Exhibit 10.42

 

 

GUARANTEE AND COLLATERAL AGREEMENT

dated as of

May 2, 2011,

among

PHARMERICA CORPORATION,

ITS SUBSIDIARIES PARTY HERETO

and

CITIBANK, N.A.,

as Collateral Agent

 

 

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TABLE OF CONTENTS

 

              Page  

ARTICLE I DEFINITIONS

     1     

1.01

   Credit Agreement      1     

1.02

   Other Defined Terms      1   

ARTICLE II GUARANTEE

     5      2.01    Guarantee      5      2.02    Guarantee of Payment      5   
  2.03    No Limitations      5      2.04    Reinstatement      6      2.05   
Agreement To Pay; Subrogation      6      2.06    Information      7   

ARTICLE III PLEDGE OF SECURITIES

     7     

3.01

   Pledge      7     

3.02

   Delivery of the Pledged Collateral      8     

3.03

   Representations, Warranties and Covenants      8     

3.04

   Certification of Limited Liability Company and Limited Partnership Interests
     9     

3.05

   Registration in Nominee Name; Denominations      9     

3.06

   Voting Rights; Dividends and Interest      9   

ARTICLE IV SECURITY INTERESTS IN PERSONAL PROPERTY

     11     

4.01

   Security Interest      11     

4.02

   Representations and Warranties      13     

4.03

   Covenants      14     

4.04

   Other Actions      16   

ARTICLE V REMEDIES

     18     

5.01

   Remedies Upon Default      18     

5.02

   Application of Proceeds      19     

5.03

   Grant of License to Use Intellectual Property      20     

5.04

   Securities Act      20     

5.05

   Registration      21   

ARTICLE VI INDEMNITY, SUBROGATION AND SUBORDINATION

     22     

6.01

   Indemnity and Subrogation      22     

6.02

   Contribution and Subrogation      22     

6.03

   Subordination      22   

 

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ARTICLE VII MISCELLANEOUS

     23     

7.01

   Notices      23     

7.02

   Waivers; Amendment      23     

7.03

   Collateral Agent’s Fees and Expenses; Indemnification      23     

7.04

   Successors and Assigns      24     

7.05

   Survival of Agreement; Reinstatement      25     

7.06

   Counterparts; Effectiveness; Several Agreement      25     

7.07

   Severability      25     

7.08

   Right of Set-Off      25     

7.09

   Governing Law; Jurisdiction; Consent to Service of Process      26     

7.10

   WAIVER OF JURY TRIAL      26     

7.11

   Headings      27     

7.12

   Termination or Release      27     

7.13

   Additional Subsidiaries      27     

7.14

   Collateral Agent Appointed Attorney-in-Fact      28   

 

Schedules    Schedule I    Subsidiary Loan Parties Schedule II    Specified
Pledge Equity Interests; Specified Pledged Indebtedness Schedule III    U.S.
Intellectual Property Schedule IV    Commercial Tort Claims Exhibits    Exhibit
I    Form of Supplement Exhibit II    Form of Patent and Trademark Security
Agreement Exhibit III    Form of Copyright Security Agreement

 

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GUARANTEE AND COLLATERAL AGREEMENT (this “Agreement”), dated as of May 2, 2011,
among PHARMERICA CORPORATION, a Delaware corporation (the “Borrower”), the
Subsidiaries of the Borrower from time to time party hereto and Citibank, N.A.
(“Citi”), as Collateral Agent.

Reference is made to the Credit Agreement dated as of May 2, 2011 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, the Lenders party thereto and Citi, as Administrative Agent.
The Lenders have agreed to extend credit to the Borrower subject to the terms
and conditions set forth in the Credit Agreement. The obligations of the Lenders
to extend such credit are conditioned upon, among other things, the execution
and delivery of this Agreement. The Subsidiary Loan Parties are subsidiaries of
the Borrower, will derive substantial benefits from the extension of credit to
the Borrower pursuant to the Credit Agreement and are willing to execute and
deliver this Agreement in order to induce the Lenders to extend such credit.
Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

1.01 Credit Agreement.

(a) Capitalized terms used in this Agreement, not otherwise defined herein and
defined in the Credit Agreement shall have the meanings specified in the Credit
Agreement. Unless the context otherwise requires, all terms defined in the New
York UCC (as defined herein) and not defined in this Agreement have the meanings
specified therein; the term “instrument” shall have the meaning specified in
Article 9 of the New York UCC.

(b) The rules of construction specified in Section 1.03 of the Credit Agreement
also apply to this Agreement.

1.02 Other Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

“Account Debtor” means any Person who is or who may become obligated to any Loan
Party under, with respect to or on account of an Account.

“Article 9 Collateral” has the meaning assigned to such term in Section 4.01.

“Borrower Group Members” means, collectively, the Borrower and the Subsidiaries.

“CHAMPVA” means, collectively, the Civilian Health and Medical Program of the
Department of Veteran Affairs, a program of medical benefits covering retirees
and dependents of former members of the armed services administered by the
United States Department of Veteran Affairs and all laws, rules,

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regulations, manuals, orders, guidelines or requirements pertaining to such
program, including (a) all Federal statutes (whether set forth in 38 U.S.C. §
1713 or elsewhere) affecting such program or applicable to CHAMPVA; and (b) all
rules, regulations (including 38 C.F.R. § 17.54), manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities promulgated in connection with such program (whether or not having
the force of law), in each case as the same may be amended, supplemented or
otherwise modified from time to time.

“Collateral” means Article 9 Collateral and Pledged Collateral.

“Contingent Obligations” means contingent obligations for indemnification,
expense reimbursement, tax gross-up or yield protection as to which no claim has
been made.

“Copyright License” means any written agreement, now or hereafter in effect,
granting any right to any third party under any copyright now or hereafter owned
by any Loan Party or that such Loan Party otherwise has the right to license, or
granting any right to any Loan Party under any copyright now or hereafter owned
by any third party, and all rights of such Loan Party under any such agreement.

“Copyrights” means all of the following now owned or hereafter acquired by any
Loan Party: (a) all copyright rights in any work subject to the copyright laws
of the United States or any other country, whether as author, assignee,
transferee or otherwise, and (b) all registrations and applications for
registration of any such copyright in the United States, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on Schedule III.

“Credit Agreement” has the meaning assigned to such term in the preliminary
statement of this Agreement.

“Excluded Equity Interests” has the meaning assigned to such term in
Section 3.01.

“Federal Securities Laws” has the meaning assigned to such term in Section 5.04.

“General Intangibles” has the meaning assigned to such term in Article 9 of the
New York UCC and, for the avoidance of doubt, includes indemnification claims
and contract rights.

“Immaterial Indebtedness” means, with respect to any Loan Party, Indebtedness of
any other Borrower Group Member that is less than $1,000,000 in the aggregate
for all such Indebtedness of such Borrower Group Member owing to such Loan
Party.

“Intellectual Property” means all intellectual and similar property of every
kind and nature now owned or hereafter acquired by any Loan Party, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information, know how, show
how or other data or information, software and databases and all embodiments or
fixations thereof and related documentation, registrations and franchises, and
all additions, improvements and accessions to, and books and records describing
or used in connection with, any of the foregoing.

“IP Agreements” has the meaning assigned to such term in Section 4.02(a).

 

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“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement relating to intellectual property to which
any Loan Party is a party.

“Medicaid Receivable” means any Account with respect to which the obligor is a
state Governmental Authority (or agent thereof) obligated to pay, pursuant to
Federal or state Medicaid program statutes or regulations, for services rendered
to eligible beneficiaries thereunder.

“Medicare Receivable” means any Account with respect to which the obligor is a
Federal Governmental Authority (or agent thereof) obligated to pay, pursuant to
federal Medicare program statutes or regulations, for services rendered to
eligible beneficiaries thereunder.

“New York UCC” means the Uniform Commercial Code as from time to time in effect
in the State of New York.

“Patent License” means any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a patent, now or hereafter owned by any Loan Party or that any Loan Party
otherwise has the right to license, is in existence, or granting to any Loan
Party any right to make, use or sell any invention on which a patent, now or
hereafter owned by any third party, is in existence, and all rights of any Loan
Party under any such agreement.

“Patents” means all of the following now owned or hereafter acquired by any Loan
Party: (a) all letters patent of the United States or the equivalent thereof in
any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office, including those
listed on Schedule III, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.

“Pledged Collateral” has the meaning assigned to such term in Section 3.01.

“Pledged Equity Interests” has the meaning assigned to such term in
Section 3.01.

“Pledged Indebtedness” has the meaning assigned to such term in Section 3.01.

“Pledged Securities” means any promissory notes, stock certificates or other
securities certificates or instruments now or hereafter included in the Pledged
Collateral, including all certificates and instruments representing or
evidencing any Pledged Collateral.

“Proceeds” has the meaning assigned to such term in Section 9-102 of the New
York UCC.

“Retained Collection Rights” means, with respect to any Medicaid Receivable,
Medicare Receivable, TRICARE Receivable or VA Receivable of any Loan Party, the
right of such Loan Party to collect and receive from the obligor thereon
payments in respect of such receivable in

 

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the absence of a court order requiring such obligor to submit payments thereon
directly to a Person other than such Loan Party.

“Secured Cash Management/Purchasing Card Obligations” means the obligations
described in clause (c) of the definition of the term “Secured Obligations”.

“Secured Parties” means, collectively, (a) the Lenders, (b) the Collateral
Agent, (c) the Administrative Agent, (d) the Issuing Banks, (e) the
beneficiaries of each indemnification obligation undertaken by any Loan Party
under any Loan Document, (f) each Permitted Secured Hedge Bank, (g) each other
Person to whom any of the Secured Obligations (including Secured Cash
Management/Purchasing Card Obligations) is owed and (h) the successors and
assigns of each of the foregoing.

“Security Interest” has the meaning assigned to such term in Section 4.01.

“Specified Pledged Equity Interests” means, with respect to any Loan Party, any
Pledged Equity Interests that are Equity Interests in a Subsidiary.

“Specified Pledged Indebtedness” means, with respect to any Loan Party, Pledged
Indebtedness (other than Immaterial Indebtedness) owing to it by any other
Borrower Group Member.

“Specified Pledged Securities” means, collectively, the Specified Pledged Equity
Interests and the Specified Pledged Indebtedness.

“Trademark License” means any written agreement, now or hereafter in effect,
granting to any third party any right to use any trademark now or hereafter
owned by any Loan Party or that any Loan Party otherwise has the right to
license, or granting to any Loan Party any right to use any trademark now or
hereafter owned by any third party, and all rights of any Loan Party under any
such agreement.

“Trademarks” means all of the following now owned or hereafter acquired by any
Loan Party: (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, and all extensions or renewals
thereof, including registrations and registration applications in the United
States Patent and Trademark Office or any similar offices in any State of the
United States, and all extensions, or renewals thereof, including those listed
on Schedule III, (b) all goodwill associated therewith or symbolized thereby and
(c) all other assets, rights and interests that uniquely reflect or embody such
goodwill.

