inc. | 150 Alhambra Circle, Suite 1200 Coral Gables, FL 33134 Attention: Bill O’Dowd, CEO |
II.Pledged Equity Interests
| Pledgor | Pledged Entity | Description of Equity Interests Owned | Percentage of Issued Equity Interests Owned | Certificated Security (Yes/No) and Certificate No. (if applicable) |
| Dolphin Entertainment, Inc. | Shore Fire Media, Ltd. | Shareholder Interests | 100% | No |
| Dolphin Entertainment, Inc. | The Door Marketing Group, LLC | Membership Interests | 100% | No |
SA-1
EXHIBIT A
Agreement and Acknowledgment
The undersigned (each, a “Pledged Entity” and, together, “Pledged Entities”) hereby consents to the pledge of Equity Interests in each Pledged Entity as described in the Pledge and Security Agreement dated as of May 7, 2026 (as amended, modified, supplemented, extended, restated or renewed from time to time, the “Pledge Agreement”) by DOLPHIN ENTERTAINMENT, INC., as Pledgor, and FVP SERVICING, LLC, as Administrative Agent. Each Pledged Entity agrees that upon the receipt of a written notice from Administrative Agent that an Event of Default has occurred and is continuing under the Loan Agreement, such Pledged Entity shall pay all Distributions on the Pledged Equity issued by it directly to Administrative Agent. All capitalized terms used herein not otherwise defined herein shall have the meanings ascribed to such terms in the Pledge Agreement.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby represents, warrants, covenants and agrees for the benefit of Administrative Agent as follows:
1. Representations and Warranties. The undersigned represents and warrants that (a) the execution and delivery of the Pledge Agreement does not violate the undersigned’s Organizational Agreements or any other agreement to which such undersigned is a party or by which any of the property of the undersigned is bound, (b) the undersigned has not entered into a control agreement perfecting a security interest in any of the Pledged Equity Interests favor of any other party, other than pursuant to a Permitted Lien, (c) the Collateral is not subject to any security interest or lien in favor of any person or entity (or otherwise) other than Administrative Agent and has not been pledged, transferred or assigned to, and is not otherwise in the control of, any person or entity (or otherwise) other than Administrative Agent, in each case, other than pursuant to a Permitted Lien, (d) the undersigned has no present claim, right of offset, or counterclaim against Pledgor under or with respect to the Collateral or otherwise under the Organizational Agreements of the undersigned, (e) Pledgor is not in default to the undersigned or otherwise under or in respect of any of its respective obligations under the undersigned’s Organizational Agreements, and (f) all of the representations and warranties of Pledgor made in the Pledge Agreement are true, accurate and complete in all respects and, without limitation of the foregoing, the ownership of each Pledged Entity, as set forth on Schedule A to the Pledge Agreement, is true, accurate and complete in all respects.
2. Covenants and Agreements.
(a) Books and Records. The undersigned (i) shall cause all of its respective books and records to reflect the pledge of the Collateral to Administrative Agent and agrees not to consent to or to permit any transfer thereof or any other action that may be taken by Pledgor that might constitute an Event of Default so long as any of the Secured Obligations remain outstanding, and (ii) agrees that Administrative Agent and/or its representatives may, upon reasonable advance notice and at any reasonable time during normal business hours, inspect the books, records and properties of such undersigned (but in no event more than one time in any calendar year, unless an Event of Default has occurred and is continuing).
(b) UCC Matters. The undersigned confirms, agrees and acknowledges that (i) all Pledged Equity has been validly issued and is fully paid for, (ii) none of the Pledged Equity in the undersigned is, except as otherwise specified in Schedule A to the Pledge Agreement, a Certificated Security, (iii) with respect to the Pledged Equity so designated in Schedule A to the Pledge Agreement as a Certificated Security (A) such Pledged Equity is and shall continue to be evidenced by one (1) certificate issued to the Pledgor specified in Schedule A, as its sole members or shareholders, as the case may be, (B) such certificate represents and embodies all right, title and interest in and to the Pledged Equity, (C) each such original certificate that has been physically delivered to Administrative Agent, was in the physical possession of the Pledgor at all times prior to such delivery to Administrative Agent, and has been duly indorsed in blank within the meaning of the UCC, and (D) such certificate has not been modified or amended and remains in full force and effect, (iv) ownership of all Pledged Equity in the undersigned is registered in the respective books and records of the undersigned in the name of the Pledgor, in such amounts and in such manner as specified in Schedule A to the Pledge Agreement, subject only to the pledge thereof in favor of Administrative Agent as security for the Secured Obligations and Permitted Liens, (v) notwithstanding any provisions in the Organizational Agreements, Pledgor is hereby authorized and permitted to pledge, assign and grant a security interest in the Collateral in favor of Administrative Agent pursuant to the Pledge Agreement, (vi) this Agreement and Acknowledgment is intended to, and shall, provide Administrative Agent with “control” over the Collateral within the meaning of Articles 8 and 9 of the UCC, (vii) the undersigned shall comply with all instructions relating to the Collateral originated by Administrative Agent without further authorization or consent from Pledgor, the intention of such covenant being to comply with Section 8-106(c)(2) of the UCC, and (viii) no Equity Interest in the undersigned other than those held by Pledgor and specified in Schedule A to the Pledge Agreement are valid or will be recognized by the undersigned.
