Exhibit 10.4
 
PLEDGE AND SECURITY AGREEMENT
 
PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of July 2, 2010, made
by each of the Grantors referred to below, in favor of HCP-TELA, LLC, a Delaware
limited liability company, in its capacities as collateral agent for the Secured
Parties referred to below (in such capacities, together with its successors and
assigns in such capacities, if any, the "Agent").
 
W I T N E S S E T H:
 
WHEREAS, pursuant to the Securities Purchase Agreement, dated as of June 30,
2010, (as amended, restated, supplemented, replaced, modified or otherwise
changed from time to time, the "Purchase Agreement"), among Telanetix, Inc., a
Delaware corporation (the "Company") has agreed to issue, and each party listed
as a "Buyer" on the Schedule of Buyers (collectively, the "Buyers") attached to
the Purchase Agreement, has agreed to purchase, the Notes referred to in the
Purchase Agreement (as amended, restated, supplemented, replaced, modified or
otherwise changed from time to time, collectively, the "Notes");
 
WHEREAS, each of the Grantors (other than the Company) (each a "Guarantor" and
collectively, the "Guarantors") has executed and delivered a Guaranty, dated as
of dated as of July 2, 2010 (as amended, restated, supplemented, replaced,
modified or otherwise changed from time to time, the "Guaranty"), in favor of
the Secured Parties, to guarantee the Company's obligations under the Purchase
Agreement, the Notes and the Transaction Documents (as defined below);
 
WHEREAS, it is a condition precedent to each of the Buyers purchasing the Notes
pursuant to the Purchase Agreement that the Grantors execute and deliver to this
Agreement providing for the grant of a first priority perfected security
interest all of the property and assets of each Grantor to secure all of the
Company's obligations under the Purchase Agreement, the Notes, and the other
Transaction Documents and the Guarantors' obligations under the Guaranty; and
 
WHEREAS, the Grantors have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of,
the Grantors;
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce each of the Secured Parties to enter into the transactions
under the Purchase Agreement, each Grantor agrees as follows:
 
SECTION 1. Definitions .
 
(a) Reference is hereby made to the Purchase Agreement and the Note for a
statement of the terms thereof.  All capitalized terms used in this Agreement
and the recitals hereto which are defined in the Purchase Agreement and the Note
or in Article 8 or 9 of the Uniform Commercial Code as in effect from time to
time in the State of New York (the "Code") and which are not otherwise defined
herein shall have the same meanings herein as set forth therein; provided that
terms used herein which are defined in the Code as in effect in the State of New
York on the date hereof shall continue to have the same meaning notwithstanding
any replacement or amendment of such statute except as the Agent may otherwise
determine.
 
 
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(b) The following terms shall have the respective meanings provided for in the
Code:  "Accounts", "Account Debtor", "Cash Proceeds", "Certificate of Title",
"Chattel Paper", "Commercial Tort Claim", "Commodity Account", "Commodity
Contracts", "Deposit Account", "Documents", "Electronic Chattel Paper",
"Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments",
"Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash
Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Record",
"Security Account", "Software", "Supporting Obligations" and "Tangible Chattel
Paper".
 
(c) As used in this Agreement, the following terms shall have the respective
meanings indicated below, such meanings to be applicable equally to both the
singular and plural forms of such terms:
 
"Additional Collateral" has the meaning specified therefor in Section 4(a)(i)
hereof.
 
"Affiliate" means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person.  For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the Equity Interests having ordinary voting power for the
election of members of the Board of Directors of such Person or (b) direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.  Notwithstanding anything herein to the contrary, in no
event shall any Agent or any Holder be considered an "Affiliate" of the Company
or any Guarantor.
 
"Certificated Entities" has the meaning specified therefor in Section 5(o)
hereof.
 
"Copyright Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any Copyright
(including, without limitation, all Copyright Licenses set forth in Schedule II
hereto).
 
"Equity Interest" means (a) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (b) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person.
 
"Existing Issuer" has the meaning specified therefor in the definition of the
term "Pledged Shares".
 
"Governmental Authority" means any nation or government, any federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government.
 
 
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"Holder" means the Buyers and the subsequent holders of the Notes.
 
"Insolvency Proceeding" means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
 
"Intellectual Property" means all U.S. and non-U.S. (a) published and
unpublished works of authorship (including, without limitation, computer
software), copyrights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof,
including, without limitation, all copyright registrations and applications
listed in Schedule II hereto (collectively, "Copyrights"); (b) inventions,
discoveries, ideas and all patents, registrations, and applications therefor,
including, without limitation, divisions, continuations, continuations-in-part
and renewal applications, and all renewals, extensions and reissues, including,
without limitation, all patents and patent applications listed in Schedule II
hereto (collectively, "Patents"); (c) trademarks, service marks, brand names,
certification marks, collective marks, d/b/a's, Internet domain names, logos,
symbols, trade dress, assumed names, fictitious names, trade names, and other
indicia of origin, all applications and registrations for all of the foregoing,
and all goodwill associated therewith and symbolized thereby, and all
extensions, modifications and renewals of same, including, without limitation,
all trademark registrations and applications listed in Schedule II hereto
(collectively, "Trademarks"); (d) confidential and proprietary information,
trade secrets and know-how, including, without limitation, processes,
schematics, databases, formulae, drawings, prototypes, models, designs and
customer lists (collectively, "Trade Secrets"); and (e) all other intellectual
property or proprietary rights and claims or causes of action arising out of or
related to any infringement, misappropriation or other violation of any of the
foregoing, including, without limitation, rights to recover for past, present
and future violations thereof (collectively, "Other Proprietary Rights").
 
"Licenses" means the Copyright Licenses, the Patent Licenses and the Trademark
Licenses.
 
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or otherwise),
security interest, charge or other encumbrance or security or preferential
arrangement of any nature, including, without limitation, any conditional sale
or title retention arrangement, any lease required under GAAP to be capitalized
on the balance sheet of such Person and any assignment, deposit arrangement or
financing lease intended as, or having the effect of, security.
 
"Patent Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set forth in Schedule
II hereto).
 
"Pledged Debt" means the indebtedness described in Schedule VII hereto and all
indebtedness from time to time owned or acquired by a Grantor, the promissory
notes and other Instruments evidencing any or all of such indebtedness, and all
interest, cash, Instruments, Investment Property, financial assets, securities,
Equity Interests, stock options and commodity contracts, notes, debentures,
bonds, promissory notes or other evidences of indebtedness and all other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness.
 
 
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"Pledged Interests" means, collectively, (a) the Pledged Debt, (b) the Pledged
Shares and (c) all security entitlements in any and all of the foregoing.
 
"Pledged Issuer" has the meaning specified therefor in the definition of the
term "Pledged Shares".
 
"Pledged Shares" means (a) the shares of Equity Interests described in Schedule
VIII hereto, whether or not evidenced or represented by any stock certificate,
certificated security or other Instrument, issued by the Persons described in
such Schedule VIII (the "Existing Issuers"), (b) the shares of Equity Interests
at any time and from time to time acquired by a Grantor of any and all Persons
now or hereafter existing (such Persons, together with the Existing Issuers,
being hereinafter referred to collectively as the "Pledged Issuers" and each
individually as a "Pledged Issuer"), whether or not evidenced or represented by
any stock certificate, certificated security or other Instrument, and (c) the
certificates representing such shares of Equity Interests, all options and other
rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, Instruments, Investment Property, financial assets,
securities, Equity Interests, stock options and commodity contracts, notes,
debentures, bonds, promissory notes or other evidences of indebtedness and all
other property (including, without limitation, any stock dividend and any
distribution in connection with a stock split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Equity Interests.
 
"Secured Parties" means, each of the Agent and the Buyers and all of the
Holders.
 
"Secured Obligations" has the meaning specified therefor in Section 3 hereof.
 
"Securities Act" means the Securities Act of 1933, as amended, or any similar
Federal statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect from time to time.
 
"Titled Collateral" means all Collateral for which the title to such Collateral
is governed by a Certificate of Title or certificate of ownership, including,
without limitation, all motor vehicles (including, without limitation, all
trucks, trailers, tractors, service vehicles, automobiles and other mobile
equipment) for which the title to such motor vehicles is governed by a
Certificate of Title or certificate of ownership.
 
"Trademark Licenses" means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements (including, without limitation, all Trademark Licenses described in
Schedule II hereto).
 
 
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SECTION 2. Grant of Security Interest .  As collateral security for the payment,
performance and observance of all of the Secured Obligations, each Grantor
hereby pledges and assigns to the Agent (and its agents and designees), and
grants to the Agent (and its agents and designees), for the benefit of the
Secured Parties, a continuing security interest in, all personal property and
Fixtures of such Grantor, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, of every kind and description,
tangible or intangible, including, without limitation, the following (all being
collectively referred to herein as the "Collateral"):
 
(a) all Accounts;
 
(b) all Chattel Paper (whether tangible or electronic);
 
(c) the Commercial Tort Claims specified on Schedule VI;
 
(d) all Deposit Accounts, all cash, and all other property from time to time
deposited therein or otherwise credited thereto and the monies and property in
the possession or under the control of the Agent or any Holder or any affiliate,
representative, agent or correspondent of the Agent or any Holder;
 
(e) all Documents;
 
(f) all General Intangibles (including, without limitation, all Payment
Intangibles, Intellectual Property and Licenses);
 
(g) all Goods, including, without limitation, all Equipment, Fixtures and
Inventory;
 
(h) all Instruments (including, without limitation, Promissory Notes);
 
(i) all Investment Property;
 
(j) all Letter-of-Credit Rights;
 
(k) all Pledged Interests;
 
(l) all Supporting Obligations;
 
(m) all other tangible and intangible personal property of such Grantor (whether
or not subject to the Code), including, without limitation, all bank and other
accounts and all cash and all investments therein, all proceeds, products,
offspring, accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of such Grantor described in the
preceding clauses of this Section 2 hereof (including, without limitation, any
proceeds of insurance thereon and all causes of action, claims and warranties
now or hereafter held by such Grantor in respect of any of the items listed
above), and all books, correspondence, files and other Records, including,
without limitation, all tapes, disks, cards, Software, data and computer
programs in the possession or under the control of such Grantor or any other
Person from time to time acting for such Grantor that at any time evidence or
contain information relating to any of the property described in the preceding
clauses of this Section 2 hereof or are otherwise necessary or helpful in the
collection or realization thereof; and
 