“TRICARE” means, collectively, a program of medical benefits covering former and
active members of the uniformed services and certain of their dependents,
financed and administered by the United States Department of Defense, Department
of Health and Human Services and Department of Transportation, which program was
formerly known as the Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS), and all laws, rules,

 

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regulations, manuals, orders and administrative, reimbursement and other
guidelines of all Governmental Authorities promulgated in connection with such
program (whether or not having the force of law), in each case as the same may
be amended, supplemented or otherwise modified from time to time.

“TRICARE Receivable” means any Account payable pursuant to TRICARE.

“VA Receivable” means any Account payable pursuant to CHAMPVA.

ARTICLE II

Guarantee

2.01 Guarantee. Each Subsidiary Loan Party unconditionally guarantees, jointly
with the other Subsidiary Loan Parties and severally, as a primary obligor and
not merely as a surety, the due and punctual payment and performance of the
Secured Obligations. Each of the Subsidiary Loan Parties further agrees that the
Secured Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any Secured Obligation.
Each of the Subsidiary Loan Parties waives presentment to, demand of payment
from and protest to the Borrower or any other Subsidiary Loan Party of any of
the Secured Obligations, and also waives notice of acceptance of its guarantee
and notice of protest for nonpayment.

2.02 Guarantee of Payment. Each of the Subsidiary Loan Parties further agrees
that its guarantee hereunder constitutes a guarantee of payment when due and not
of collection. Each of the Subsidiary Loan Parties waives any right to require
that any resort be had by the Collateral Agent or any other Secured Party to any
security held for the payment of the Secured Obligations or to any balance of
any deposit account or credit on the books of the Collateral Agent or any other
Person in favor of the Borrower or any Subsidiary Loan Party.

2.03 No Limitations.

(a) Except for termination or release of a Subsidiary Loan Party’s obligations
hereunder as expressly provided in Section 7.12, the obligations of each
Subsidiary Loan Party hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or set-off, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Secured
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Subsidiary Loan Party hereunder shall not be discharged or
impaired or otherwise affected by (i) the failure of the Collateral Agent or any
other Secured Party to assert any claim or demand or to enforce any right or
remedy under the provisions of any Loan Document or otherwise; (ii) any
rescission, waiver, amendment or modification of, or any release from any of the
terms or provisions of, any Loan Document or any other agreement, including with
respect to any other Subsidiary Loan Party under this Agreement; (iii) the
release of any security held by the Collateral Agent or any other Secured Party
for the Secured Obligations or any of them; (iv) any default, failure or delay,
willful or otherwise, in the performance of the Secured Obligations; or (v) any
other act or

 

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omission that may or might in any manner or to any extent vary the risk of any
Subsidiary Loan Party or otherwise operate as a discharge of any Subsidiary Loan
Party as a matter of law or equity (other than the payment in full in cash of
all the Secured Obligations). Each Subsidiary Loan Party expressly authorizes
the Secured Parties, to the fullest extent permitted by applicable law, to take
and hold security for the payment and performance of the Secured Obligations, to
exchange, waive or release any or all such security (with or without
consideration), to enforce or apply such security and direct the order and
manner of any sale thereof in their sole discretion or to release or substitute
any one or more other guarantors or obligors upon or in respect of the Secured
Obligations, all without affecting the obligations of any Subsidiary Loan Party
hereunder.

(b) To the fullest extent permitted by applicable law, each Subsidiary Loan
Party waives any defense based on or arising out of any defense of the Borrower
or any other Loan Party or the unenforceability of the Secured Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower or any other Loan Party, other than the payment in
full in cash of all the Secured Obligations. The Collateral Agent and the other
Secured Parties may, at their election, foreclose on any security held by one or
more of them by one or more judicial or nonjudicial sales, accept an assignment
of any such security in lieu of foreclosure, compromise or adjust any part of
the Secured Obligations, make any other accommodation with the Borrower or any
other Loan Party or exercise any other right or remedy available to them against
the Borrower or any other Loan Party, without affecting or impairing in any way
the liability of any Subsidiary Loan Party hereunder except to the extent the
Secured Obligations have been fully paid in full in cash or the guarantee of
such Subsidiary Loan Party has been terminated or released pursuant to
Section 7.12. To the fullest extent permitted by applicable law, each Subsidiary
Loan Party waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of such
Subsidiary Loan Party against the Borrower or any other Loan Party, as the case
may be, or any security.

2.04 Reinstatement. Each of the Subsidiary Loan Parties agrees that its
guarantee hereunder shall, to the fullest extent permitted by applicable law,
continue to be effective or be reinstated, as the case may be, if at any time
payment of any Secured Obligation, or any part thereof, is rescinded or must
otherwise be restored by the Collateral Agent or any other Secured Party upon
the bankruptcy or reorganization of the Borrower, any other Loan Party or
otherwise.

2.05 Agreement To Pay; Subrogation. In furtherance of the foregoing and not in
limitation of any other right that the Collateral Agent or any other Secured
Party has at law or in equity against any Subsidiary Loan Party by virtue
hereof, upon the failure of any Loan Party to pay any Secured Obligation that
such Loan Party is obligated to pay, when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
each Subsidiary Loan Party hereby promises to and will forthwith pay, or cause
to be paid, to the Collateral Agent for distribution to the applicable Secured
Parties in cash the amount of such unpaid Secured Obligation. Upon payment by
any Subsidiary Loan Party of any sums to the Collateral Agent as provided above,
all rights of such Subsidiary Loan Party against the Borrower or any other Loan
Party arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subject to
Article VI.

 

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2.06 Information. Each Subsidiary Loan Party assumes all responsibility for
being and keeping itself informed of the Borrower’s and each other Subsidiary
Loan Party’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Secured Obligations and the nature,
scope and extent of the risks that such Subsidiary Loan Party assumes and incurs
hereunder, and agrees that none of the Collateral Agent or the other Secured
Parties will have any duty to advise such Subsidiary Loan Party of information
known to it or any of them regarding such circumstances or risks.

ARTICLE III

Pledge of Securities

3.01 Pledge. As security for the payment or performance, as the case may be, in
full of the Secured Obligations, each Loan Party hereby assigns and pledges to
the Collateral Agent, its successors and permitted assigns, for the benefit of
the Secured Parties, and hereby grants to the Collateral Agent, its successors
and permitted assigns, for the benefit of the Secured Parties, a security
interest in, all of such Loan Party’s right, title and interest in, to and under
the following assets, whether now owned or hereafter acquired (a)(i) the shares
of capital stock and other Equity Interests owned by such Loan Party on the date
hereof (including all such shares and other Equity Interests in the Subsidiaries
listed opposite the name of such Loan Party on Schedule II), (ii) any Equity
Interests obtained in the future by such Loan Party and (iii) the certificates
representing all such Equity Interests (all of the foregoing being collectively
referred to as the “Pledged Equity Interests”); provided that the Pledged Equity
Interests shall not include (A) more than 66% of the issued and outstanding
voting Equity Interests of any CFC or (B) Equity Interests in any Person other
than a wholly-owned Subsidiary where such assignment or pledge hereunder
requires, pursuant to the constituent documents of such Person or any related
joint venture, shareholder or like agreement binding on any shareholder, partner
or member of such Person, the consent of any governing body, shareholder,
partner or member of such Person (other than a Loan Party) and such consent
shall not have been obtained (the Equity Interests so excluded being
collectively referred to herein as the “Excluded Equity Interests”); (b)(i) debt
securities owned by such Loan Party on the date hereof (including all such debt
securities of other Borrower Group Members listed opposite the name of such Loan
Party on Schedule II), (ii) any debt securities obtained in the future by such
Loan Party and (iii) all promissory notes and any other instruments evidencing
such debt securities (all of the foregoing being collectively referred to as the
“Pledged Indebtedness”); (c) subject to Section 3.06, all payments of principal
or interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of, in exchange for or
upon the conversion of, and all other Proceeds received in respect of, the
securities and instruments referred to in clauses (a) and (b) above; (d) subject
to Section 3.06, all rights and privileges of such Loan Party with respect to
the securities, instruments and other property referred to in clauses (a),
(b) and (c) above; and (e) all Proceeds of any of the foregoing (the items
referred to in clauses (a) through (e) above being collectively referred to as
the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the benefit of the
Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.

 

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3.02 Delivery of the Pledged Collateral.

(a) Each Loan Party represents and warrants that any and all Specified Pledged
Securities in existence on the date hereof have been delivered to the Collateral
Agent. Each Loan Party agrees to deliver or cause to be delivered to the
Collateral Agent any and all Specified Pledged Securities at any time owned by
such Loan Party promptly (and in any event within 5 Business Days) upon
acquiring such Specified Pledged Securities.

(b) Each Loan Party represents and warrants that any and all Indebtedness (other
than Immaterial Indebtedness) for borrowed money owed to it evidenced by a duly
executed promissory note in existence on the date hereof have been delivered to
the Collateral Agent. Each Loan Party will cause any Indebtedness for borrowed
money owed to it by any other Borrower Group Member (other than Immaterial
Indebtedness) to be evidenced by a duly executed promissory note that is pledged
and delivered to the Collateral Agent pursuant to the terms hereof promptly (and
in any event within 5 Business Days) upon receipt of such promissory note.

(c) Upon delivery to the Collateral Agent, all Specified Pledged Securities
shall be accompanied by stock powers duly executed in blank or other instruments
of transfer reasonably satisfactory to the Collateral Agent. Each delivery of
Specified Pledged Securities after the date of this Agreement shall be
accompanied by a schedule describing the Specified Pledged Securities so
delivered, which schedule shall be attached to Schedule II hereto and made a
part thereof; provided that failure to so attach any such schedule shall not
affect the validity of such pledge of such Specified Pledged Securities.

(d) The security interests granted in Section 3.01 are granted as security only
and shall not subject the Collateral Agent or any other Secured Party to, or in
any way alter or modify, any obligation or liability of any Loan Party with
respect to or arising out of the Pledged Collateral.

3.03 Representations, Warranties and Covenants. The Loan Parties jointly and
severally represent, warrant and covenant to and with the Collateral Agent, for
the benefit of the Secured Parties, that:

(a) Schedule II sets forth a true and complete list, with respect to each Loan
Party, of (i) all the Equity Interests owned by such Loan Party in the
Subsidiaries on the date hereof (other than any Excluded Equity Interests),
setting forth the percentage of the issued and outstanding units of each class
of the Equity Interests of the issuer thereof represented by the Pledged Equity
Interests of such Loan Party, and (ii) all Specified Pledged Indebtedness owned
by such Loan Party on the date hereof, including all promissory notes in respect
thereof;

(b) except to the extent any failure to be so authorized or issued could not, in
the aggregate, be reasonably expected to be adverse to the interests of the
Secured Parties in any material respect, (i) the Pledged Equity Interests and
Pledged Indebtedness have been duly and validly authorized and issued by the
issuers thereof, (ii) in the case of Pledged Equity Interests, the same are
fully paid and nonassessable and (iii) in the case of

 

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Pledged Indebtedness, the same are valid and binding obligations of the issuers
thereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors’ rights generally, concepts of
reasonableness and general principles of equity, regardless of whether
considered in a proceeding in equity or at law;

(c) except for the security interests granted hereunder, each of the Loan
Parties (i) is and, subject to any transfers made in compliance with the Credit
Agreement, will continue to be the direct owner, beneficially, and to the extent
applicable, of record, of the Specified Pledged Securities indicated on Schedule
II as owned by such Loan Party, (ii) holds the same free and clear of all Liens,
other than Liens created by this Agreement and non-consensual Permitted
Encumbrances, and (iii) will, to the extent commercially reasonable, defend its
title or interest thereto or therein against any and all Liens (other than the
Lien created by this Agreement and Permitted Encumbrances), however arising, of
all Persons whomsoever; and

(d) no consent or approval of any Governmental Authority, any securities
exchange or any other Person was or is necessary to the validity of the pledge
effected hereby (other than such consents and approvals as have been obtained
and are in full force and effect).