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(c) Organizational Agreements; Additional Issuances. The undersigned shall not (i) suffer or permit its Organizational Agreements to be amended or modified in any manner adverse to Administrative Agent, or (ii) issue any additional Equity Interests (other than to Pledgor), in each case, without the prior written consent of Administrative Agent.
(d) Notices; Defaults. The undersigned shall give Administrative Agent a copy of all notices, reports or communications received or given pursuant to its Organizational Agreements promptly after the same shall have been received or contemporaneously with the giving thereof, as the case may be. The undersigned shall permit Administrative Agent the right to cure any default (beyond any applicable notice and cure periods) by Pledgor under the Organizational Agreements, and no notice of any default by Pledgor with respect to the Organizational Agreements shall be effective unless and until such notice has been received by Administrative Agent; provided, however, in no event shall Administrative Agent be obligated to cure such default. Administrative Agent shall have fifteen (15) days in excess of the amount of time to cure any such default as given to Pledgor under the Organizational Agreements, as measured from the date notice of such default has been received by Administrative Agent.
3. Events of Default; Sales of Collateral. The undersigned hereby agrees that during the continuance of an Event of Default, (a) all Distributions will be made directly to Administrative Agent, (b) Administrative Agent shall have the sole and exclusive right to exercise all voting, consensual and other powers of ownership pertaining to the Collateral in accordance with the Pledge Agreement, (c) Administrative Agent may take any reasonable action which Administrative Agent may deem necessary for the maintenance, preservation and protection of any of the Collateral or Administrative Agent’s security interests therein, including, without limitation, the right to declare any or all Secured Obligations to be immediately due and payable without demand or notice and the right to transfer any of the Pledged Equity or other Collateral into Administrative Agent’s name or the name of any designee or nominee of Administrative Agent, (d) Administrative Agent may dispose of the Collateral in accordance with Articles 8 and 9 of the UCC and the provisions of the Pledge Agreement, in which case, notwithstanding anything to the contrary in the Organizational Agreements, (i) Administrative Agent, or its designee or assign, at its election, shall automatically be admitted as a shareholder, member or partner, as the case may be, of the undersigned and shall be entitled to receive all benefits and exercise all rights in connection therewith pursuant to the Organizational Agreements of the undersigned, (ii) the undersigned shall recognize Administrative Agent (or its designee or assign), at its election, as the successor in interest to Pledgor, and (iii) notwithstanding any provisions to the contrary in the Organizational Agreements, Administrative Agent shall not be required to pay any fees or other consideration of any type, or execute any documents, or be limited by any requirements or conditions whatsoever (regarding Distributions receivable by Administrative Agent from the undersigned, Administrative Agent’s financial condition or otherwise), other than any such requirements, if any, that are expressly set forth in the Loan Documents.
4. No Liability. Notwithstanding the security interests of Administrative Agent in the Collateral or any of its rights hereunder or under the Pledge Agreement, (a) Administrative Agent shall have no obligation or liability whatsoever for matters in connection with the Pledged Equity arising or occurring, directly or indirectly, prior to Administrative Agent’s (or its designee’s, successor’s or assign’s) becoming a shareholder, member or partner, as the case may be, of the undersigned, and (b) Administrative Agent shall not be obligated to perform any of the obligations or duties of Pledgor under any of the undersigned’s Organizational Agreements, or to take any action to collect or enforce any claim for payment due Pledgor arising thereunder.
5. Transfers. The undersigned acknowledges that the security interest of Administrative Agent in the Collateral and all of Administrative Agent’s rights and remedies under the Pledge Agreement may be freely transferred or assigned by Administrative Agent. In the event of any such transfer or assignment, all of the provisions of this Agreement and Acknowledgment shall inure to the benefit of the transferees, successors, and/or assigns of Administrative Agent. The provisions of this Agreement and Acknowledgment shall likewise be binding upon any and all permitted transferees, successors and assigns of the undersigned.
6. Further Assurances. The undersigned shall, from time to time, promptly execute and deliver such further instruments, documents and agreements, and perform such further acts as may be reasonably necessary or proper to carry out and effect the terms of the Pledge Agreement and this Agreement and Acknowledgment.
7. Reliance. This Agreement and Acknowledgment is being given to induce Administrative Agent to accept the Pledge Agreement and with the understanding that Administrative Agent will rely hereon.
8. Counterparts. This Agreement and Acknowledgment may be executed in counterparts.
9. Miscellaneous. The provisions of Sections 8, 10, 11, 17-19, 21 and 23-25 of the Pledge Agreement are hereby incorporated herein by this reference (with all references to Pledgor therein deemed to mean and refer to the undersigned).
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IN WITNESS WHEREOF, the undersigned has duly executed this Agreement and Acknowledgment as of the day and year first above written.
SHORE
FIRE MEDIA, LTD.
By:________________
Name: Bill O’Dowd
Title: Authorized Signatory
Address for Notices:
Attention: Bill O’Dowd
150 Alhambra Circle, Suite 1200
Coral Gables, FL 33134
THE
DOOR MARKETING GROUP, LLC
By:__________________:
Name: Bill O’Dowd
Title: Authorized Signatory
Address for Notices:
Attention: Bill O’Dowd
150 Alhambra Circle, Suite 1200
Coral Gables, FL 33134
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Exhibit B
Organizational Agreements
[See Attached]
B1