 
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(n) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products
of any and all of the foregoing Collateral;
 
in each case howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
 
Notwithstanding anything herein to the contrary, the term "Collateral" shall not
include, and no Grantor is pledging, nor granting a security interest hereunder
in, (i) any of such Grantor's right, title or interest in any license, contract
or agreement to which such Grantor is a party as of the date hereof or any of
its right, title or interest thereunder to the extent, but only to the extent,
that such a grant would under the express terms of such license, contract or
agreement on the date hereof result in a breach of the terms of, or constitute a
default under, such license, contract or agreement (other than to the extent
that any such term (it being understood that any material Collateral as to which
clause (i) is applicable shall be set forth on Schedule II(A)) (A) has been
waived or (B) would be rendered ineffective pursuant to Sections 9-406, 9-408,
9-409 of the Code or other applicable provisions of the Uniform Commercial Code
of any relevant jurisdiction or any other applicable law (including the
Bankruptcy Code) or principles of equity); provided, that (x) immediately upon
the ineffectiveness, lapse, termination or waiver of any such provision, the
Collateral shall include, and such Grantor shall be deemed to have granted a
security interest in, all such right, title and interest as if such provision
had never been in effect, (y) the foregoing exclusion shall in no way be
construed so as to limit, impair or otherwise affect the Agent's unconditional
continuing security interest in and liens upon any rights or interests of a
Grantor in or to the proceeds of, or any monies due or to become due under, any
such license, contract or agreement, and (z) Grantor shall use reasonable
commercial efforts not to enter into any license agreement that would contain a
prohibition on granting a security interest, provided that Grantor must get
consent (which shall not be unreasonably withheld) from Agent to enter into any
material license agreement to the extent there is a prohibition on granting a
security interest, or (ii) any intent-to-use United States trademark
applications for which an amendment to allege use or statement of use has not
been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively, or if
filed, has not been deemed in conformance with 15 U.S.C. § 1051(a) or examined
and accepted, respectively, by the United States Patent and Trademark Office,
provided that, upon such filing and acceptance, such intent-to-use applications
shall be included in the definition of Collateral.
 
SECTION 3. Security for Secured Obligations .  The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred (the
"Secured Obligations"):
 
(a) the prompt payment by each Grantor, as and when due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), of
all amounts from time to time owing by it in respect of the Note and/or the
other Transaction Documents, including, without limitation, (i) in the case of a
Guarantor, the payment by such Grantor, a and when due and payable of all
"Guaranteed Obligations" under (and as defined in) the Guaranty , including,
without limitation, in both cases, (A) the principal of and interest on the Note
(including without limitation, all interest accrues after the after the
commencement of any Insolvency Proceeding of any Guarantor, whether or not the
payment of such interest is unenforceable or is not allowable due to the
existence of such Insolvency Proceeding), and (B) all fees, commissions, expense
reimbursements, indemnifications and all other amounts due or to become due
under any of the Transaction Documents; and
 
 
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(b) the due performance and observance by each Grantor of all of its other
obligations from time to time existing in respect of any of the Transaction
Documents, including without limitation, with respect to any conversion or
redemption rights of the Holders.
 
SECTION 4. Delivery of the Pledged Interests.
 
(a) (i)           All promissory notes currently evidencing the Pledged Debt and
all certificates currently representing the Pledged Shares shall be delivered to
the Agent on or prior to the execution and delivery of this Agreement.  All
other promissory notes, certificates and Instruments constituting Pledged
Interests from time to time required to be pledged to the Agent pursuant to the
terms of this Agreement (the "Additional Collateral") shall be delivered to the
Agent promptly upon, but in any event within five (5) days of, receipt thereof
by or on behalf of any of the Grantors.  All such promissory notes, certificates
and Instruments shall be held by or on behalf of the Agent pursuant hereto and
shall be delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment or undated
stock powers executed in blank, all in form and substance reasonably
satisfactory to the Agent.  If any Pledged Interests consists of uncertificated
securities, unless the immediately following sentence is applicable thereto,
such Grantor shall cause the Agent (or its designated custodian or nominee) to
become the registered holder thereof, or cause each issuer of such securities to
agree that it will comply with instructions originated by the Agent with respect
to such securities without further consent by such Grantor.  If any Pledged
Interests consists of security entitlements, such Grantor shall transfer such
security entitlements to the Agent (or its custodian, nominee or other
designee), or cause the applicable securities intermediary to agree that it will
comply with entitlement orders by the Agent without further consent by such
Grantor.
 
(ii) Within ten (10) days of the receipt by a Grantor of any Additional
Collateral, a Pledge Amendment, duly executed by such Grantor, in substantially
the form of Exhibit A hereto (a "Pledge Amendment"), shall be delivered to the
Agent, in respect of the Additional Collateral that must be pledged pursuant to
this Agreement and the other Transaction Documents.  The Pledge Amendment shall
from and after delivery thereof constitute part of Schedules VII and VIII
hereto.  Each Grantor hereby authorizes the Agent to attach each Pledge
Amendment to this Agreement and agrees that all promissory notes, certificates
or Instruments listed on any Pledge Amendment delivered to the Agent shall for
all purposes hereunder constitute Pledged Interests and such Grantor shall be
deemed upon delivery thereof to have made the representations and warranties set
forth in Section 5 hereof with respect to such Additional Collateral.
 
(b) If any Grantor shall receive, by virtue of such Grantor's being or having
been an owner of any Pledged Interests, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off), promissory note or other Instrument, (ii)
option or right, whether as an addition to, substitution for, or in exchange
for, any Pledged Interests, or otherwise, (iii) dividends payable in cash
(except such dividends permitted to be retained by any such Grantor pursuant to
Section 7 hereof) or in securities or other property or (iv) dividends,
distributions, cash, Instruments, Investment Property and other property in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, such Grantor
shall receive such stock certificate, promissory note, Instrument, option,
right, payment or distribution in trust for the benefit of the Agent, shall
segregate it from such Grantor's other property and shall deliver it forthwith
to the Agent, in the exact form received, with any necessary indorsement and/or
appropriate stock powers duly executed in blank, to be held by the Agent, as
Pledged Interests and as further collateral security for the Secured
Obligations.
 
 
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SECTION 5. Representations and Warranties .  Each Grantor jointly and severally
represents and warrants as follows:
 
(a) Schedule I hereto sets forth (i) the exact legal name of each Grantor, (ii)
the state or jurisdiction of organization of each Grantor, (iii) the type of
organization of each Grantor and (iv) the organizational identification number
of each Grantor or states that no such organizational identification number
exists.
 
(b) This Agreement is, and each other Transaction Document to which any Grantor
is or will be a party, when executed and delivered, will be, a legal, valid and
binding obligation of such Grantor, enforceable against such Grantor in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws or effecting
generally the enforcement of creditor's rights or remedies or other equitable
principals.
 
(c) Except as Previously Disclosed, there is no pending or, to the best
knowledge of any Grantor, threatened action, suit, proceeding or claim before
any court or other Governmental Authority or any arbitrator, or any order,
judgment or award by any court or other Governmental Authority or any
arbitrator, that may adversely affect the grant by any Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Agent of any of its rights or remedies
hereunder.
 
(d) All Equipment, Fixtures, Inventory and other Goods now existing are, and all
Equipment, Fixtures, Inventory and other Goods hereafter existing will be,
located at the addresses specified therefor in Schedule III hereto (as amended,
supplemented or otherwise modified from time to time in accordance with Section
6(b)).  Each Grantor's chief place of business and chief executive office, the
place where such Grantor keeps its Records concerning Accounts and all originals
of all Chattel Paper are located at the addresses specified therefor in Schedule
III hereto (as amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof).  Except as provided on Schedule IV(a), none
of the Accounts is evidenced by Promissory Notes or other Instruments.  Set
forth in Schedule IV(b) hereto is a complete and accurate list, as of the date
of this Agreement, of each Deposit Account, Securities Account and Commodities
Account of each Grantor, together with the name and address of each institution
at which each such Account is maintained, the account number for each such
Account and a description of the purpose of each such Account.  Set forth in
Schedule II hereto is (i) a complete and correct list of each trade name used by
each Grantor and (ii) the name of, and each trade name used by, each Person from
which such Grantor has acquired any substantial part of the Collateral within
five years of the date hereof.
 
 
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(e) Schedule II hereto sets forth a true and complete list of all material
Licenses, owned or used by each Grantor as the date hereof.  Each Grantor has
delivered to the Agent complete and correct copies of each such License,
including all schedules and exhibits thereto.  Each such License sets forth the
entire agreement and understanding of the parties thereto relating to the
subject matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of any Grantor or any of its Affiliates in respect thereof.  Each License
now existing is, and each other License will be, the legal, valid and binding
obligation of the parties thereto, enforceable against such parties in
accordance with its terms.  Except as Previously Disclosed, to the knowledge of
Grantors, no material default under any License by any such party has occurred,
nor does any defense, offset, deduction or counterclaim exist thereunder in
favor of any such party.  No party to any License has given any Grantor notice
of its intention to cancel, terminate or fail to renew any License.
 
(f) (i)           The Grantors own and control, or otherwise possess adequate
rights to use, all Intellectual Property necessary to conduct their business in
substantially the same manner as conducted as of the date hereof.  Schedule II
hereto sets forth a true and complete list of all issued, registered, renewed,
applied-for or otherwise material Intellectual Property owned or used by each
Grantor as of the date hereof.  All such Intellectual Property is valid,
subsisting and enforceable, has not been abandoned in whole or in part and is
not subject to any outstanding order, judgment or decree restricting its use or
adversely affecting the Grantor's rights thereto.  Except as set forth in
Schedule II hereto, no such Intellectual Property is the subject of any
licensing or franchising agreement.
 
(ii) Except as Previously Disclosed, each Grantor is not violating and has not
violated any Intellectual Property rights.  There are no suits, actions,
reissues, reexaminations, public protests, interferences, arbitrations,
mediations, oppositions, cancellations, Internet domain name dispute resolutions
or other proceedings (collectively, "Suits") pending, decided, or to Grantor's
knowledge threatened or asserted concerning any claim or position that a Grantor
or any of its indemnitees have violated any Intellectual Property rights.  There
are no Suits or claims pending, decided, or to the Grantor's knowledge
threatened or asserted concerning the Intellectual Property owned or controlled
by a Grantor, and, to the Grantor's knowledge, no valid basis for any such Suits
or claims exists.  To the Grantor's knowledge, there are no Suits or claims
pending, decided, threatened or asserted concerning the Licenses or the right of
the Grantor to use the Licenses, and no valid basis for any such Suits or claims
exists.
 