3.04 Certification of Limited Liability Company and Limited Partnership
Interests. Each Loan Party acknowledges and agrees that (a) each interest in any
limited liability company or limited partnership that is a Specified Pledged
Equity Interest pledged hereunder and not represented by a certificate shall not
be a “security” within the meaning of Article 8 of the New York UCC and shall
not be governed by Article 8 of the Uniform Commercial Code of the applicable
jurisdiction and (b) the Loan Parties shall at no time elect to treat any such
interest as a “security” within the meaning of Article 8 of the New York UCC or
issue any certificate representing such interest (except that the Loan Parties
may elect to so treat any such interest as a “security” and issue any
certificate representing such interest if promptly thereafter the applicable
Loan Party delivers such certificate to the Collateral Agent).

3.05 Registration in Nominee Name; Denominations. The Collateral Agent, on
behalf of the Secured Parties, shall have the right to hold the Specified
Pledged Securities in the name of the applicable Loan Party, endorsed or
assigned in blank or in favor of the Collateral Agent or, at any time upon the
occurrence and during the continuance of an Event of Default, in its own name
(as pledgee) or the name of its nominee (as pledgee or as sub-agent). Upon the
occurrence and during the continuance of an Event of Default, each Loan Party
will promptly give to the Collateral Agent copies of any material notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Loan Party.

3.06 Voting Rights; Dividends and Interest.

(a) Unless and until an Event of Default shall have occurred and be continuing
and the Collateral Agent shall have notified the Loan Parties that their rights
under this Section 3.06 are being suspended:

 

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(i) Each Loan Party shall be entitled to exercise any and all voting and/or
other consensual rights and powers inuring to an owner of Pledged Equity
Interests or Pledged Indebtedness; provided that such rights and powers shall
not be exercised in any manner that could materially and adversely affect the
rights inuring to a holder of any Pledged Equity Interests or any Pledged
Indebtedness or the rights and remedies of any of the Collateral Agent or the
other Secured Parties under this Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.

(ii) The Collateral Agent shall execute and deliver to each Loan Party, or cause
to be executed and delivered to such Loan Party, all such proxies, powers of
attorney and other instruments as such Loan Party may reasonably request for the
purpose of enabling such Loan Party to exercise the voting and/or consensual
rights and powers it is entitled to exercise pursuant to subparagraph (i) above.

(iii) Each Loan Party shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Equity Interests and the Pledged Indebtedness to the
extent and only to the extent that such dividends, interest, principal and other
distributions are not prohibited by the terms and conditions of the Credit
Agreement, the other Loan Documents and applicable laws; provided that any
noncash dividends, interest, principal or other distributions that would
constitute Pledged Equity Interests or Pledged Indebtedness, whether resulting
from a subdivision, combination or reclassification of the outstanding Equity
Interests of the issuer of any Pledged Equity Interests or received in exchange
for Pledged Equity Interests or Pledged Indebtedness or any part thereof, or in
redemption thereof, or as a result of any merger, consolidation, acquisition or
other exchange of assets to which such issuer may be a party or otherwise, shall
be and become part of the Pledged Collateral, and to the extent constituting a
Specified Pledged Security, if received by any Loan Party shall be held in trust
for the benefit of the Collateral Agent and the other Secured Parties and shall
be forthwith delivered to the Collateral Agent in the same form as so received
(with any necessary endorsement).

(b) Upon the occurrence and during the continuance of an Event of Default, after
the Collateral Agent shall have notified the Loan Parties of the suspension of
their rights under paragraph (a)(iii) of this Section 3.06, then all rights of
any Loan Party to dividends, interest, principal or other distributions that
such Loan Party is authorized to receive pursuant to paragraph (a)(iii) of this
Section 3.06 shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall have the sole and exclusive right and
authority to receive and retain such dividends, interest, principal or other
distributions. All dividends, interest, principal or other distributions
received by any Loan Party contrary to the provisions of this Section 3.06 shall
be held in trust for the benefit of the Collateral Agent and the other Secured
Parties, shall be segregated from other property or funds of such Loan Party and
shall be forthwith delivered to the Collateral Agent upon demand in the same
form as so received (with any necessary endorsement). Any and all money and
other property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the Collateral Agent in an
account to be established by the Collateral Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of
Section 5.02. After all Events of Default have been cured or waived and the
Borrower has delivered to the

 

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Collateral Agent a certificate to that effect, the Collateral Agent shall
promptly repay to each Loan Party (without interest) all dividends, interest,
principal or other distributions that such Loan Party would otherwise be
permitted to retain pursuant to the terms of paragraph (a)(iii) of this
Section 3.06 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, after
the Collateral Agent shall have notified the Loan Parties of the suspension of
their rights under paragraph (a)(i) of this Section 3.06, then (subject to any
restriction contained in joint venture agreements in respect of the applicable
Pledged Equity Interests) all rights of any Loan Party to exercise the voting
and consensual rights and powers it is entitled to exercise pursuant to
paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral
Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and all such
rights shall thereupon become vested in the Collateral Agent, which shall have
the sole and exclusive right and authority to exercise such voting and
consensual rights and powers; provided that, unless otherwise directed by
Lenders constituting “Required Lenders” under the Credit Agreement, the
Collateral Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Loan Parties to exercise such
rights. After all Events of Default have been cured or waived and the Borrower
has delivered to the Collateral Agent a certificate to that effect, the voting
and consensual rights and powers the Loan Parties are otherwise entitled to
exercise pursuant to paragraph (a)(i) of this Section 3.06 shall be restored.

(d) Any notice given by the Collateral Agent to the Loan Parties suspending
their rights under paragraph (a) of this Section 3.06 may (i) be given by
telephone if promptly confirmed in writing, (ii) be given to one or more of the
Loan Parties at the same or different times and (iii) suspend the rights of the
Loan Parties under paragraph (a)(i) or paragraph (a)(iii) in part without
suspending all such rights (as specified by the Collateral Agent in its sole and
absolute discretion) and without waiving or otherwise affecting the Collateral
Agent’s rights to give additional notices from time to time suspending other
rights so long as an Event of Default has occurred and is continuing.

ARTICLE IV

Security Interests in Personal Property

4.01 Security Interest.

(a) As security for the payment or performance, as the case may be, in full of
the Secured Obligations, each Loan Party hereby assigns and pledges to the
Collateral Agent, its successors and permitted assigns, for the benefit of the
Secured Parties, and hereby grants to the Collateral Agent, its successors and
permitted assigns, for the benefit of the Secured Parties, a security interest
(the “Security Interest”) in, all right, title and interest in, to and under any
and all of the following assets and properties now owned or at any time
hereafter acquired by such Loan Party or in which such Loan Party now has or at
any time in the future may acquire any right, title or interest (collectively,
the “Article 9 Collateral”):

(i) all Accounts, including all Health-care-insurance Receivables;

 

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(ii) all Chattel Paper;

(iii) all Documents;

(iv) all Equipment;

(v) all Inventory;

(vi) all other Goods;

(vii) all Instruments;

(viii) all Investment Property;

(ix) all Intellectual Property (except for “intent-to-use” applications for a
trademark or service mark, to the extent that, and solely during the period in
which, the grant of a security interest therein would impair the validity or
enforceability of such “intent-to-use” application under applicable Federal
law);

(x) all other General Intangibles;

(xi) all Letter-of-Credit Rights that are Supporting Obligations;

(xii) all Commercial Tort Claims specifically described on Schedule IV hereto,
as such schedule may be supplemented from time to time pursuant to the terms
hereof;

(xiii) all books and records pertaining to any Article 9 Collateral; and

(xiv) to the extent not otherwise included, all Proceeds, Supporting Obligations
and products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing;

provided that, Article 9 Collateral shall not include (A) Intellectual Property
to the extent, but only to the extent that, perfection of a security interest
therein requires a filing to be made in any jurisdiction other than the United
States, any political subdivision thereof or its territories or possessions,
(B) the Excluded Equity Interests, (C) to the extent (but only to the extent)
that at any time the Collateral Agent may not validly possess a security
interest in any Retained Collection Rights under applicable law, such Retained
Collection Rights, (D) any contract, agreement, lease, license or permit to
which a Loan Party is a party or any of its rights or interests thereunder if
and for so long as the grant of such security interest shall constitute or
result in (1) the unenforceability of any right of the Loan Party therein or
(2) a breach or termination pursuant to the terms of, or a default under, any
such contract, agreement, lease, license or permit (other than to the extent
that any such term would be rendered ineffective pursuant to Section 9-406,
9-407, 9-408 or 9-409 of the New York UCC or any other applicable law or
principles of equity), provided that such security interest shall attach
immediately at such time as the condition causing such unenforceability, breach
or termination shall cease to be applicable and, to the extent severable, shall
attach immediately to any portion of such contract or agreement that does not
result in any of the consequences specified this clause, including any

 

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Proceeds of such contract or agreement, (E) motor vehicles the perfection of a
security interest in which is excluded from the Uniform Commercial Code in the
relevant jurisdiction, (F) Deposit Accounts (except to the extent constituting
or containing Collateral referred to in clause (xiv) above) and
(G) Letter-of-Credit Rights not constituting Supporting Obligations, (H) cash
(except to the extent constituting Collateral referred to in clause
(xiv) above), (I) real property leases and (J) Commercial Tort Claims that are
not specifically described in Schedule IV (as such schedule may be supplemented
from time to time).

(b) Each Loan Party hereby irrevocably authorizes the Collateral Agent at any
time and from time to time to file in the jurisdiction of its organization any
initial financing statements with respect to the Collateral or any part thereof
and amendments thereto that (i) indicate the Collateral as all assets of such
Loan Party or words of similar effect as being of an equal or lesser scope or
with greater detail and (ii) contain the information required by Article 9 of
the Uniform Commercial Code of such jurisdiction for the filing of any financing
statement or amendment, including whether such Loan Party is an organization,
the type of organization and any organizational identification number issued to
such Loan Party. Each Loan Party agrees to provide such information to the
Collateral Agent promptly upon request.

Each Loan Party hereby further irrevocably authorizes the Collateral Agent at
any time and from time to time to file with the United States Patent and
Trademark Office or United States Copyright Office (or any successor office)
such documents as may be necessary or advisable for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
such Loan Party in any United States registered Patent, United States registered
Copyright and United States registered Trademark (and applications for any of
the foregoing), without the signature of such Loan Party and naming such Loan
Party as debtor and the Collateral Agent as secured party.

(c) The Security Interest is granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or in any way alter or modify,
any obligation or liability of any Loan Party with respect to or arising out of
the Article 9 Collateral.

4.02 Representations and Warranties. The Loan Parties jointly and severally
represent and warrant to the Collateral Agent, for the benefit of the Secured
Parties, that:

(a) The Perfection Certificate has been duly prepared, completed and executed
and the information set forth therein, including the exact legal name of each
Loan Party, is correct and complete as of the date of this Agreement. Each Loan
Party shall ensure that a Patent and Trademark Security Agreement, in the form
of Exhibit II hereto, and a Copyright Security Agreement in the form of Exhibit
III hereto (such agreements being collectively referred to as the “IP
Agreements”), in each case containing a description of the Article 9 Collateral
consisting of the United States registered Patents, United States registered
Trademarks and United States registered Copyrights (and applications for any of
the foregoing), as applicable, and executed by each Loan Party owning any such
Article 9 Collateral, shall be received by the Collateral Agent within one month
after the execution of this Agreement, for registration thereof with the United
States Patent and Trademark Office or the United States Copyright

 

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Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17 U.S.C. § 205 and the
regulations thereunder, as applicable.

(b) The Article 9 Collateral is owned by the Loan Parties free and clear of any
Lien, except for Liens permitted under Section 6.02 of the Credit Agreement.

(c) Schedule III hereto sets forth, as of the date hereof, (i) all of each Loan
Party’s United States registered Patents and Patent applications, including the
name of the registered owner, type, registration or application number and the
expiration date (if already registered) of each such Patent and Patent
application owned by any Loan Party, (ii) all of each Loan Party’s United States
registered Trademarks and Trademark applications, including the name of the
registered owner, the registration or application number and the expiration date
(if already registered) of each such Trademark and Trademark application owned
by any Loan Party, and (iii) all of each Loan Party’s United States registered
Copyrights and Copyright applications, including the name of the registered
owner, title and, if applicable, the registration number of each such Copyright
or Copyright application owned by any Loan Party.

(d) Schedule IV hereto sets forth, as of the date hereof, each Commercial Tort
Claim in respect of which a complaint or a counterclaim has been filed by any
Loan Party seeking damages in an amount of $5,000,000 or more.

(e) The security interest in and Lien on the Collateral granted to the
Collateral Agent for the benefit of the Secured Parties hereunder constitutes
(a) a legal and valid security interest in all the Collateral securing the
payment and performance of the Secured Obligations, and (b) subject to the
filings and other actions required hereunder, a perfected security interest in
all the Collateral and will at all times constitute a perfected, continuing
security interest therein, prior to all other Liens on the Collateral except for
Permitted Encumbrances.

(f) All financing statements, agreements, instruments and other documents
necessary to perfect the security interest hereunder granted by it to the
Collateral Agent in respect of the Collateral have been delivered to the
Collateral Agent in completed and, to the extent necessary or appropriate, duly
executed form for filing in each appropriate governmental, municipal or other
office and at the sole cost and expense of the Loan Parties, such Loan Party
will maintain the security interest created by this Agreement in the Collateral
as a perfected first priority security interest subject only to Permitted
Encumbrances.

4.03 Covenants.

(a) Each Loan Party agrees promptly to notify the Collateral Agent in writing of
any change (i) in its legal name, (ii) in its type of organization or corporate
structure, (iii) in its Federal Taxpayer Identification Number or organizational
identification number, if any, issued to it by the jurisdiction of its
organization, (iv) in the jurisdiction of its organization or (v) in its chief
executive office. Each Loan Party agrees to promptly provide the Collateral
Agent with certified organizational documents reflecting any of the changes
described in the first sentence of

 

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this paragraph. Each Loan Party agrees not to effect or permit any change
referred to in this paragraph unless all filings have been made under the
Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected security interest in all the Collateral as and to the extent
required hereunder.

(b) Each Loan Party agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and, upon the occurrence and during the
continuance of an Event of Default, promptly to prepare and deliver to the
Collateral Agent a duly certified schedule or schedules setting forth such
information relating to the Collateral as the Collateral Agent may reasonably
request.

(c) Each Loan Party shall, at its own expense, use commercially reasonable
efforts to defend title to the Collateral against all Persons and to defend the
Security Interest of the Collateral Agent in the Collateral and the priority
thereof against any Lien not permitted under Section 6.02 of the Credit
Agreement; provided, however, that the foregoing shall not require a Loan Party
to institute an Intellectual Property infringement action against a third party
unless such action would be (i) in the ordinary course of business of the
Borrower and the Subsidiaries and (ii) in accordance with such prudent and
standard practice used in industries that are the same as or similar to those in
which the Borrower and the Subsidiaries are engaged.

(d) Each Loan Party agrees, at its own expense, to execute, acknowledge, deliver
and cause to be duly filed all such further instruments and documents and take
all such actions as the Collateral Agent may from time to time reasonably
request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and delivery of this
Agreement, the granting of the Security Interest and the filing of any financing
statements or other documents in connection herewith or therewith; provided that
no Loan Party shall be required (i) to make any filing or record any document to
perfect the Security Interest in Intellectual Property of such Loan Party other
than the filing of Uniform Commercial Code financing statements with applicable
filing offices and the filing of IP Security Agreements with the United States
Patent and Trademark Office or the United States Copyright Office, (ii) to
provide control with respect to any Deposit Account, Securities Account or
Security Entitlements, (iii) to deliver to the Collateral Agent any tangible
Chattel Paper or to provide control in respect of any Electronic Chattel Paper
or (iv) to deliver any securities certificates or Instruments other than the
Specified Pledged Securities.

(e) Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may, at its option, discharge past due taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at any time
levied or placed on the Collateral and not permitted pursuant to Section 6.02 of
the Credit Agreement, and may pay for the maintenance and preservation of the
Collateral to the extent any Loan Party fails to do so as required by the Credit
Agreement or this Agreement, and each Loan Party jointly and severally agrees to
reimburse the Collateral Agent on demand for any payment made or any expense
reasonably incurred by the Collateral Agent pursuant to the foregoing
authorization; provided that nothing in this paragraph shall be interpreted as
excusing any Loan Party from the performance of, or imposing any obligation on
the Collateral Agent or any Secured Party to cure or perform, any

 

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covenants or other promises of any Loan Party with respect to taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.

(f) Each Loan Party shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Collateral, all in accordance
with the terms and conditions thereof, and each Loan Party jointly and severally
agrees to indemnify and hold harmless the Collateral Agent and the other Secured
Parties from and against any and all liability for such performance.

(g) None of the Loan Parties shall make or permit to be made an assignment,
pledge or hypothecation of the Article 9 Collateral, or shall grant any other
Lien in respect of the Article 9 Collateral, except to the extent not prohibited
by the Credit Agreement.

(h) The Loan Parties, at their own expense, shall maintain or cause to be
maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with Section 5.07 of the Credit Agreement. Each Loan
Party irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent) as such Loan
Party’s true and lawful agent (and attorney-in-fact) for the purpose, during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Article 9 Collateral under such policies of insurance, endorsing the
name of such Loan Party on any check, draft, instrument or other item of payment
for the proceeds of such policies of insurance and for making all determinations
and decisions with respect thereto. In the event that any Loan Party at any time
or times shall fail to obtain or maintain any of the policies of insurance
required hereby or to pay any premium in whole or part relating thereto, the
Collateral Agent may, without waiving or releasing any obligation or liability
of the Loan Parties hereunder or any Event of Default, in its sole discretion,
obtain and maintain such policies of insurance and pay such premium and take any
other actions with respect thereto as the Collateral Agent deems advisable. All
sums disbursed by the Collateral Agent in connection with this paragraph,
including reasonable attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Loan Parties to the
Collateral Agent and shall be additional Secured Obligations secured hereby.

4.04 Other Actions. In order to further insure the attachment, perfection and
priority of, and the ability of the Collateral Agent to enforce, the Security
Interest, each Loan Party agrees, in each case at such Loan Party’s own expense,
to take the following actions with respect to the following Article 9
Collateral:

(a) Commercial Tort Claims. Within five Business Days after any delivery of
financial statements under Section 5.01(a) or Section 5.01(b) of the Credit
Agreement, the Loan Parties will deliver a supplement to Schedule IV hereto
specifically describing any Commercial Tort Claim in respect of which a
complaint or counterclaim seeking damages in an amount of $5,000,000 or more has
been filed by any Loan Party prior to the last day of the fiscal quarter or
fiscal year to which such certificate relates and that has not been so described
on such Schedule prior to such supplement.

 

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(b) Covenants Regarding Patent, Trademark and Copyright Collateral. (i) Within
five Business Days after any delivery of financial statements under
Section 5.01(a) or Section 5.01(b) of the Credit Agreement, the Loan Parties
will deliver a supplement to Schedule III hereto identifying (A) all of each
Loan Party’s United States registered Patents and Patent applications, including
the name of the registered owner, type, registration or application number and
the expiration date (if already registered) of each such Patent and Patent
application, (B) all of each Loan Party’s United States registered Trademarks
and Trademark applications, including the name of the registered owner, the
registration or application number and the expiration date (if already
registered) of each such Trademark and Trademark application, and (C) all of
each Loan Party’s United States registered Copyrights and Copyright
applications, including the name of the registered owner, title and, if
applicable, the registration number of each such Copyright or Copyright
application, in each case, that have not been so identified prior to such
supplement; provided that any such item enumerated in the preceding clauses (A),
(B) or (C) shall automatically constitute Collateral as if such would have
constituted Collateral at the time of execution hereof and be subject to the
Lien and security interest created by this Agreement without further action by
any party. Each Loan Party hereby (1) agrees to execute and deliver any and all
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent’s security interest in such
Intellectual Property and (2) appoints the Collateral Agent as its
attorney-in-fact to execute and file such writings for the sole purposes of
evidencing or perfecting such Security Interest, all acts of such attorney being
hereby ratified and confirmed and such power, being coupled with an interest,
being irrevocable.

(ii) Except to the extent that the failure to do so, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
each Loan Party agrees that it will not do any act or omit do to any act (and
will exercise commercially reasonable efforts to prevent its licensees from
doing any act or omitting to do any act) whereby any United States registered
Patent may become invalidated or dedicated to the public, and agrees that it
shall continue to mark any products covered by a United States registered Patent
with the relevant patent number as necessary and sufficient to establish and
preserve its maximum rights under applicable patent laws.

(iii) Except to the extent that the failure to do so, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
each Loan Party (either itself or through its licensees or its sublicensees)
will, for each United States registered Trademark, (A) maintain such Trademark
in full force free from any claim of abandonment or invalidity for non-use,
(B) maintain the quality of products and services offered under such Trademark,
(C) display such Trademark with notice of Federal or foreign registration to the
extent necessary and sufficient to establish and preserve its maximum rights
under applicable law and (D) not knowingly use or knowingly permit the use of
such Trademark in violation of any third party rights.