(g) (i) none of the Other Proprietary Rights or Trade Secrets of any Grantor
have been used, divulged, disclosed or appropriated to the detriment of such
Grantor for the benefit of any other Person other than such Grantor to the
extent such use, divulgence, disclosure, or misappropriation would result in
more than a de minimis effect;
 
 
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(ii) no employee, independent contractor or agent of any Grantor has
misappropriated any Other Proprietary Rights or Trade Secrets of any other
Person in the course of the performance of his or her duties as an employee,
independent contractor or agent of such Grantor to the extent such
misappropriation would result in more than a de minimis effect; and
 
(iii) no employee, independent contractor or agent of any Grantor is in default
or breach of any term of any employment agreement, non-disclosure agreement,
assignment of inventions agreement or similar agreement, or contract relating an
any way to the protection, ownership, development, use or transfer of such
Grantor's Intellectual Property Collateral to the extent such default or breach
would result in more than a de minimis effect.
 
(h) The Existing Issuers set forth in Schedule VIII identified as a Subsidiary
of a Grantor are each such Grantor's only Subsidiaries existing on the date
hereof.  The Pledged Shares have been duly authorized and validly issued and are
fully paid and nonassessable and the holders thereof are not entitled to any
preemptive, first refusal or other similar rights.  Except as noted in Schedule
VIII hereto, the Pledged Shares constitute 100% of the issued shares of Equity
Interests of the Pledged Issuers as of the date hereof.  All other shares of
Equity Interests constituting Pledged Interests will be duly authorized and
validly issued, fully paid and nonassessable.
 
(i) The promissory notes currently evidencing the Pledged Debt have been, and
all other promissory notes from time to time evidencing Pledged Debt, when
executed and delivered, will have been, duly authorized, executed and delivered
by the respective makers thereof, and all such promissory notes are or will be,
as the case may be, legal, valid and binding obligations of such makers,
enforceable against such makers in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws.
 
(j) The Grantors are and will be at all times the sole and exclusive owners of,
or otherwise have and will have adequate rights in, the Collateral free and
clear of any Lien except for the Permitted Liens.  No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording or filing office except such as may have
been filed to perfect or protect any Permitted Lien.
 
(k) The exercise by the Agent of any of its rights and remedies hereunder will
not contravene any law or any contractual restriction binding on or otherwise
affecting any Grantor or any of its properties and will not result in, or
require the creation of, any Lien upon or with respect to any of its properties;
except for the contractual restrictions listed on Schedule V(K) hereto.
 
(l) No authorization or approval or other action by, and no notice to or filing
with, any Governmental Authority or any other Person, is required for (i) the
due execution, delivery and performance by any Grantor of this Agreement,
(ii) the grant by any Grantor of the security interest purported to be created
hereby in the Collateral or (iii) the exercise by the Agent of any of its rights
and remedies hereunder, except, in the case of this clause (iii), as may be
required in connection with any sale of any Pledged Interests by laws affecting
the offering and sale of securities generally.  No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority or
any other Person, is required for the perfection of the security interest
purported to be created hereby in the Collateral, except (A) with respect to the
perfection of Collateral which may be perfected by the filing of a financing
statement, for the filing under the Uniform Commercial Code as in effect in the
applicable jurisdiction of the financing statements described in Schedule V
hereto, all of which financing statements have been duly filed and are in full
force and effect, (B) with respect to the perfection of the security interest
created hereby in the United States Intellectual Property and Licenses, for the
recording of the appropriate Assignment for Security, substantially in the form
of Exhibit B hereto in the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, (C) with respect to the
perfection of the security interest created hereby in foreign Intellectual
Property and Licenses, for registrations and filings in jurisdictions located
outside of the United States and covering rights in such jurisdictions relating
to such foreign Intellectual Property and Licenses, (D) with respect to the
perfection of the security interest created hereby in Titled Collateral, for the
submission of an appropriate application requesting that the Lien of the Agent
be noted on the Certificate of Title or certificate of ownership, completed and
authenticated by the applicable Grantor, together with the Certificate of Title
or certificate of ownership, with respect to such Titled Collateral, to the
appropriate Governmental Authority, (E) with respect to any action that may be
necessary to obtain control of Collateral constituting Deposit Accounts,
Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the
taking of such actions, and (F) the Agent's having possession of all Documents,
Chattel Paper, Instruments and cash constituting Collateral (subclauses (A),
(B), (C), (D), (E) and (F), each a "Perfection Requirement" and collectively,
the "Perfection Requirements").
 
 
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(m) This Agreement creates a legal, valid and enforceable security interest in
favor of the Agent, for the benefit of the Secured Parties, in the Collateral,
as security for the Secured Obligations.  The Perfection Requirements result in
the perfection of such security interests.  Such security interests are, or in
the case of Collateral in which any Grantor obtains rights after the date
hereof, will be, perfected, first priority security interests, subject in
priority only to the Permitted Liens that, pursuant to the definition of the
term "Permitted Liens", are not prohibited from being prior to the Liens in
favor of the Agent, for the benefit of the Secured Parties, and the recording of
such instruments of assignment described above.  Such Perfection Requirements
and all other action necessary or desirable to perfect and protect such security
interest have been duly made or taken, except for (i) the Agent's having
possession of all Instruments, Documents, Chattel Paper and cash constituting
Collateral after the date hereof, (ii) the Agent's having control of all Deposit
Accounts, Electronic Chattel Paper, Investment Property or Letter-of-Credit
Rights constituting Collateral after the date hereof, and (iii) the other
filings and recordations and actions described in Section 5(l) hereof.
 
(n) As of the date hereof, no Grantor holds any Commercial Tort Claims or is
aware of any such pending claims, except for such claims described in Schedule
VI.
 
(o) (i) With respect to each Grantor and its Subsidiaries that is a partnership
or a limited liability company, each such Person has irrevocably opted into (and
has caused each of its Subsidiaries that is a partnership or a limited liability
company, and a Pledged Issuer to opt into) Article 8 of the Uniform Commercial
Code (collectively, the "Certificated Entities").  Such interests are securities
for purposes of Article 8 of any relevant Uniform Commercial Code.  (ii) With
respect to each Grantor and its Subsidiaries that is a partnership or a limited
liability and is not a Certificated Entity, the partnership interests or
membership interests of each such Person is not (A) dealt in or traded on
securities exchanges or in securities markets, (B) securities for purposes of
Article 8 of any relevant Uniform Commercial Code, (C) investment company
securities within the meaning of Section 8-103 of any relevant Uniform
Commercial Code and (D) evidenced by a certificate.  Such partnership interests
or membership interests constitute General Intangibles.
 
 
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(p) Except as Previously Disclosed, all federal, state and local tax returns and
other reports required by applicable law to be filed by any Grantor have been
filed, or extensions have been obtained, and all taxes, assessments and other
governmental charges imposed upon any Grantor or any property of any Grantor
(including, without limitation, all federal income and social security taxes on
employees' wages) and which have become due and payable on or prior to the date
hereof have been paid, except to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or Lien resulting
from the non-payment thereof and with respect to which adequate reserves have
been set aside for the payment thereof in accordance with generally accepted
accounting principles consistently applied ("GAAP").
 
SECTION 6. Covenants as to the Collateral .  So long as any of the Secured
Obligations (whether or not due) shall remain unpaid, unless the Agent shall
otherwise consent in writing:
 
(a) Further Assurances.  Each Grantor will at its expense, at any time and from
time to time, promptly execute and deliver all further instruments and documents
and take all further action that may be necessary or desirable or that the Agent
may request in order (i) to perfect and protect, or maintain the perfection of,
the security interest and Lien purported to be created hereby; (ii) to enable
the Agent to exercise and enforce its rights and remedies hereunder in respect
of the Collateral; or (iii) otherwise to effect the purposes of this Agreement,
including, without limitation:  (A) marking conspicuously all Chattel Paper,
Instruments and Licenses and, at the request of the Agent, all of its Records
pertaining to the Collateral with a legend, in form and substance reasonably
satisfactory to the Agent, indicating that such Chattel Paper, Instrument,
License or Collateral is subject to the security interest created hereby, (B) if
any Account shall be evidenced by a Promissory Note or other Instrument or
Chattel Paper, delivering and pledging to the Agent such Promissory Note, other
Instrument or Chattel Paper, duly endorsed and accompanied by executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Agent, (C) executing and filing (to the extent, if any, that
such Grantor's signature is required thereon) or authenticating the filing of,
such financing or continuation statements, or amendments thereto, (D) with
respect to Intellectual Property hereafter existing and not covered by an
appropriate security interest grant, the executing and recording in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, appropriate instruments granting a security interest, as may be
necessary or desirable or that the Agent may request in order to perfect and
preserve the security interest purported to be created hereby, (E) delivering to
the Agent irrevocable proxies in respect of the Pledged Interests,
(F) furnishing to the Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Agent may reasonably request, all in reasonable
detail, (G) if any Collateral shall be in the possession of a third party,
notifying such Person of the Agent's security interest created hereby and
obtaining a written agreement, in form and substance reasonably satisfactory to
the Agent, providing access to such Collateral in order to remove such
Collateral from such premises during an Event of Default and acknowledging that
such Person holds possession of the Collateral for the benefit of the Agent,
(H) if at any time after the date hereof, any Grantor acquires or holds any
Commercial Tort Claim, promptly within 10 Business Days notifying the Agent in a
writing signed by such Grantor setting forth a brief description of such
Commercial Tort Claim and granting to the Agent a security interest therein and
in the proceeds thereof, which writing shall incorporate the provisions hereof
and shall be in form and substance reasonably satisfactory to the Agent, and
(I) upon the acquisition after the date hereof by any Grantor of any Titled
Collateral (other than Equipment that is subject to a purchase money security
interest permitted by the Note), promptly notifying the Agent of such
acquisition, setting forth a description of the Titled Collateral acquired and a
good faith estimate of the current value of such Titled Collateral, and if so
requested by the Agent, promptly causing the Agent to be listed as the
lienholder on such Certificate of Title or certificate of ownership and
delivering evidence of the same to the Agent.  No Grantor shall take or fail to
take any action which would in any manner impair the validity or enforceability
of the Agent's security interest in and Lien on any Collateral.
 