(iv) Except to the extent that the failure to do so, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
each Loan Party (either itself or through its licensees or sublicensees) will,
for each work covered by a United States registered Copyright, continue to
publish, reproduce, display,

 

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adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum associated rights under
applicable copyright laws.

(v) Except to the extent that the failure to do so, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect,
each Loan Party 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 to maintain and pursue each material
application relating to any United States Patent, United States Trademark or
United States Copyright (and to obtain the relevant grant or registration) and
to maintain each issued United States Patent and each registration of United
States Trademarks and United States Copyrights.

ARTICLE V

Remedies

5.01 Remedies Upon Default. Upon the occurrence and during the continuance of an
Event of Default, each Loan Party agrees to deliver each item of Collateral to
the Collateral Agent on demand, and it is agreed that the Collateral Agent shall
have the right, with or without legal process and with or without prior notice
or demand for performance (but subject to Section 9-609 of the New York UCC), to
take possession of the Collateral and without liability for trespass to enter
any premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
applicable law. Without limiting the generality of the foregoing, each Loan
Party agrees that the Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral at a public or private sale or at any broker’s board
or on any securities exchange, for cash, upon credit or for future delivery as
the Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale of securities (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any sale of Collateral shall hold the
property sold absolutely, free from any claim or right on the part of any Loan
Party, and each Loan Party hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Loan Party now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.

The Collateral Agent shall give the applicable Loan Parties 10 days’ written
notice (which each Loan Party agrees is reasonable notice within the meaning of
Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of
the Collateral Agent’s intention to make any sale of Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker’s board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral,

 

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or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Agreement, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Loan Party (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Loan Party as a credit against the purchase price, and such Secured
Party may, upon compliance with the terms of sale, hold, retain and dispose of
such property without further accountability to any Loan Party therefor. For
purposes hereof and to the extent permitted by applicable law, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and no Loan Party shall be entitled to the return of
the Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Secured Obligations paid in
full. As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.

5.02 Application of Proceeds. The Collateral Agent shall apply the proceeds of
any collection or sale of Collateral, including any Collateral consisting of
cash, as follows:

FIRST, to the payment of all costs and expenses incurred by the Collateral Agent
in connection with such collection or sale or otherwise in connection with this
Agreement, any other Loan Document or any of the Secured Obligations, including
all court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or under any
other Loan Document on behalf of any Loan Party and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder or
under any other Loan Document;

SECOND, to the payment in full of the Secured Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance with
the

 

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amounts of the Secured Obligations owed to them on the date of any such
distribution); and

THIRD, to the Loan Parties, their successors or assigns, or as a court of
competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

5.03 Grant of License to Use Intellectual Property. For the purpose of enabling
the Collateral Agent to exercise rights and remedies under this Agreement at
such time as the Collateral Agent shall be lawfully entitled to exercise such
rights and remedies after the occurrence and during the continuance of an Event
of Default, each Loan Party hereby grants to the Collateral Agent an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to the Loan Parties) to use, license or sublicense (other
than in violation of any then-existing licensing arrangements) any of the
Article 9 Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Loan Party, and wherever the same may be located, and 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 software and programs used
for the compilation or printout thereof. The use of such license by the
Collateral Agent may be exercised, at the option of the Collateral Agent, upon
the occurrence and during the continuation of an Event of Default, and any gain
or proceeds of such use shall be applied in accordance with the provisions of
Section 5.02; provided that any license, sublicense or other transaction entered
into by the Collateral Agent in accordance herewith shall be binding upon the
Loan Parties notwithstanding any subsequent cure of any such Event of Default.

5.04 Securities Act. In view of the position of the Loan Parties in relation to
the Pledged Collateral, or because of other current or future circumstances, a
question may arise under the Securities Act of 1933, as now or hereafter in
effect, or any similar statute hereafter enacted analogous in purpose or effect
(such Act and any such similar statute as from time to time in effect being
called the “Federal Securities Laws”) with respect to any disposition of the
Pledged Collateral permitted hereunder. Each Loan Party understands that
compliance with the Federal Securities Laws might very strictly limit the course
of conduct of the Collateral Agent if the Collateral Agent were to attempt to
dispose of all or any part of the Pledged Collateral, and might also limit the
extent to which or the manner in which any subsequent transferee of any Pledged
Collateral could dispose of the same. Similarly, there may be other legal
restrictions or limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Pledged Collateral under applicable Blue Sky or
other state securities laws or similar laws analogous in purpose or effect. Each
Loan Party recognizes that in light of such restrictions and limitations the
Collateral Agent may, with respect to any sale of the Pledged Collateral, limit
the purchasers to those who will agree, among other things, to acquire such
Pledged Collateral for their own

 

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account, for investment, and not with a view to the distribution or resale
thereof. Each Loan Party acknowledges and agrees that in light of such
restrictions and limitations, the Collateral Agent, in its sole and absolute
discretion (a) may proceed to make such a sale whether or not a registration
statement for the purpose of registering such Pledged Collateral or part thereof
shall have been filed under the Federal Securities Laws and (b) may approach and
negotiate with a single potential purchaser to effect such sale. Each Loan Party
acknowledges and agrees that any such sale might result in prices and other
terms less favorable to the seller than if such sale were a public sale without
such restrictions. In the event of any such sale, the Collateral Agent shall
incur no responsibility or liability for selling all or any part of the Pledged
Collateral at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a single purchaser were approached. The provisions of this
Section 5.04 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.

5.05 Registration. Each Loan Party agrees that, upon the occurrence and during
the continuance of an Event of Default, if for any reason the Collateral Agent
desires to sell any of the Pledged Collateral at a public sale, it will, at any
time and from time to time, upon the written request of the Collateral Agent,
use commercially reasonable efforts to take or to cause the issuer of such
Pledged Collateral to take such action and prepare, distribute and/or file such
documents, as are required or advisable in the reasonable opinion of counsel for
the Collateral Agent to permit the public sale of such Pledged Collateral. Each
Loan Party further agrees to indemnify, defend and hold harmless the Collateral
Agent, each other Secured Party, any underwriter and their respective officers,
directors, affiliates and controlling persons from and against all loss,
liability, expenses, costs of counsel (including, without limitation, reasonable
fees and expenses to the Collateral Agent of legal counsel), and claims
(including the costs of investigation) that they may incur insofar as such loss,
liability, expense or claim arises out of or is based upon any alleged untrue
statement of a material fact contained in any prospectus (or any amendment or
supplement thereto) or in any notification or offering circular, or arises out
of or is based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements in any thereof not
misleading, except insofar as the same may have been caused by any untrue
statement or omission based upon information furnished in writing to such Loan
Party or the issuer of such Pledged Collateral by the Collateral Agent or any
other Secured Party expressly for use therein. Each Loan Party further agrees,
upon such written request referred to above, to use commercially reasonable
efforts to qualify, file or register, or cause the issuer of such Pledged
Collateral to qualify, file or register, any of the Pledged Collateral under the
Blue Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Loan Party will bear all costs
and expenses of carrying out its obligations under this Section 5.05. Each Loan
Party acknowledges that there is no adequate remedy at law for failure by it to
comply with the provisions of this Section 5.05 and that such failure would not
be adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 5.05 may be specifically enforced.

 

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ARTICLE VI

Indemnity, Subrogation and Subordination

6.01 Indemnity and Subrogation. In addition to all such rights of indemnity and
subrogation as the Subsidiary Loan Parties may have under applicable law (but
subject to Section 6.03), the Borrower agrees that (a) in the event a payment of
an obligation shall be made by any Subsidiary Loan Party under this Agreement,
the Borrower shall indemnify such Subsidiary Loan Party for the full amount of
such payment and such Subsidiary Loan Party shall be subrogated to the rights of
the Person to whom such payment shall have been made to the extent of such
payment and (b) in the event any assets of any Subsidiary Loan Party shall be
sold pursuant to this Agreement or any other Loan Document to satisfy in whole
or in part an obligation owed to any Secured Party, the Borrower shall indemnify
such Subsidiary Loan Party in an amount equal to the greater of the book value
or the fair market value of the assets so sold.

6.02 Contribution and Subrogation. Each Subsidiary Loan Party (a “Contributing
Party”) agrees (subject to Section 6.03) that, in the event a payment shall be
made by any other Subsidiary Loan Party hereunder in respect of any Secured
Obligation or assets of any other Subsidiary Loan Party shall be sold pursuant
to any Loan Document to satisfy any Secured Obligation and such other Subsidiary
Loan Party (the “Claiming Party”) shall not have been fully indemnified by the
Borrower as provided in Section 6.01, the Contributing Party shall indemnify the
Claiming Party in an amount equal to the amount of such payment or the greater
of the book value or the fair market value of such assets, as the case may be,
in each case multiplied by a fraction of which the numerator shall be the net
worth of the Contributing Party on the date hereof and the denominator shall be
the aggregate net worth of all the Subsidiary Loan Parties on the date hereof
(or, in the case of any Subsidiary Loan Party or Subsidiary Loan Party becoming
a party hereto pursuant to Section 7.13, the date of the supplement hereto
executed and delivered by such Subsidiary Loan Party). Any Contributing Party
making any payment to a Claiming Party pursuant to this Section 6.02 shall be
subrogated to the rights of such Claiming Party under Section 6.01 to the extent
of such payment.

6.03 Subordination. Notwithstanding any provision of this Agreement to the
contrary, all rights of the Subsidiary Loan Parties under Sections 6.01 and 6.02
and all other rights of indemnity, contribution or subrogation under applicable
law or otherwise shall be fully subordinated to the payment in full in cash of
the Secured Obligations (and shall continue to be subordinated if at any time
payment of any Secured Obligation, or any part thereof, is rescinded or must
otherwise be restored by the Collateral Agent or any other Secured Party upon
the bankruptcy or reorganization of the Borrower, any other Loan Party or
otherwise). No failure on the part of the Borrower or any Subsidiary Loan Party
or Loan Party to make the payments required by Sections 6.01 and 6.02 (or any
other payments required under applicable law or otherwise) shall in any respect
limit the obligations and liabilities of any Subsidiary Loan Party with respect
to its obligations hereunder, and each Subsidiary Loan Party shall remain liable
for the full amount of the obligations of such Subsidiary Loan Party hereunder.

 

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ARTICLE VII

Miscellaneous

7.01 Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in
Section 9.01 of the Credit Agreement. All communications and notices hereunder
to any Subsidiary Loan Party shall be given to it in care of the Borrower as
provided in Section 9.01 of the Credit Agreement.

7.02 Waivers; Amendment.

(a) No failure or delay by the Administrative Agent, the Collateral Agent, any
Issuing Bank or any Secured Party in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Collateral Agent, the Issuing
Banks and the Secured Parties hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Loan Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 7.02, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, the
Collateral Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time. No notice or demand on any Loan Party in
any case shall entitle any Loan Party to any other or further notice or demand
in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Collateral Agent and the Loan Party or Loan Parties with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement.

7.03 Collateral Agent’s Fees and Expenses; Indemnification.

(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its expenses incurred hereunder as provided in Section 9.03 of
the Credit Agreement.

(b) Without limitation of its indemnification obligations under the other Loan
Documents, each Loan Party jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees (as defined in Section 9.03(b) of the
Credit Agreement) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with or

 

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as a result of (i) the arrangement and the syndication of the credit facilities
provided for in the Credit Agreement, the preparation, execution, delivery and
administration of the Commitment Letter, the Loan Documents or any other
agreement or instrument contemplated thereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated thereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by any Issuing Bank to honor a demand for payment under a
Letter of Credit so issued if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property currently or formerly owned or operated by the Borrower or any
of the Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of the Subsidiaries or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto and whether such matter is initiated by a
third party or by any Loan Party or any Affiliate thereof; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence, bad faith or willful misconduct of such
Indemnitee or from the breach by such Indemnitee of its obligations under the
Loan Documents.

(c) To the extent permitted by applicable law, no Loan Party shall assert, and
hereby waives, any claim against any Indemnitee, (i) for any damages arising
from the use by others of information or other materials obtained through
electronic telecommunications or other information transmission systems
(including the internet), except for damages due to willful misconduct, bad
faith or gross negligence of such Indemnitee (it being understood that this
clause (i) is not intended to exculpate any knowing and intentional breach of
any confidentiality agreement), or (ii) on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
the Commitment Letter, the Credit Agreement or any agreement or instrument
contemplated thereby, the Transactions, any Loan or Letter of Credit or the use
of the proceeds thereof.

(d) Any such amounts payable as provided hereunder shall be additional Secured
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.03 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Secured Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Collateral Agent or any other Secured Party. All
amounts due under this Section 7.03 shall be payable not later than 10 days
after written demand therefor.

7.04 Successors and Assigns. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Loan Party or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.

 

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7.05 Survival of Agreement; Reinstatement. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Administrative Agent, the
Collateral Agent, any Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended under the Credit Agreement, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under any Loan Document is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated. Each of the Loan Parties agrees that its
obligations hereunder and the security interest created hereunder shall continue
to be effective or be reinstated, as applicable, if at any time payment, or any
part thereof, of all or any part of the Secured Obligations is rescinded or must
otherwise be restored by the Secured Party upon the bankruptcy or reorganization
of any Loan Party or otherwise.

7.06 Counterparts; Effectiveness; Several Agreement. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original but all of which when
taken together shall constitute a single contract. Delivery of an executed
signature page to this Agreement by facsimile or electronic transmission shall
be as effective as delivery of a manually executed counterpart of this
Agreement. This Agreement shall become effective as to any Loan Party when a
counterpart hereof executed on behalf of such Loan Party shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed and delivered on behalf of the Collateral Agent, and thereafter shall
be binding upon such Loan Party and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of such Loan Party, the
Collateral Agent and the other Secured Parties and their respective permitted
successors and assigns, except that no Loan Party shall have the right to assign
or transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Loan Party and
may be amended, modified, supplemented, waived or released with respect to any
Loan Party without the approval of any other Loan Party and without affecting
the obligations of any other Loan Party hereunder.

7.07 Severability. Any provision of this Agreement held to be invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

7.08 Right of Set-Off. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of any Loan Party
against any of and

 

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all the obligations then due of any Loan Party now or hereafter existing under
this Agreement or any other Loan Document owed to such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement. The
rights of each Lender under this Section 7.08 are in addition to other rights
and remedies (including other rights of set-off) which such Lender may have.

7.09 Governing Law; Jurisdiction; Consent to Service of Process.

(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.

(b) Each of the Loan Parties hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to Section 9.17 of the Credit Agreement, nothing in this Agreement or
any other Loan Document shall affect any right that the Administrative Agent,
the Collateral Agent, any Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against any Loan Party or its properties in the courts of any jurisdiction.

(c) Each of the Loan Parties hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section 7.09. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 7.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.

7.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR

 

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ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 7.10.

7.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

7.12 Termination or Release.

(a) This Agreement, the Guarantees made herein, the Security Interest and all
other security interests granted hereby shall terminate in their entirety when
all the Obligations (other than Contingent Obligations) have been paid in full
and the Lenders have no further commitment to lend under the Credit Agreement,
the Issuing Banks have no further obligation to issue Letters of Credit, the LC
Exposure has been reduced to zero or, with the consent of each affected Issuing
Bank, cash collateralized pursuant to arrangements satisfactory to such Issuing
Bank (which arrangements result in the release of the Lenders from their
obligation to make payments in respect of LC Disbursements).

(b) A Subsidiary Loan Party shall automatically be released from its obligations
hereunder and any security interest granted by such Subsidiary Loan Party (or in
the Equity Interests of such Subsidiary Loan Party) hereunder shall be
automatically released upon the consummation of any transaction permitted by the
Credit Agreement as a result of which such Subsidiary Loan Party ceases to be a
Subsidiary of the Borrower; provided that the Required Lenders shall have
consented to such transaction (to the extent required by the Credit Agreement)
and the terms of such consent did not provide otherwise.

(c) Upon any sale or other transfer by any Loan Party of any Collateral that is
permitted under the Credit Agreement (other than to a Loan Party), or upon the
effectiveness of any written consent to the release of the security interest
granted hereby in any Collateral pursuant to Section 9.02 of the Credit
Agreement, the security interest in such Collateral shall be automatically
released.

(d) In connection with any termination or release pursuant to paragraph (a),
(b) or (c) of this Section 7.12, the Collateral Agent shall promptly execute and
deliver to any Loan Party, at such Loan Party’s expense, all documents that such
Loan Party shall reasonably request to evidence such termination or release
subject to the Collateral Agent’s receipt of a certification by the Borrower and
applicable Loan Party stating that such transaction is in compliance with the
Credit Agreement and the other Loan Documents and as to such other matters as
the Collateral Agent may reasonably request. Any execution and delivery of
documents pursuant to this Section 7.12 shall be without recourse to or warranty
by the Collateral Agent.

7.13 Additional Subsidiaries. The Loan Parties shall cause each Subsidiary of
the Borrower which, from time to time, after the date hereof shall be required
to pledge any assets to

 

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the Collateral Agent for the benefit of the Secured Parties pursuant to the
provisions of the Credit Agreement, to execute and deliver to the Collateral
Agent and instrument in the form of Exhibit I hereto and a Perfection
Certificate, in each case, within 90 days of the date on which it was acquired
or created. Upon execution and delivery by the Collateral Agent and a Subsidiary
of an instrument in the form of Exhibit I hereto, such Subsidiary shall become a
party hereto (and a guarantor and grantor hereunder) with the same force and
effect as if it were a party hereto (and a guarantor and grantor hereunder) on
the date hereof. The execution and delivery of any such instrument shall not
require the consent of any other Loan Party hereunder. The rights and
obligations of each Loan Party hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary as a party to this Agreement.

7.14 Collateral Agent Appointed Attorney-in-Fact. Each Loan Party hereby
appoints the Collateral Agent the attorney-in-fact of such Loan Party, which
appointment is irrevocable and coupled with an interest, upon the occurrence and
during the continuance of an Event of Default, with full power of substitution
either in the Collateral Agent’s name or in the name of such Loan Party, (a) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the Collateral or
any part thereof; (b) to demand, collect, receive payment of, give receipt for
and give discharges and releases of all or any of the Collateral; (c) to sign
the name of any Loan Party on any invoice or bill of lading relating to any of
the Collateral; (d) to send verifications of accounts receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the Collateral;
(g) to notify, or to require any Loan Party to notify, any Account Debtor to
make payment directly to the Collateral Agent; and (h) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do all other acts and things necessary to carry
out the purposes of this Agreement, as fully and completely as though the
Collateral Agent were the absolute owner of the Collateral for all purposes;
provided that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the Collateral Agent, or
to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein (if any), and
neither they nor their officers, directors, employees or agents shall be
responsible to any Loan Party for any act or failure to act hereunder, except
for their own gross negligence, willful misconduct or bad faith.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

PHARMERICA CORPORATION By:  

/s/ Michael J. Culotta

  Name:   Michael J. Culotta   Title:   Executive Vice President and Chief
Financial Officer

CITIBANK, N.A.,

as the Collateral Agent

By:  

 

  Name:   Title:

[Signature page to Pharmerica Corporation Guarantee and Collateral Agreement]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

PHARMERICA CORPORATION, By:  

 

  Name:   Title:

CITIBANK, N.A.,

as the Collateral Agent

By:  

/s/ Justin S. Tichauer

  Name: Justin S. Tichauer   Title:   Vice President

[Signature page to Pharmerica Corporation Guarantee and Collateral Agreement]

--------------------------------------------------------------------------------

ADVANCED INFUSION SYSTEMS LLC

ARK PHARMACY SERVICES, LLC

CAPSTONE PHARMACY OF DELAWARE, LLC

CHEMRX PHARMACY SERVICES, LLC

CLINICARE CONCEPTS INC.

COMPUTRAN SYSTEMS INC.

CONTINUUMCARE PHARMACY LLC

FAMILY CENTER PHARMACY, LLC

GOOT NURSING HOME PHARMACY INC

INSTA-CARE PHARMACY SERVICES CORPORATION

INTEGRITY MEDICAL SUPPLIES, LLC

INTEGRITY PHARMACY SERVICES, LLC

LS ACQUISITION COMPANY I, LLC

LS ACQUISITION COMPANY II, LLC

PHARMACY CORPORATION OF AMERICA

PHARMERICA CHICAGO, LLC

PHARMERICA DRUG SYSTEMS, LLC

PHARMERICA EAST, LLC

PHARMERICA HOLDINGS, INC.

PHARMERICA INSTITUTIONAL PHARMACY SERVICES, LLC

PHARMERICA LONG-TERM CARE LLC

PHARMERICA MIDWEST, LLC

PHARMERICA MOUNTAIN, LLC

PHARMERICA PENNSYLVANIA, LLC

PHARMERICA TECHNOLOGY SOLUTIONS LLC

PHARMERICA WISCONSIN, LLC

PMC HEALTHCARE PHARMACIES, LLC

PMC PHARMACY SERVICES, LLC

SOUTHWEST PHARMACIES, INC.

By:  

/s/ Michael J. Culotta

Name:   Michael J. Culotta Title:   Treasurer

[Signature page to Pharmerica Corporation Guarantee and Collateral Agreement]

--------------------------------------------------------------------------------

PHARMERICA HOSPITAL PHARMACY SERVICES, LLC By:  

/s/ Berard Tomassetti

Name:   Berard Tomassetti Title:   Treasurer LONE STAR PHARMACY, LTD By:  

LS Acquisition Company II, LLC,

its General Partner

 

/s/ Thomas A. Caneris

  Name:   Thomas A. Caneris   Title:   Vice President PHARMASTAT TRANSPORT, LTD
By:  

LS Acquisition Company I, LLC,

its General Partner

 

/s/ Thomas A. Caneris

  Name:   Thomas A. Caneris   Title:   Vice President

[Signature page to Pharmerica Corporation Guarantee and Collateral Agreement]

--------------------------------------------------------------------------------

SCHEDULE I

Subsidiary Loan Parties

 

Advanced Infusion Systems LLC

     CA   

Ark Pharmacy Services, LLC

     DE   

Capstone Pharmacy of Delaware, LLC

     DE   

ChemRx Pharmacy Services, LLC

     DE   

Clinicare Concepts Inc.