 
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(b) Location of Equipment and Inventory.  Each Grantor will keep the Equipment
and Inventory (other than Equipment and Inventory sold in the ordinary course of
business in accordance with Section 6(h) hereof) at the locations specified in
Schedule III hereto or, upon not less than thirty (30) days' prior written
notice to the Agent accompanied by a new Schedule III hereto indicating each new
location of the Equipment and Inventory, at such other locations in the
continental United States as the Grantors may elect, provided that (i) all
action has been taken to grant to the Agent a perfected, first priority security
interest in such Equipment and Inventory (subject in priority only to Permitted
Liens that, pursuant to the definition of the term "Permitted Liens", are not
prohibited from being prior to the Liens in favor of the Agent) for the benefit
of the Secured Parties, and (ii) the Agent's rights in such Equipment and
Inventory, including, without limitation, the existence, perfection and priority
of the security interest created hereby in such Equipment and Inventory, are not
adversely affected thereby.
 
(c) Condition of Equipment.  Each Grantor will maintain or cause the Equipment
which is necessary in the proper conduct of its business to be maintained and
preserved in good condition, repair and working order as when acquired and in
accordance with any manufacturer's manual, ordinary wear and tear excepted, and
will forthwith, or in the case of any loss or damage to any Equipment promptly
after the occurrence thereof, make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or desirable,
consistent with past practice, or which the Agent may request to such end.  Each
Grantor will promptly furnish to the Agent a statement describing in reasonable
detail any material loss or damage to any Equipment.
 
(d) Taxes, Etc.  Each Grantor jointly and severally agrees to pay promptly when
due all property and other taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment and Inventory.
 
 
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(e) Insurance.  Each Grantor will, at its own expense, maintain insurance with
respect to the Collateral in accordance with the terms of the Note.  Each
Grantor will, if so requested by the Agent, deliver to the Agent original or
duplicate insurance policies and, as often as the Agent may reasonably request,
a report of a reputable insurance broker with respect to such insurance.  Each
Grantor will also, at the request of the Agent, execute and deliver instruments
of assignment of such insurance policies and cause the respective insurers to
acknowledge notice of such assignment.
 
(f) Provisions Concerning the Accounts and the Licenses.
 
(i) Each Grantor will, except as otherwise provided in this subsection (f),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts.  In connection with such collections, each Grantor may (and upon
the occurrence and continuation of a default or an Event of Default, at the
Agent's direction, will) take such action as such Grantor (or, if applicable,
the Agent) may deem necessary or advisable to enforce collection or performance
of the Accounts; provided, however, that the Agent shall have the right at any
time, upon the occurrence and during the continuance of an Event of Default, to
notify the Account Debtors or obligors under any Accounts of the assignment of
such Accounts to the Agent and to direct such Account Debtors or obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to the Agent or its designated agent and, upon such notification and at
the expense of such Grantor and to the extent permitted by law, to enforce
collection of any such Accounts and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as such Grantor
might have done.  After receipt by any Grantor of a notice from the Agent that
the Agent has notified, intends to notify, or has enforced or intends to enforce
a Grantor's rights against the Account Debtors or obligors under any Accounts as
referred to in the proviso to the immediately preceding sentence, (A) all
amounts and proceeds (including Instruments) received by such Grantor in respect
of the Accounts shall be received in trust for the benefit of the Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Agent or its designated agent in the same form as so
received (with any necessary endorsement) to be applied as specified in Section
9(d) hereof, and (B) such Grantor will not adjust, settle or compromise the
amount or payment of any Account or release wholly or partly any Account Debtor
or obligor thereof or allow any credit or discount thereon.  In addition, upon
the occurrence and during the continuance of an Event of Default, the Agent may
(in its sole and absolute discretion) direct any or all of the banks and
financial institutions with which any Grantor either maintains a Deposit Account
or a lockbox or deposits the proceeds of any Accounts to send immediately to the
Agent or its designated agent by wire transfer (to such account as the Agent
shall specify, or in such other manner as the Agent shall direct) all or a
portion of such securities, cash, investments and other items held by such
institution.  Any such securities, cash, investments and other items so received
by the Agent or its designated agent shall be applied as specified in accordance
with Section 9 hereof.
 
(ii) Upon the occurrence and during the continuance of any breach or default
under any material License by any party thereto other than a Grantor, (A) the
relevant Grantor will, promptly after obtaining knowledge thereof, give the
Agent written notice of the nature and duration thereof, specifying what action,
if any, it has taken and proposes to take with respect thereto, (B) no Grantor
will, without the prior written consent of the Agent, declare or waive any such
breach or default or affirmatively consent to the cure thereof or exercise any
of its remedies in respect thereof, and (C) each Grantor will, upon written
instructions from the Agent and at such Grantor's expense, take such action as
the Agent may deem necessary or advisable in respect thereof.
 
 
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(iii) Each Grantor will, at its expense, promptly deliver to the Agent a copy of
each notice or other communication received by it by which any other party to
any License (A) declares a breach or default by a Grantor of any material term
thereunder, (B) terminates such License or (C) purports to exercise any of its
rights or affect any of its obligations thereunder, together with a copy of any
reply by such Grantor thereto.
 
(iv) Each Grantor will exercise promptly and diligently each and every right
which it may have under each License of more than de minimis value (other than
any right of termination) and will duly perform and observe in all respects all
of its obligations under each License of more than de minimis value and will
take all action necessary to maintain the Licenses of more than de minimis value
in full force and effect, in each case when a failure to exercise such rights,
perform such obligations and take such action would result in a material adverse
effect on the business operations or condition (financial or otherwise) of the
Grantor.  No Grantor will, without the prior written consent of the Agent,
cancel or terminate any license necessary to the business of such Grantor, or
amend or otherwise modify in any respect, or waive any provision of, any
material License.
 
(g) Provisions Concerning the Pledged Interests.  Each Grantor will
 
(i) at the Grantors' joint and several expense, promptly deliver to the Agent a
copy of each notice or other communication received by it in respect of the
Pledged Interests;
 
(ii) at the Grantors' joint and several expense, defend the Agent's right, title
and security interest in and to the Pledged Interests against the claims of any
Person;
 
(iii) except to the extent expressly permitted by the Transaction Documents, not
make or consent to any amendment or other modification or waiver with respect to
any Pledged Interests or enter into any agreement or permit to exist any
restriction with respect to any Pledged Interests other than pursuant to the
Transaction Documents; and
 
(iv) except to the extent expressly permitted by the Transaction Documents, not
permit the issuance of (A) any additional shares of any class of Equity
Interests of any Pledged Issuer, (B) any securities convertible voluntarily by
the holder thereof or automatically upon the occurrence or non-occurrence of any
event or condition into, or exchangeable for, any such shares of Equity
Interests, other than or (C) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
shares of Equity Interests.
 
 
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(h) Transfers and Other Liens.
 
(i) Except to the extent expressly permitted by the Note or the other
Transaction Documents, no Grantor will sell, assign (by operation of law or
otherwise), lease, license, exchange or otherwise transfer or dispose of any of
the Collateral.
 
(ii) Except to the extent expressly permitted by the Note or the other
Transaction Documents, no Grantor will create, suffer to exist or grant any Lien
upon or with respect to any Collateral.
 
(i) Intellectual Property.
 
(i) Each Grantor has duly executed and delivered the applicable Grant of a
security interest in the form attached hereto as Exhibit B.
 
(ii) Each Grantor (either itself or through its licensees or its sublicensees)
agrees that it will not do any act or omit to do any act whereby any Patent that
is necessary or advisable to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
mark any products covered by a Patent with the relevant patent number as
necessary to establish and preserve its rights under applicable patent laws,
except where the failure to do so, together with all other such failures
hereunder since the Closing Date, could not reasonably be expected to result in
a material diminution in the value of the Collateral.
 
(iii) Each Grantor (either itself or through its licensees or its sublicensees)
will, for each Trademark necessary or advisable to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of U.S. or non-U.S. registration to the extent necessary to establish and
preserve its rights under applicable law, except where the failure to do so,
together with all other such failures hereunder since the Closing Date, could
not reasonably be expected to result in a material diminution in the value of
the Collateral and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.
 
(iv) Each Grantor (either itself or through its licensees or sublicensees) will,
for each work covered by a Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary to
establish and preserve its rights under applicable copyright laws, except where
the failure to do so, together with all other such failures hereunder since the
Closing Date, could not reasonably be expected to result in a material
diminution in the value of the Collateral.
 
(v) Each Grantor shall notify the Agent promptly if it knows or has reason to
know that any Intellectual Property necessary or advisable to the conduct of its
business may become abandoned, lost or dedicated to the public, or of any final
determination (including the institution of, or any such determination in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding such
Grantor's ownership of any Intellectual Property, its right to register the
same, or its right to keep and maintain the same.
 
 
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(vi) In the event that any Grantor (i) files an application or registration for
any Intellectual Property with the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, either itself or through any agent, employee, licensee or
designee or (ii) obtains rights to or develop any new Intellectual Property or
any reissue, division, continuation, renewal, extension or continuation-in-part
of any existing Intellectual Property, whether pursuant to any license or
otherwise; the provisions of Section 2 hereof shall automatically apply thereto
and such Grantor shall give to the Agent prompt notice thereof, and, upon
request of the Agent, execute and deliver any and all agreements, instruments,
documents and papers as the Agent may reasonably request to evidence the Agent's
security interest in such Intellectual Property, and each Grantor hereby
appoints the Agent as its attorney-in-fact to execute and file such writings for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable.
 
(vii) Each Grantor will take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each application relating to the
Intellectual Property of such Grantor (and to obtain the relevant grant or
registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is necessary or advisable to the conduct of any
Grantor's business as conducted or proposed to be conducted, including timely
filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if consistent with good
business judgment, to initiate opposition, interference and cancellation
proceedings against third parties.
 
(viii) In the event that any Grantor has reason to believe that any Collateral
consisting of Intellectual Property used in the conduct of any Grantor's
business has been infringed, misappropriated or diluted by a third party, such
Grantor shall promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as are appropriate under the circumstances to
protect such Collateral and promptly shall notify the Agent of the initiation of
such suit.
 
(ix) Upon and during the continuance of an Event of Default, (i) no Grantor
shall abandon or otherwise permit any Intellectual Property to become invalid
and (ii) each Grantor shall use its best efforts to obtain all requisite
consents or approvals by the licensor of each License that constitutes
Collateral owned by such Grantor to effect the assignment of all such Grantor's
right, title and interest thereunder to the Agent or its designee.
 