     FL   

Computran Systems Inc.

     OR   

ContinuumCare Pharmacy LLC

     DE   

Family Center Pharmacy, LLC

     DE   

Goot Nursing Home Pharmacy Inc

     AZ   

Insta-Care Pharmacy Services Corporation

     TX   

Integrity Medical Supplies, LLC

     FL   

Integrity Pharmacy Services, LLC

     FL   

Lone Star Pharmacy, LTD

     TX   

LS Acquisition Company I, LLC

     DE   

LS Acquisition Company II, LLC

     DE   

Pharmacy Corporation of America

     CA   

Pharmastat Transport, LTD

     TX   

PharMerica Chicago, LLC

     DE   

PharMerica Drug Systems, LLC

     DE   

PharMerica East, LLC

     DE   

PharMerica Holdings, Inc.

     DE   

PharMerica Hospital Pharmacy Services, LLC

     DE   

PharMerica Institutional Pharmacy Services, LLC

     DE   

PharMerica Long-Term Care LLC

     DE   

PharMerica Midwest, LLC

     DE   

PharMerica Mountain, LLC

     DE   

PharMerica Pennsylvania, LLC

     DE   

PharMerica Technology Solutions LLC

     DE   

PharMerica Wisconsin, LLC

     DE   

PMC Healthcare Pharmacies, LLC

     DE   

PMC Pharmacy Services, LLC

     DE   

Southwest Pharmacies, Inc.

     AZ   

--------------------------------------------------------------------------------

SCHEDULE II

Specified Pledged Equity Interests

 

Issuer

  

Number of
Certificate

  

Registered Owner

  

Number of

Shares

  

Percentage of

Equity Interests

Advanced Infusion Systems LLC

   N/A    PMC Pharmacy Services, LLC    N/A    100%

Ark Pharmacy Services, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

Capstone Pharmacy of Delaware, LLC

   N/A    PharMerica Drug Systems, LLC    N/A    100%

ChemRx Pharmacy Services, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

CliniCare Concepts, Inc.

   3    PharMerica Holdings, Inc.    100    100%

Computran Systems, Inc.

   40    Pharmacy Corporation of America    1,887,320    100%

ContinuumCare Pharmacy LLC

   N/A    Pharmacy Corporation of America    N/A    100%

Family Center Pharmacy, LLC

   N/A    PharMerica Drug Systems, LLC    N/A    100%

Goot Nursing Home Pharmacy, Inc.

   2    Southwest Pharmacies, Inc.    1,000    100%

Insta-Care Pharmacy Services Corporation

   3    Pharmacy Corporation of America    100    100%

Integrity Medical Supplies, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

Integrity Pharmacy Services, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

LS Acquisition Company I, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

LS Acquisition Company II, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

Lone Star Pharmacy, LTD

   N/A    LS Acquisition Company I, LLC    N/A    99%

Lone Star Pharmacy, LTD

   N/A    LS Acquisition Company II, LLC    N/A    1%

Pharmacy Corporation of America

   2    PharMerica Holdings, Inc.    1,000    100%

Pharmastat Transport, LTD

   N/A    LS Acquisition Company I, LLC    N/A    100%

PharMerica Chicago, LLC

   N/A    PharMerica Institutional Pharmacy Services, LLC is the sole member   
N/A    100%

PharMerica Drug Systems, LLC

   N/A    Pharmacy Corporation of America is the sole member    N/A    100%

PharMerica East, LLC

   N/A    PharMerica Institutional Pharmacy Services, LLC is the sole member   
N/A    100%

PharMerica Holdings, Inc.

   1    PharMerica Corporation    100    100%

PharMerica Hospital Pharmacy Services, LLC

   N/A    PMC Pharmacy Services, LLC is the sole member    N/A    100%

PharMerica Institutional Pharmacy Services, LLC

   N/A    PMC Pharmacy Services, LLC is the sole member    N/A    100%

--------------------------------------------------------------------------------

Issuer

  

Number of
Certificate

  

Registered Owner

  

Number of

Shares

  

Percentage of

Equity Interests

PharMerica Long-Term Care, LLC

   N/A    PharMerica Holdings, Inc. is the sole member    N/A    100%

PharMerica Midwest, LLC

   N/A    PharMerica Institutional Pharmacy Services, LLC is the sole member   
N/A    100%

PharMerica Mountain, LLC

   N/A    PharMerica Institutional Pharmacy Services, LLC is the sole member   
N/A    100%

PharMerica Pennsylvania, LLC

   N/A    PharMerica Institutional Pharmacy Services, LLC is the sole member   
N/A    100%

PharMerica Technology Solutions, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

PharMerica Wisconsin, LLC

   N/A    PharMerica Institutional Pharmacy Services, LLC is the sole member   
N/A    100%

PMC Healthcare Pharmacies, LLC

   N/A    PharMerica Holdings, Inc. is the sole member    N/A    100%

PMC Pharmacy Services, LLC

   N/A    Pharmacy Corporation of America    N/A    100%

Southwest Pharmacies, Inc.

   3    PharMerica Drug Systems. LLC    1,000    100%

Specified Pledged Indebtedness

 

Issuer

  

Principal Amount

  

Date of Note

  

Maturity Date

PharMerica Corporation and subsidiaries (global intercompany note pursuant to
Guarantee and Collateral Agreement dated as of May 2, 2011)    N/A    May 2,
2011    N/A

--------------------------------------------------------------------------------

SCHEDULE III- U.S. Intellectual Property

U.S. COPYRIGHTS OWNED

U.S. Copyright Registrations

 

Company

  

Title

  

Reg. No.

  

Author

  

None

     

U.S. Copyright Applications

 

Company

  

Title

  

Author

  

Class

  

Date Filed

  

None

        

U.S. PATENTS OWNED

U.S. Patent Registrations

 

Company

  

Patent Numbers

  

Issue Date

     

U.S. Patent Applications

 

Company

  

Patent Application No.

  

Filing Date

PharMerica Technology Solutions, LLC

   10/848,157    5/19/04

--------------------------------------------------------------------------------

U.S. TRADEMARKS

U.S. Trademark Registrations

 

Company

  

Mark

  

Reg. Date

  

Reg. No.

PharMerica Corporation   

4 Crossed Hands (design)

LOGO [g181457pg37a.jpg]

   09-05-1989    1,554,991 PharMerica Corporation    COMPUTRAN    08-18-2009   
3,668,760 PharMerica Corporation    CONSULTPRO    08-11-2009    3,666,207
PharMerica Corporation    CONSULTWARE    06-09-2009    3,635,311 PharMerica
Corporation    IT’S MORE THAN JUST FILLING PRESCRIPTIONS, IT’S A FULFILLING
CAREER    04-11-2006    3,079,570 PharMerica Corporation    MEDMATE   
10-24-2006    3,161,289 PharMerica Corporation   

Pill logo (design)

LOGO [g181457pg37b.jpg]

   07-08-2008    3,464,646 PharMerica Corporation   

Pill logo (design)

LOGO [g181457pg37c.jpg]

   07-14-2009    3,656,001 PharMerica Corporation    ONE PRESCRIPTION AT A TIME,
ONE PERSON    03-07-2006    3,066,406    AT A TIME       PharMerica Corporation
   PHARMACY CORPORATION OF AMERICA    03-07-1989    1,528,564 PharMerica
Corporation    PHARMERICA    12-28-1999    2,304,597 PharMerica Corporation   

PHARMERICA FORECASTER (plus design)

LOGO [g181457pg37d.jpg]

   09-05-2006    3,139,556 PharMerica Corporation    VALUE. TRUST. PERFORMANCE.
   07-08-2008    3,463,909 PharMerica Corporation    VALUE. TRUST. PERFORMANCE.
   07-07-2009    3,651,627 PharMerica Corporation    VIEWMASTERX    07-27-2010
   3,825,885 PharMerica Corporation    **DESIGN ONLY**    09-06-2005   
2,992,983

--------------------------------------------------------------------------------

Chem RX Pharmacy Services, LLC    CHEM RX    01-15-2008    3368772

U.S. Trademark Applications

 

Company

  

Mark

  

Filing Date

  

Application No.

PharMerica Corporation    A PRESCRIPTION FOR LONG-TERM CARE SUCCESS   
02-04-2011    85/234,413 PharMerica Corporation    A PRESCRIPTION FOR SUCCESS   
02-04-2011    85/234,456 PharMerica Corporation    EZ-MAR    02-25-2011   
85/251,946 PharMerica Corporation    EZORDER    01-31-2011    85/230,378
PharMerica Corporation    RXALLOW    01-21-2011    85/223,171 PharMerica
Corporation    RXEXACT    01-10-2011    85/213,887 PharMerica Corporation   
RXFORECASTER    07-15-2010    85/085,171 PharMerica Corporation    STAR
(STRATEGIC TREND ANALYSIS REPORT)    03-01-2011    85/254,640 PharMerica
Corporation   

PCA PHARMACY CORPORATION OF AMERICA (plus design)

LOGO [g181457pg38.jpg]

   01-07-2009    77/644,549

--------------------------------------------------------------------------------

SCHEDULE IV

Commercial Tort Claims

None.

--------------------------------------------------------------------------------

Exhibit I to the

Guarantee and Collateral Agreement

SUPPLEMENT NO. [    ] dated as of [                    ], to the Guarantee and
Collateral Agreement dated as of May 2, 2011 (as amended, supplemented or
otherwise modified from time to time, the “Collateral Agreement”), among
PHARMERICA CORPORATION, a Delaware corporation (the “Borrower”), the
Subsidiaries of the Borrower from time to time party thereto and CITIBANK, N.A.
(“Citi”), as Collateral Agent.

A. Reference is made to (i) the Credit Agreement dated as of May 2, 2011 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the Lenders party thereto and Citi, as
Administrative Agent.

B. Capitalized terms used herein, not otherwise defined herein and defined in
the Credit Agreement or the Collateral Agreement shall have the meanings
specified in the Credit Agreement or the Collateral Agreement, as applicable.

C. The Borrower and the Subsidiary Loan Parties have entered into the Collateral
Agreement in order to induce the Lenders to make Loans and the Issuing Banks to
issue Letters of Credit. Section 7.13 of the Collateral Agreement provides that
additional Subsidiaries of the Borrower may become parties to the Collateral
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the “New Subsidiary”) is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a party to the Collateral Agreement in order to induce the Lenders to make
additional Loans and the Issuing Banks to issue additional Letters of Credit and
as consideration for Loans previously made and Letters of Credit previously
issued.