(x) Each Grantor shall execute, authenticate and deliver any and all
assignments, agreements, instruments, documents and papers as the Agent may
reasonably request to evidence the Agent's security interest hereunder in such
Intellectual Property and the General Intangibles of such Grantor relating
thereto or represented thereby, each Grantor hereby appoints the Agent as its
attorney-in-fact to execute and file such writings for the foregoing purposes,
all acts of such attorney being hereby ratified and confirmed; such power, being
coupled with an interest, is irrevocable.
 
 
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(xi) Each Grantor agrees, at its own expense, as soon as practicable after the
date hereof, to make such filings (or authorize any filings) and to take such
other actions as are reasonably necessary in each non-U.S. jurisdiction in which
such Grantor owns any Intellectual Property in order to perfect the security
interest with respect to such Intellectual Property in such jurisdiction,
provided that no Grantor shall be obligated to make any such filing or to take
any such other action where the Agent and the Company agree that the cost of
such filing or action exceeds the value of the security afforded thereby.
 
(j) Deposit, Commodities and Securities Accounts.  Prior to the date hereof,
each Grantor shall cause each bank and other financial institution with an
account referred to in Schedule IV hereto to execute and deliver to the Agent
(or its designee) a control agreement, in form and substance reasonably
satisfactory to the Agent, duly executed by such Grantor and such bank or
financial institution, or enter into other arrangements in form and substance
reasonably satisfactory to the Agent, pursuant to which such institution shall
irrevocably agree, among other things, that (i) it will comply at any time with
the instructions originated by the Agent (or its designee) to such bank or
financial institution directing the disposition of cash, Commodity Contracts,
securities, Investment Property and other items from time to time credited to
such account, without further consent of such Grantor, which instructions the
Agent (or its designee) will not give to such bank or other financial
institution in the absence of a continuing Event of Default, (ii) all cash,
Commodity Contracts, securities, Investment Property and other items of such
Grantor deposited with such institution shall be subject to a perfected, first
priority security interest in favor of the Agent (or its designee), (iii) any
right of set off, banker's Lien or other similar Lien, security interest or
encumbrance shall be fully waived as against the Agent (or its designee), and
(iv) upon receipt of written notice from the Agent during the continuance of an
Event of Default, such bank or financial institution shall immediately send to
the Agent (or its designee) by wire transfer (to such account as the Agent (or
its designee) shall specify, or in such other manner as the Agent (or its
designee) shall direct) all such cash, the value of any Commodity Contracts,
securities, Investment Property and other items held by it. Without the prior
written consent of the Agent, no Grantor shall make or maintain any Deposit
Account, Commodity Account or Securities Account except for the accounts set
forth in Schedule IV hereto.  The provisions of this Section 6(j) shall not
apply to (i) Deposit Accounts for which the Agent is the depositary and (ii)
Deposit Accounts specially and exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of a Grantor's
salaried employees, provided that the funds on deposit in such Deposit Accounts
shall at no time exceed the actual payroll, payroll taxes and other employee
wage and benefit payments then owing by such Grantor for the immediately
succeeding payroll period.
 
(k) Titled Collateral.  Each Grantor shall (a) cause all Collateral, now owned
or hereafter acquired by any Grantor, which under applicable law are required to
be registered, to be properly registered in the name of such Grantor, (b) cause
all Titled Collateral, to be properly titled in the name of such Grantor, and if
reasonably requested by the Agent, with the Agent's Lien noted thereon and (c)
if reasonably requested by the Agent, promptly deliver to the Agent (or its
custodian) originals of all such Certificates of Title or certificates of
ownership for such Titled Collateral, with the Agent's Lien noted thereon.
 
 
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(l) Control.  Each Grantor hereby agrees to take any or all action that may be
necessary or desirable or that the Agent may request in order for the Agent to
obtain control in accordance with Sections 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to the following Collateral:  (i) Deposit Accounts, (ii)
Electronic Chattel Paper, (iii) Investment Property and (iv) Letter-of-Credit
Rights.  Each Grantor hereby acknowledges and agrees that any agent or designee
of the Agent shall be deemed to be a "secured party" with respect to the
Collateral under the control of such agent or designee for all purposes.
 
(m) Records; Inspection and Reporting.
 
(i) Each Grantor shall keep adequate records concerning the Accounts, Chattel
Paper and Pledged Interests.  Each Grantor shall permit the Agent, or any agents
or representatives thereof or such professionals or other Persons as the Agent
may designate at any time provided that, so long as no default under the Note or
the other Transaction Documents or Event of Default shall have occurred and be
continuing, upon Agent's reasonable advance request, during normal business
hours, (A) to examine and make copies of and abstracts from such Grantor's books
and records, (B) to visit and inspect its properties, (C) to verify materials,
leases, notes, Accounts, Inventory and other assets of such Grantor from time to
time, (D) to conduct audits, physical counts, appraisals and/or valuations or
examinations at the locations of such Grantor and (E) to discuss such Grantor's
affairs, finances and accounts with any of its directors, officers, managerial
employees, independent accountants or any of its other representatives.
 
(ii) No Grantor shall, without the prior written consent of the Agent, change
(A) its name, identity or organizational structure, (B) its jurisdiction of
incorporation or organization as set forth in Schedule I hereto or (C) its chief
executive office as set forth in Schedule III hereto.  Each Grantor shall
promptly notify the Agent upon obtaining an organizational identification
number, if on the date hereof such Grantor did not have such identification
number.
 
(n) Partnership and Limited Liability Company Interest.  Except with respect to
partnership interests and membership interests evidenced by a certificate, which
certificate has been pledged and delivered to the Agent pursuant to Section 4
hereof, no Grantor that is a partnership or a limited liability company shall,
nor shall any Grantor with any Subsidiary that is a partnership or a limited
liability company, permit such partnership interests or membership interests to
(i) be dealt in or traded on securities exchanges or in securities markets, (ii)
become a security for purposes of Article 8 of any relevant Uniform Commercial
Code, (iii) become an investment company security within the meaning of Section
8-103 of any relevant Uniform Commercial Code or (iv) be evidenced by a
certificate.  Each Grantor agrees that such partnership interests or membership
interests shall constitute General Intangibles.
 
 
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SECTION 7. Voting Rights, Dividends, Etc. in Respect of the Pledged Interests.
 
(a) So long as no Event of Default shall have occurred and be continuing:
 
(i) each Grantor may exercise any and all voting and other consensual rights
pertaining to any Pledged Interests for any purpose not inconsistent with the
terms of this Agreement, the Note or the other Transaction Documents; provided,
however, that (A) each Grantor will give the Agent at least five (5) Business
Days' notice of the manner in which it intends to exercise, or the reasons for
refraining from exercising, any such right that could reasonably be expected to
adversely affect in any material respect the value, liquidity or marketability
of any Collateral or the creation, perfection and priority of the Agent's Lien;
and (B) none of the Grantors will exercise or refrain from exercising any such
right, as the case may be, if the Agent gives a Grantor notice that, in the
Agent's judgment, such action (or inaction) could reasonably be expected to
adversely affect in any material respect the value, liquidity or marketability
of any Collateral or the creation, perfection and priority of the Agent's Lien;
and
 
(ii) each of the Grantors may receive and retain any and all dividends, interest
or other distributions paid in respect of the Pledged Interests to the extent
permitted by the Note; provided, however, that any and all (A) dividends and
interest paid or payable other than in cash in respect of, and Instruments and
other property received, receivable or otherwise distributed in respect of or in
exchange for, any Pledged Interests, (B) dividends and other distributions paid
or payable in cash in respect of any Pledged Interests in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, and (C) cash paid, payable or
otherwise distributed in redemption of, or in exchange for, any Pledged
Interests, together with any dividend, interest or other distribution or payment
which at the time of such payment was not permitted by the Note, shall be, and
shall forthwith be delivered to the Agent, to hold as, Pledged Interests and
shall, if received by any of the Grantors, be received in trust for the benefit
of the Agent, shall be segregated from the other property or funds of the
Grantors, and shall be forthwith delivered to the Agent in the exact form
received with any necessary indorsement and/or appropriate stock powers duly
executed in blank, to be held by the Agent as Pledged Interests and as further
collateral security for the Secured Obligations; and
 
(iii) the Agent will execute and deliver (or cause to be executed and delivered)
to a Grantor all such proxies and other instruments as such Grantor may
reasonably request for the purpose of enabling such Grantor to exercise the
voting and other rights which it is entitled to exercise pursuant to Section
7(a)(i) hereof and to receive the dividends, interest and/or other distributions
which it is authorized to receive and retain pursuant to Section 7(a)(ii)
hereof.
 
(b) Upon the occurrence and during the continuance of an Event of Default:
 
(i) at the option of Agent, all rights of each Grantor to exercise the voting
and other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 7(a)(i) hereof, and to receive the dividends, distributions,
interest and other payments that it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) hereof, shall cease, and all such rights
shall thereupon become vested in the Agent, which shall thereupon have the sole
right to exercise such voting and other consensual rights and to receive and
hold as Pledged Interests such dividends, distributions and interest payments;
 
 
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(ii) the Agent is authorized to notify each debtor with respect to the Pledged
Debt to make payment directly to the Agent (or its designee) and may collect any
and all moneys due or to become due to any Grantor in respect of the Pledged
Debt, and each of the Grantors hereby authorizes each such debtor to make such
payment directly to the Agent (or its designee) without any duty of inquiry;
 
(iii) without limiting the generality of the foregoing, the Agent may at its
option exercise any and all rights of conversion, exchange, subscription or any
other rights, privileges or options pertaining to any of the Pledged Interests
as if it were the absolute owner thereof, including, without limitation, the
right to exchange, in its discretion, any and all of the Pledged Interests upon
the merger, consolidation, reorganization, recapitalization or other adjustment
of any Pledged Issuer, or upon the exercise by any Pledged Issuer of any right,
privilege or option pertaining to any Pledged Interests, and, in connection
therewith, to deposit and deliver any and all of the Pledged Interests with any
committee, depository, transfer agent, registrar or other designated agent upon
such terms and conditions as it may determine; and
 
(iv) all dividends, distributions, interest and other payments that are received
by any of the Grantors contrary to the provisions of Section 7(b)(i) hereof
shall be received in trust for the benefit of the Agent, shall be segregated
from other funds of the Grantors, and shall be forthwith paid over to the Agent
as Pledged Interests in the exact form received with any necessary indorsement
and/or appropriate stock powers duly executed in blank, to be held by the Agent
as Pledged Interests and as further collateral security for the Secured
Obligations.
 
SECTION 8. Additional Provisions Concerning the Collateral .
 
(a) To the maximum extent permitted by applicable law, and for the purpose of
taking any action that the Agent may deem necessary or advisable to accomplish
the purposes of this Agreement, until the Secured Obligations shall have been
indefeasibly paid in full, each Grantor hereby (i) authorizes the Agent to
execute any such agreements, instruments or other documents in such Grantor's
name and to file such agreements, instruments or other documents in such
Grantor's name and in any appropriate filing office, (ii) authorizes the Agent
at any time and from time to time to file, one or more financing or continuation
statements and amendments thereto, relating to the Collateral (including,
without limitation, any such financing statements that (A) describe the
Collateral as "all assets" or "all personal property" (or words of similar
effect) or that describe or identify the Collateral by type or in any other
manner as the Agent may determine, regardless of whether any particular asset of
such Grantor falls within the scope of Article 9 of the Uniform Commercial Code
or whether any particular asset of such Grantor constitutes part of the
Collateral, and (B) contain any other information required by Part 5 of Article
9 of the Code for the sufficiency or filing office acceptance of any financing
statement, continuation statement or amendment, including, without limitation,
whether such Grantor is an organization, the type of organization and any
organizational identification number issued to such Grantor) and (iii) ratifies
such authorization to the extent that the Agent has filed any such financing
statements, continuation statements, or amendments thereto, prior to the date
hereof.  A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
 
 
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(b) Each Grantor hereby irrevocably appoints the Agent as its attorney-in-fact
and proxy, with full authority in the place and stead of such Grantor and in the
name of such Grantor or otherwise, from time to time in the Agent's discretion,
to take any action and to execute any instrument that the Agent may deem
necessary or advisable to accomplish the purposes of this Agreement (subject to
the rights of a Grantor under Section 6 hereof and Section 7(a) hereof),
including, without limitation, (i) to obtain and adjust insurance required to be
paid to the Agent pursuant to the Note, (ii) to ask, demand, collect, sue for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any Collateral, (iii) to receive, endorse,
and collect any drafts or other Instruments, Documents and Chattel Paper in
connection with clause (i) or (ii) above, (iv) to receive, indorse and collect
all Instruments made payable to such Grantor representing any dividend, interest
payment or other distribution in respect of any Pledged Interests and to give
full discharge for the same, (v) to file any claims or take any action or
institute any proceedings which the Agent may deem necessary or desirable for
the collection of any Collateral or otherwise to enforce the rights of the Agent
and the Holders with respect to any Collateral, (vi) to execute assignments,
licenses and other documents to enforce the rights of the Agent and the Holders
with respect to any Collateral, (vii) to pay or discharge taxes or Liens levied
or placed upon or threatened against the Collateral, the legality or validity
thereof and the amounts necessary to discharge the same to be determined by the
Agent in its sole discretion, and such payments made by the Agent to become
Secured Obligation of such Grantor to the Agent, due and payable immediately
without demand, and (viii) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, assignments,
verifications and notices in connection with Accounts, Chattel Paper and other
documents relating to the Collateral.  This power is coupled with an interest
and is irrevocable until the date on which all of the Secured Obligations have
been indefeasibly paid in full in cash after the termination of each of the
Transaction Documents.
 
(c) For the purpose of enabling the Agent to exercise rights and remedies
hereunder, at such time as the Agent shall be lawfully entitled to exercise such
rights and remedies, and for no other purpose, each Grantor hereby (i) grants to
the Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to any Grantor) to use, assign, license or
sublicense any Intellectual Property now or hereafter owned by any Grantor,
wherever the same may be located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof; and (ii)
assigns to the Agent, to the extent assignable, all of its rights to any
Intellectual Property now or hereafter licensed or used by any
Grantor.  Notwithstanding anything contained herein to the contrary, but subject
to the provisions of the Note that limit the right of a Grantor to dispose of
its property and Section 6(i) hereof, so long as no Event of Default shall have
occurred and be continuing, each Grantor may exploit, use, enjoy, protect,
license, sublicense, assign, sell, dispose of or take other actions with respect
to the Intellectual Property in the ordinary course of its business.  In
furtherance of the foregoing, unless an Event of Default shall have occurred and
be continuing, the Agent shall from time to time, upon the request of a Grantor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, which such Grantor shall have certified are appropriate (in
such Grantor's judgment) to allow it to take any action permitted above
(including relinquishment of the license provided pursuant to this clause (c) as
to any Intellectual Property).  Further, upon the date on which all of the
Secured Obligations have been indefeasibly paid in full in cash after the
termination of each of the Transaction Documents, the Agent (subject to Section
13(e) hereof) shall release and reassign to the Grantors all of the Agent's
right, title and interest in and to the Intellectual Property, and the Licenses,
all without recourse, representation or warranty whatsoever and at the Grantors'
sole expense.  The exercise of rights and remedies hereunder by the Agent shall
not terminate the rights of the holders of any licenses or sublicenses
theretofore granted by any Grantor in accordance with the second sentence of
this clause (c).  Each Grantor hereby releases the Agent from any claims, causes
of action and demands at any time arising out of or with respect to any actions
taken or omitted to be taken by the Agent under the powers of attorney granted
herein other than actions taken or omitted to be taken through the Agent's gross
negligence or willful misconduct, as determined by a final determination of a
court of competent jurisdiction.
 
 
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(d) If any Grantor fails to perform any agreement or obligation contained
herein, the Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of such Grantor or the Agent, and the expenses of the
Agent incurred in connection therewith shall be jointly and severally payable by
the Grantors pursuant to Section 10 hereof and shall be secured by the
Collateral.
 
(e) The powers conferred on the Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers.  Other than the exercise of reasonable care to assure the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral and shall be
relieved of all responsibility for any Collateral in its possession upon
surrendering it or tendering surrender of it to any of the Grantors (or
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct).  The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which the Agent accords its own property, it being understood that the
Agent shall not have responsibility for ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Collateral, whether or not the Agent has or is deemed to have
knowledge of such matters.  Except for its own gross negligence or willful
misconduct, the Agent shall not be liable or responsible for any loss or damage
to any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Agent in good faith.
 
(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise in respect of the Collateral to
the extent set forth therein to perform all of its obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Agent of any of its rights hereunder shall not release any Grantor from any of
its obligations under the Licenses or otherwise in respect of the Collateral,
and (iii) the Agent shall not have any obligation or liability by reason of this
Agreement under the Licenses or otherwise in respect of the Collateral, nor
shall the Agent be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
 
 
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(g) Upon the occurrence and the continuation of any Event of Default, the Agent
may at any time in its discretion (i) without notice to any Grantor, transfer or
register in the name of the Agent or any of its nominees any or all of the
Pledged Interests, subject only to the revocable rights of such Grantor under
Section 7(a) hereof, and (ii) exchange certificates or Instruments constituting
Pledged Interests for certificates or Instruments of smaller or larger
denominations.
 
SECTION 9. Remedies Upon Default .  If any Event of Default shall have occurred
and be continuing:
 
(a) The Agent may exercise in respect of the Collateral, in addition to any
other rights and remedies provided for herein or otherwise available to it, all
of the rights and remedies of a secured party upon default under the Code
(whether or not the Code applies to the affected Collateral), and also may
(i) take absolute control of the Collateral, including, without limitation,
transfer into the Agent's name or into the name of its nominee or nominees (to
the extent the Agent has not theretofore done so) and thereafter receive, for
the benefit of the Agent and the Holders, all payments made thereon, give all
consents, waivers and ratifications in respect thereof and otherwise act with
respect thereto as though it were the outright owner thereof, (ii) require each
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of the Agent forthwith, assemble all or part of the Collateral as
directed by the Agent and make it available to the Agent at a place or places to
be designated by the Agent that is reasonably convenient to both parties, and
the Agent may enter into and occupy any premises owned or leased by any Grantor
where the Collateral or any part thereof is located or assembled for a
reasonable period in order to effectuate the Agent's rights and remedies
hereunder or under law, without obligation to any Grantor in respect of such
occupation, and (iii) without notice except as specified below and without any
obligation to prepare or process the Collateral for sale, (A) sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Agent's offices, at any exchange or broker's board or elsewhere,
for cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Agent may deem commercially reasonable and/or (B) lease,
license or otherwise dispose of the Collateral or any part thereof upon such
terms as the Agent may deem commercially reasonable.  Each Grantor agrees that,
to the extent notice of any sale or other disposition of the Collateral shall be
required by law, at least five (5) days' prior notice to the applicable Grantor
of the time and place of any public sale or the time after which any private
sale or other disposition of the Collateral is to be made shall constitute
reasonable notification.  The Agent shall not be obligated to make any sale or
other disposition of Collateral regardless of notice of sale having been
given.  The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned.  Each Grantor hereby waives any claims against the Agent and the
Holders arising by reason of the fact that the price at which the Collateral may
have been sold at a private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Agent accepts the first offer received and does not
offer the Collateral to more than one offeree, and waives all rights that such
Grantor may have to require that all or any part of the Collateral be marshaled
upon any sale (public or private) thereof.  Each Grantor hereby acknowledges
that (i) any such sale of the Collateral by the Agent shall be made without
warranty, (ii) the Agent may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like, (iii) the Agent may bid (which bid may
be, in whole or in part, in the form of cancellation of indebtedness), if
permitted by law, for the purchase, lease, license or other disposition of the
Collateral or any portion thereof for the account of the Agent (on behalf of
itself and the Holders) and (iv) such actions set forth in clauses (i), (ii) and
(iii) above shall not adversely affect the commercial reasonableness of any such
sale of the Collateral.  In addition to the foregoing, (i) upon written notice
to any Grantor from the Agent, each Grantor shall cease any use of the
Intellectual Property or any trademark, patent or copyright similar thereto for
any purpose described in such notice; (ii) the Agent may, at any time and from
time to time, upon five (5) days' prior notice to any Grantor, license, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any of the Intellectual Property, throughout the universe for such term
or terms, on such conditions, and in such manner, as the Agent shall in its sole
discretion determine; and (iii) the Agent may, at any time, pursuant to the
authority granted in Section 8 hereof (such authority being effective upon the
occurrence and during the continuance of an Event of Default), execute and
deliver on behalf of a Grantor, one or more instruments of assignment of the
Intellectual Property (or any application or registration thereof), in form
suitable for filing, recording or registration in any country.
 
 
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(b) In the event that the Agent determines to exercise its right to sell all or
any part of the Pledged Interests pursuant to Section 9(a) hereof, each Grantor
will, at such Grantor's expense and upon request by the Agent:  (i) execute and
deliver, and cause each issuer of such Pledged Interests and the directors and
officers thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be necessary or,
in the opinion of the Agent, advisable to register such Pledged Interests under
the provisions of the Securities Act, and to cause the registration statement
relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of the
Agent, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the SEC applicable thereto,
(ii) cause each issuer of such Pledged Interests to qualify such Pledged
Interests under the state securities or "Blue Sky" laws of each jurisdiction,
and to obtain all necessary governmental approvals for the sale of the Pledged
Interests, as requested by the Agent, (iii) cause each Pledged Issuer to make
available to its securityholders, as soon as practicable, an earnings statement
which will satisfy the provisions of Section 11(a) of the Securities Act, and
(iv) do or cause to be done all such other acts and things as may be necessary
to make such sale of such Pledged Interests valid and binding and in compliance
with applicable law.  Each Grantor acknowledges the impossibility of
ascertaining the amount of damages which would be suffered by the Agent by
reason of the failure by any Grantor to perform any of the covenants contained
in this Section 9(b) and, consequently, agrees that, if any Grantor fails to
perform any of such covenants, it shall pay, as liquidated damages and not as a
penalty, an amount equal to the value of the Pledged Interests on the date the
Agent demands compliance with this Section 9(b); provided, however, that the
payment of such amount shall not release any Grantor from any of its obligations
under any of the other Transaction Documents.
 
 
 
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(c) Notwithstanding the provisions of Section 9(b) hereof, each Grantor
recognizes that the Agent may deem it impracticable to effect a public sale of
all or any part of the Pledged Shares or any other securities constituting
Pledged Interests and that the Agent may, therefore, determine to make one or
more private sales of any such securities to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such securities
for their own account, for investment and not with a view to the distribution or
resale thereof.  Each Grantor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the prices and other terms
which might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sales shall be deemed to have been made in a
commercially reasonable manner and that the Agent shall have no obligation to
delay the sale of any such securities for the period of time necessary to permit
the issuer of such securities to register such securities for public sale under
the Securities Act.  Each Grantor further acknowledges and agrees that any offer
to sell such securities which has been (i) publicly advertised on a bona fide
basis in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such an offer may
be so advertised without prior registration under the Securities Act) or (ii)
made privately in the manner described above to not less than fifteen bona fide
offerees shall be deemed to involve a "public disposition" for the purposes of
Section 9-610(c) of the Code (or any successor or similar, applicable statutory
provision) as then in effect in the State of New York, notwithstanding that such
sale may not constitute a "public offering" under the Securities Act, and that
the Agent may, in such event, bid for the purchase of such securities.
 
(d) Any cash held by the Agent (or its agent or designee) as Collateral and all
Cash Proceeds received by the Agent (or its agent or designee) in respect of any
sale of or collection from, or other realization upon, all or any part of the
Collateral may, in the discretion of the Agent, be held by the Agent (or its
agent or designee) as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Agent pursuant to Section
10 hereof) in whole or in part by the Agent against, all or any part of the
Secured Obligations in such order as the Agent shall elect, consistent with the
provisions of the Note and any other Transaction Documents.  Any surplus of such
cash or Cash Proceeds held by the Agent (or its agent or designee) and remaining
after the date on which all of the Secured Obligations have been indefeasibly
paid in full in cash after the termination of each of the Transaction Documents,
shall be paid over to whomsoever shall be lawfully entitled to receive the same
or as a court of competent jurisdiction shall direct.
 
(e) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Agent and the Holders are
legally entitled, the Grantors shall be jointly and severally liable for the
deficiency, together with interest thereon at the highest rate specified in any
applicable Transaction Document for interest on overdue principal thereof or
such other rate as shall be fixed by applicable law, together with the costs of
collection and the reasonable fees, costs, expenses and other client charges of
any attorneys employed by the Agent to collect such deficiency.
 
(f) Each Grantor hereby acknowledges that if the Agent complies with any
applicable requirements of law in connection with a disposition of the
Collateral, such compliance will not adversely affect the commercial
reasonableness of any sale or other disposition of the Collateral.
 
 
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(g) The Agent shall not be required to marshal any present or future collateral
security (including, but not limited to, this Agreement and the Collateral) 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, and all of the Agent's rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising.  To the extent that
any Grantor lawfully may, such Grantor hereby agrees that it will not invoke any
law relating to the marshalling of collateral which might cause delay in or
impede the enforcement of the Agent's rights under this Agreement or under any
other instrument creating or 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, each Grantor hereby irrevocably waives the
benefits of all such laws.
 
SECTION 10. Indemnity and Expenses .
 
(a) Each Grantor jointly and severally agrees to defend, protect, indemnify and
hold harmless the Agent and each other Indemnitee from and against any and all
claims, losses, damages, liabilities, obligations, penalties, fees, reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees,
costs, expenses and disbursements) incurred by the Agent or such Indemnitee to
the extent that they arise out of or otherwise result from or relate to or are
in connection with this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting solely and
directly from the Agent's or such Indemnitee's gross negligence or willful
misconduct, as determined by a final judgment of a court of competent
jurisdiction.
 
(b) Each Grantor jointly and severally agrees to pay to the Agent upon demand
the amount of any and all costs and expenses, including the reasonable fees,
costs, expenses and disbursements of counsel for the Agent and of any experts
and agents (including, without limitation, any collateral trustee which may act
as agent of the Agent), which the Agent may incur in connection with (i) the
preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder, or (iv) the failure by
any Grantor to perform or observe any of the provisions hereof.
 
SECTION 11. Notices, Etc.   All notices and other communications provided for
hereunder shall be given in accordance with the notice provision of the Purchase
Agreement.
 
SECTION 12. Security Interest Absolute; Joint and Several Obligations .
 
(a) All rights of the Secured Parties, all Liens and all obligations of each of
the Grantors hereunder shall be absolute and unconditional irrespective of (i)
any lack of validity or enforceability of the Note or any other Transaction
Document, (ii) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Secured Obligations, or any other
amendment or waiver of or consent to any departure from the Note or any other
Transaction Document, (iii) any exchange or release of, or non-perfection of any
Lien on any Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations, or (iv)
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, any of the Grantors in respect of the Secured
Obligations.  All authorizations and agencies contained herein with respect to
any of the Collateral are irrevocable and powers coupled with an interest.
 
 
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(b) Each Grantor hereby waives (i) promptness and diligence, (ii) notice of any
actions taken by the Agent, any Holder, any Guarantor or any other Person under
any Transaction Document or any other agreement, document or instrument relating
thereto, (iii) all other notices, demands and protests, and all other
formalities of every kind in connection with the enforcement of the Secured
Obligations, the omission of or delay in which, but for the provisions of this
subsection (b), might constitute grounds for relieving such Grantor of any such
Grantor's obligations hereunder and (v) any requirement that the Agent or any
Holder protect, secure, perfect or insure any security interest or other lien on
any property subject thereto or exhaust any right or take any action against any
Grantor or any other Person or any collateral.
 
(c) All of the obligations of the Grantors hereunder are joint and several.  The
Agent may, in its sole and absolute discretion, enforce the provisions hereof
against any of the Grantors and shall not be required to proceed against all
Grantors jointly or seek payment from the Grantors ratably.  In addition, the
Agent may, in its sole and absolute discretion, select the Collateral of any one
or more of the Grantors for sale or application to the Secured Obligations,
without regard to the ownership of such Collateral, and shall not be required to
make such selection ratably from the Collateral owned by all of the
Grantors.  The release or discharge of any Grantor by the Agent shall not
release or discharge any other Grantor from the obligations of such Person
hereunder.
 
SECTION 13. Miscellaneous .
 
(a) No amendment of any provision of this Agreement (including any Schedule
attached hereto) shall be effective unless it is in writing and signed by each
Grantor affected thereby and the Agent, and no waiver of any provision of this
Agreement, and no consent to any departure by any Grantor therefrom, shall be
effective unless it is in writing and signed by the Agent, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
 
(b) No failure on the part of the Secured Parties to exercise, and no delay in
exercising, any right hereunder or under any other Transaction Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.  The rights and remedies of the Secured Parties provided herein and
in the other Transaction Documents are cumulative and are in addition to, and
not exclusive of, any rights or remedies provided by law.  The rights of the
Secured Parties under any Transaction Document against any party thereto are not
conditional or contingent on any attempt by such Person to exercise any of its
rights under any other Transaction Document against such party or against any
other Person, including but not limited to, any Grantor.
 
 
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(c) This Agreement shall create a continuing security interest in the Collateral
and shall (i) remain in full force and effect, subject to paragraph (e) below,
until the date on which all of the Secured Obligations have been indefeasibly
paid in full in cash after the termination of each of the Transaction Documents
and (ii) be binding on each Grantor all other Persons who become bound as debtor
to this Agreement in accordance with Section 9-203(d) of the Code, and shall
inure, together with all rights and remedies of the Secured Parties hereunder,
to the benefit of the Secured Parties and their respective successors,
transferees and assigns.  Without limiting the generality of clause (ii) of the
immediately preceding sentence, the Secured Parties may assign or otherwise
transfer their respective rights and obligations under this Agreement and any
other Transaction Document to any other Person pursuant to the terms of the
Note, and such other Person shall thereupon become vested with all of the
benefits in respect thereof granted to the Secured Parties herein or
otherwise.  Upon any such assignment or transfer, all references in this
Agreement to any Secured Party shall mean the assignee of any such Secured
Party.  None of the rights or obligations of any Grantor hereunder may be
assigned or otherwise transferred without the prior written consent of the
Agent, and any such assignment or transfer shall be null and void.
 
(d) Upon the date on which all of the Secured Obligations have been indefeasibly
paid in full in cash after the termination of each of the Transaction Documents,
(i) subject to paragraph (e) below, this Agreement and the security interests
and licenses created hereby shall terminate and all rights to the Collateral
shall revert to the Grantors and (ii) the Agent will, upon the Grantors' request
and at the Grantors' expense, without any representation, warranty or recourse
whatsoever, (A) return to the Grantors (or whomsoever shall be lawfully entitled
to receive the same or as a court of competent jurisdiction shall direct) such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof and (B) execute and deliver to the Grantors
(or authorized the filing of) such documents as the Grantors shall reasonably
request to evidence such termination.
 
(e) This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Grantor for liquidation
or reorganization, should any Grantor become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment or performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made.  In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
 
(f) Upon the execution and delivery, or authentication, by any Person of a
security agreement supplement in substantially the form of Exhibit C hereto
(each a "Security Agreement Supplement"), (i) such Person shall be referred to
as an "Additional Grantor" and shall be and become a Grantor, and each reference
in this Agreement to "Grantor" shall also mean and be a reference to such
Additional Grantor, and each reference in this Agreement and the other
Transaction Documents to "Collateral" shall also mean and be a reference to the
Collateral of such Additional Grantor and (ii) the supplemental Schedules I-VIII
attached to each Security Agreement Supplement shall be incorporated into and
become a part of and supplement Schedules I-VIII, respectively, hereto, and the
Agent may attach such Schedules as supplements to such Schedules, and each
reference to such Schedules shall mean and be a reference to such Schedules, as
supplemented pursuant hereto.
 
 
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(g) Except to the extent expressly provided in any Transaction Document to the
contrary, this Agreement and all obligations of Grantors hereunder shall be
automatically released when the Notes have been indefeasibly paid and performed
in full.  Upon such satisfaction, Agent shall promptly return any pledged
Collateral to Grantors, or to the Person or Persons legally entitled thereto,
and promptly shall endorse, execute, deliver, record and file all instruments
and documents or, at the election of Agent, authorize Grantors to do so on
behalf of agent and the Secured Parties, and do all other acts and things,
reasonably required for the return of the Collateral to Grantors, or to the
Person or Persons legally entitled thereto, and to evidence or document the
release of Agent's and the Secured Parties' interests arising under this
Agreement, all as reasonably requested by, and at the sole expense of, Grantors.
 
(h) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR
THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
 
(i) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS.  EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
 
 
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(j) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE
COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
 
(k) Each Grantor irrevocably consents to the service of process of any of the
aforesaid courts in any such action, suit or proceeding by the mailing of copies
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to any Grantor at its address provided herein, such
service to become effective 10 days after such mailing.
 
(l) Nothing contained herein shall affect the right of the Collateral Agent to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against any Grantor or any property of any Grantor in any
other jurisdiction.
 
(m) Each Grantor irrevocably and unconditionally waives any right it may have to
claim or recover in any legal action, suit or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
 
(n) Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
 
(o) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
 
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
 
 
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
 
 
 
GRANTORS:

TELENETIX, INC., a Delaware corporation

 

By: 
/s/ Douglas N. Johnson
 
Name: Douglas N. Johnson
 
Title:   Chief Executive Officer

 
 
TELENETIX, INC., a California corporation

 

By: 
/s/ Douglas N. Johnson
 
Name: Douglas N. Johnson
 
Title:   Chief Executive Officer

 

ACCESSLINE HOLDINGS, INC., a Delaware corporation
 
 

By: 
/s/ Douglas N. Johnson
 
Name: Douglas N. Johnson
 
Title:   Chief Executive Officer

 

ACCESSLINE COMMUNICATIONS CORPORATION, a Delaware corporation
 
 

By: 
/s/ Douglas N. Johnson
 
Name: Douglas N. Johnson
 
Title:   Chief Executive Officer

 
 
 
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EXHIBIT A
 
PLEDGE AMENDMENT
 
This Pledge Amendment, dated _________ __, ___, is delivered pursuant to Section
4 of the Security Agreement referred to below.  The undersigned hereby agrees
that this Pledge Amendment may be attached to the Pledge and Security Agreement,
dated as of July 2, 2010, made by Telanetix, Inc. AccessLine Holdings, Inc, and
AccessLine Communications Corporation, in favor of HCP-TELA, LLC, as agent for
the Secured Parties (the "Agent"), as it may heretofore have been or hereafter
may be amended, restated, supplemented, modified or otherwise changed from time
to time (the "Security Agreement") and that the promissory notes or shares
listed on this Pledge Amendment shall be hereby pledged and assigned to the
Agent and become part of the Pledged Interests referred to in such Security
Agreement and shall secure all of the Secured Obligations referred to in such
Security Agreement.
 

Pledged Debt
Grantor
Name of Maker
Description
Principal Amount
Outstanding as of Closing Date
                               

 

Pledged Shares
Grantor
Name of
Pledged Issuer
Number of Shares
Percentage of Outstanding Shares
Class
Certificate Number
                                               

 
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[GRANTOR]
 
By:      _____________________________
Name:
Title:

[HCP-TELA, LLC],
as the Agent

By:       _____________________________
Name:
Title:
 
 
 
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EXHIBIT B
 
GRANT OF A SECURITY INTEREST --[TRADEMARKS] [PATENTS] [COPYRIGHTS]
 
WHEREAS, ________________ (the "Grantor") [has adopted, used and is using, and
holds all right, title and interest in and to, the trademarks and service marks
listed on the attached Schedule A, which trademarks and service marks are
registered or applied for in the United States Patent and Trademark Office (the
"Trademarks")] [holds all right, title and interest in the letter patents,
design patents and utility patents listed on the attached Schedule A, which
patents are issued or applied for in the United States Patent and Trademark
Office (the "Patents")] [holds all right, title and interest in the copyrights
listed on the attached Schedule A, which copyrights are registered in the United
States Copyright Office (the "Copyrights")];
 
WHEREAS, the Grantor has entered into a Pledge and Security Agreement, dated as
of July 2, 2010 (as amended, restated, supplemented, modified or otherwise
changed from time to time, the "Security Agreement"), in favor of HCP-TELA, LLC,
as agent for certain holders (in such capacities, together with its successors
and assigns, if any, the "Grantee"); and
 
WHEREAS, pursuant to the Security Agreement, the Grantor has granted to the
Grantee, and granted to the Grantee for the benefit of the Secured Parties (as
defined in the Security Agreement), a continuing security interest in all right,
title and interest of the Grantor in, to and under the [Trademarks, together
with, among other things, the goodwill of the business symbolized by the
Trademarks] [Patents] [Copyrights] and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"Collateral"), to secure the payment, performance and observance of the Secured
Obligations (as defined in the Security Agreement).
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor does hereby grant to the Grantee
and grant to the Grantee for the benefit of the Secured Parties, a continuing
security interest in the Collateral to secure the prompt payment, performance
and observance of the Secured Obligations.
 
The Grantor does hereby further acknowledge and affirm that the rights and
remedies of the Grantee with respect to the Collateral are more fully set forth
in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
 
 
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IN WITNESS WHEREOF, the Grantor has caused this Assignment to be duly executed
by its officer thereunto duly authorized as of [_____________ __], 2010.
 
 
 
[GRANTOR]

 
 
By:                                                                           
   

 
Name:

 
Title:

 
STATE OF ____________
ss.:
COUNTY OF __________
 
On this ____ day of _______________, 2010, before me personally came
________________, to me known to be the person who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that s/he is the
________________ of _______________________________________, a
____________________, and that s/he executed the foregoing instrument in the
firm name of _______________________________________, and that s/he had
authority to sign the same, and s/he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
 
 

____________________
[Notary Seal]

 
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SCHEDULE A TO GRANT OF A SECURITY INTEREST
 

 

[Trademark Registrations and Applications]

[Patents and Patent Applications]

[Copyright Registrations and Applications]

 
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EXHIBIT C
 

 
FORM OF SECURITY AGREEMENT SUPPLEMENT
 
[Date of Security Agreement Supplement]
 
HCP-TELA, LLC, as Agent
c/o Hale Capital Management, LP
570 Lexington Avenue, 49th Floor
New  York, NY 10022
Attention:  Martin Hale
Telephone:  212-751-8800
Telecopier:  212-751-8822
 
Ladies and Gentlemen:
 
Reference hereby is made to (a) the Notes, dated as of July 2, 2010 (such
agreement, as amended, restated, supplemented, modified or otherwise changed
from time to time, including any replacement agreement therefor, being
hereinafter referred to as the "Note"), issued by Telanetix, Inc. a California
corporation (the “Company”) in the original principal amount of $10,500,000 in
favor of each Holder (as therein defined) and (b) the Pledge and Security
Agreement, dated as of July 2, 2010 (as amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), made by the
Grantors from time to time party thereto in favor of the Agent.  Capitalized
terms defined in the Note or the Security Agreement and not otherwise defined
herein are used herein as defined in the Note or the Security Agreement.
 
SECTION 1.                      Grant of Security.  The undersigned hereby
grants to the Agent, for the ratable benefit of the Secured Parties, a security
interest in, all of its right, title and interest in and to all of the
Collateral (as defined in the Security Agreement) of the undersigned, whether
now owned or hereafter acquired by the undersigned, wherever located and whether
now or hereafter existing or arising, including, without limitation, the
property and assets of the undersigned set forth on the attached supplemental
schedules to the Schedules to the Security Agreement.
 
SECTION 2.                      Security for Obligations.  The grant of a
security interest in the Collateral by the undersigned under this Security
Agreement Supplement and the Security Agreement secures the payment of all
Secured Obligations of the undersigned now or hereafter existing under or in
respect of the Transaction Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.  Without limiting the generality of the foregoing, each
of this Security Agreement Supplement and the Security Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and that
would be owed by the undersigned to the Agent or any Secured Party under the
Transaction Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Grantor.
 
 
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SECTION 3.                      Supplements to Security Agreement
Schedules.  The undersigned has attached hereto supplemental Schedules I through
VIII to Schedules I through VIII, respectively, to the Security Agreement, and
the undersigned hereby certifies, as of the date first above written, that such
supplemental Schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement, and such
supplemental Schedules include all of the information required to be scheduled
to the Security Agreement and do not omit to state any information material
thereto.
 
SECTION 4.                      Representations and Warranties.  The undersigned
hereby makes each representation and warranty set forth in Section 5 of the
Security Agreement (as supplemented by the attached supplemental Schedules) to
the same extent as each other Grantor.
 
SECTION 5.                      Obligations Under the Security Agreement.  The
undersigned hereby agrees, as of the date first above written, to be bound as a
Grantor by all of the terms and provisions of the Security Agreement to the same
extent as each of the other Grantors.  The undersigned further agrees, as of the
date first above written, that each reference in the Security Agreement to an
"Additional Grantor" or a "Grantor" shall also mean and be a reference to the
undersigned.
 
SECTION 6.                      Governing Law.  This Security Agreement
Supplement shall be governed by, and construed in accordance with, the laws of
the State of New York.
 
 
Very truly yours,
 
[NAME OF ADDITIONAL GRANTOR]
 
 
 
By:                                                                           
   

 
Name:

 
Title:

 
 

 
 
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Acknowledged and Agreed:
 
HCP-TELA, LLC,
as the Agent

By:    _____________________________
Name:
Title:

 
 
 
 
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