Accordingly, the Collateral Agent and the New Subsidiary agree as follows:

SECTION 1. In accordance with Section 7.13 of the Collateral Agreement, the New
Subsidiary by its signature below becomes a party to the Collateral Agreement as
a “Subsidiary Loan Party” and a guarantor and grantor thereunder, with the same
force and effect as if originally named therein as such, and the New Subsidiary
hereby (a) agrees to all the terms and provisions of the Collateral Agreement
applicable to it as a Subsidiary Loan Party thereunder and (b) represents and
warrants that the representations and warranties made by it in such capacity
thereunder are true and correct in all material respects on and as of the date
hereof. In furtherance of the foregoing, the New Subsidiary, as security for the
payment or performance, as the case may be, in full of the Secured Obligations
does hereby assign and pledge to the Collateral Agent, its successors and
permitted assigns, for the benefit of the Secured Parties, and does hereby grant
to the Collateral Agent, its successors and permitted assigns, for the benefit
of the Secured Parties, a security interest in, all of the New Subsidiary’s
right, title and interest in, to and under the Collateral (as defined in the
Collateral Agreement) of the New Subsidiary. Each reference to a “Subsidiary
Loan Party” in the Collateral Agreement shall be deemed to include the New
Subsidiary. The Collateral Agreement is hereby incorporated herein by reference.

--------------------------------------------------------------------------------

SECTION 2. The New Subsidiary represents and warrants to the Collateral Agent
and the Secured Parties that this Supplement has been duly authorized, executed
and delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors’ rights generally, concepts of reasonableness and general principles
of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3. This Supplement may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Supplement shall become effective when the Collateral Agent shall
have received a counterpart of this Supplement that bears the signature of the
New Subsidiary and the Collateral Agent has executed a counterpart hereof.
Delivery of an executed signature page to this Supplement by facsimile shall be
as effective as delivery of a manually executed counterpart of this Supplement.

SECTION 4. The New Subsidiary hereby represents and warrants that (a) set forth
on Schedule II attached hereto is a true and correct list, as of the date
hereof, of all the Specified Pledged Securities of the New Subsidiary, (b) set
forth on Schedule III attached hereto is a true and correct list, as of the date
hereof, of all United States registered Patents, United States registered
Trademarks and United States registered Copyrights (and applications for any of
the foregoing) of the New Subsidiary, including (i) the name of the registered
owner, type, registration or application number and the expiration date (if
already registered) of each such Patent and Patent application owned by such New
Subsidiary, (ii) the name of the registered owner, the registration or
application number and the expiration date (if already registered) of each such
Trademark and Trademark application owned by such New Subsidiary and (iii) the
name of the registered owner, title and, if applicable, the registration number
of each such Copyright or Copyright application owned by such New Subsidiary,
(c) set forth on Schedule IV attached hereto is a true and correct list and a
specific description, as of the date hereof, of each Commercial Tort Claim in
respect of which a complaint or a counterclaim has been filed by the New
Subsidiary seeking damages in an amount of $5,000,000 or more and (d) set forth
under its signature hereto, is the true and correct legal name of the New
Subsidiary, its jurisdiction of organization, the organizational identification
number, if any, issued by its jurisdiction of organization and the location of
its chief executive office, in each case as of the date hereof.

SECTION 5. Except as expressly supplemented hereby, the Collateral Agreement
shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.

SECTION 7. Any provision of this Supplement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
affecting the validity, legality and enforceability of the remaining provisions
hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

 

-2-

--------------------------------------------------------------------------------

SECTION 8. All communications and notices hereunder shall be in writing and
given as provided in Section 7.01 of the Collateral Agreement.

SECTION 9. The New Subsidiary agrees to reimburse the Collateral Agent for its
reasonable and documented out-of-pocket expenses in connection with this
Supplement, including the reasonable and documented fees, disbursements and
other charges of counsel for the Collateral Agent.

 

-3-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly
executed this Supplement to the Collateral Agreement as of the day and year
first above written.

 

[NAME OF NEW SUBSIDIARY], By:  

 

  Name:     Title:  

Legal Name:

Jurisdiction of Organization:

Organizational ID Number:

Location of Chief Executive office:

CITIBANK, N.A.,

as Collateral Agent,

By:  

 

  Name:     Title:  

--------------------------------------------------------------------------------

EXHIBIT II

PATENT AND TRADEMARK SECURITY AGREEMENT dated as of [            ], 2011 (this
“Agreement”), among PharMerica Corporation (the “Borrower”), the Subsidiaries
party hereto (the “Subsidiary Loan Parties” and, collectively with the Borrower,
the “Loan Parties”) and CITIBANK, N.A. (“Citi”), as Collateral Agent.

Reference is made to (a) the Credit Agreement dated as of May 2, 2011 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the Lenders from time to time party thereto,
Citi, as Administrative Agent, and the other parties thereto, and (b) the
Guarantee and Collateral Agreement dated as of. May 2, 2011 (as amended,
supplemented or otherwise modified from time to time, the “Collateral
Agreement”), among the Borrower, the Subsidiaries of the Borrower party thereto
and Citi, as Collateral Agent (the “Collateral Agent”). The Lenders have agreed
to extend credit to the Borrower and the Issuing Banks have agreed to issue
Letters of Credit, in each case, subject to the terms and conditions set forth
in the Credit Agreement. The obligations of the Lenders to extend such credit
and of the Issuing Banks to issue such Letters of Credit are conditioned upon,
among other things, the execution and delivery of this Agreement. The Subsidiary
Loan Parties will derive substantial benefits from the extensions of credit and
the issuance of Letters of Credit to the Borrower pursuant to the Credit
Agreement and are willing to execute and deliver this Agreement in order to
induce the Lenders to extend such credit and the Issuing Banks to issue such
Letters of Credit. Accordingly, the parties hereto agree as follows:

SECTION 1. Terms. Capitalized terms used in this Agreement and not otherwise
defined herein have the meanings specified in the Collateral Agreement. The
rules of construction specified in Section 1.03 of the Credit Agreement also
apply to this Agreement.

SECTION 2. Grant of Security Interest. As security for the payment or
performance, as the case may be, in full of the Secured Obligations, each of the
Loan Parties, pursuant to the Collateral Agreement, did and hereby does assign
and pledge to the Collateral Agent, its successors and permitted assigns, for
the benefit of the Secured Parties, and did and hereby does grant to the
Collateral Agent, its successors and permitted assigns, for the benefit of the
Secured Parties, a security interest in, all right, title and interest in, to
and under any and all of the following assets and properties now owned or at any
time hereafter acquired by such Loan Party or in which such Loan Party now has
or at any time in the future may acquire any right, title or interest
(collectively, the “Patent and Trademark Collateral”):

(a) all letters patent of the United States, all registrations and recordings
thereof, and all applications for letters patent of the United States, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office, including those registered Patents (as defined in the
Collateral Agreement) and Patent applications listed on Schedule I (the
“Patents”);

(b) all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein;

(c) all trademarks, service marks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, logos,
other source or business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all registration and recording

--------------------------------------------------------------------------------

applications filed in connection therewith, and all extensions or renewals
thereof, including registrations and registration applications in the United
States Patent and Trademark Office or any similar offices in any State of the
United States, and all extensions, or renewals thereof, including those United
States registered Trademarks (as defined in the Collateral Agreement) and
Trademark applications listed on Schedule II (the “Trademarks”); and

(d) all goodwill associated with the Trademarks or symbolized thereby.

SECTION 3. Collateral Agreement. The security interests granted to the
Collateral Agent herein are granted in furtherance, and not in limitation of,
the security interests granted to the Collateral Agent pursuant to the
Collateral Agreement. Each Loan Party hereby acknowledges and affirms that the
rights and remedies of the Collateral Agent with respect to the Patent and
Trademark Collateral are more fully set forth in the Collateral Agreement, the
terms and provisions of which are hereby incorporated herein by reference as if
fully set forth herein. In the event of any conflict between the terms of this
Agreement and the Collateral Agreement, the terms of the Collateral Agreement
shall govern.

SECTION 4. Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed this Patent and
Trademark Security Agreement as of the day and year first above written.

 

PHARMERICA CORPORATION, By:  

 

  Name:   Title:

PHARMERICA TECHNOLOGY SOLUTIONS, LLC,

CHEM RX PHARMACY SERVICES, LLC By:  

 

  Name:   Title: CITIBANK, N.A., as Collateral Agent, By:  

 

  Name:   Title:

--------------------------------------------------------------------------------

SCHEDULE I

U.S. Patent Registrations

 

Company

  

Patent Numbers

  

Issue Date

     

U.S. Patent Applications

 

Company

  

Patent Application No.

  

Filing Date

     

--------------------------------------------------------------------------------

SCHEDULE II

U.S. Trademark Registrations

 

Company

  

Mark

  

Reg. Date

  

Reg. No.

                                                                                

U.S. Trademark Applications

 

Company

  

Mark

  

Filing Date

  

Application No.

                          

--------------------------------------------------------------------------------

EXHIBIT III

Exhibit III to the

Guarantee and Collateral Agreement

[FORM OF] COPYRIGHT SECURITY AGREEMENT dated as of [                    ], 2011
(this “Agreement”), among PharMerica Corporation (the “Borrower”), the
Subsidiaries of the Borrower party hereto (the “Subsidiary Loan Parties” and,
collectively with the Borrower, the “Loan Parties”) and CITIBANK, N.A. (“Citi”),
as Collateral Agent.

Reference is made to (a) the Credit Agreement dated as of May 2, 2011 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the Lenders from time to time party thereto and
Citi, as Administrative Agent, and (b) the Guarantee and Collateral Agreement
dated as of May 2, 2011 (as amended, supplemented or otherwise modified from
time to time, the “Collateral Agreement”), among the Borrower, the Subsidiaries
of the Borrower party thereto and Citi, as Collateral Agent (the “Collateral
Agent”). The Lenders have agreed to extend credit to the Borrower and the
Issuing Banks have agreed to issue Letters of Credit, in each case, subject to
the terms and conditions set forth in the Credit Agreement. The obligations of
the Lenders to extend such credit and of the Issuing Banks to issue such Letters
of Credit are conditioned upon, among other things, the execution and delivery
of this Agreement. The Subsidiary Loan Parties will derive substantial benefits
from the extensions of credit and the issuance of Letters of Credit to the
Borrower pursuant to the Credit Agreement and are willing to execute and deliver
this Agreement in order to induce the Lenders to extend such credit and the
Issuing Banks to issue such Letters of Credit. Accordingly, the parties hereto
agree as follows:

SECTION 1. Terms. Capitalized terms used in this Agreement and not otherwise
defined herein have the meanings specified in the Collateral Agreement. The
rules of construction specified in Section 1.03 of the Credit Agreement also
apply to this Agreement.

SECTION 2. Grant of Security Interest. As security for the payment or
performance, as the case may be, in full of the Secured Obligations, each of the
Loan Parties, pursuant to the Collateral Agreement, did and hereby does assign
and pledge to the Collateral Agent, its successors and permitted assigns, for
the benefit of the Secured Parties, and did and hereby does grant to the
Collateral Agent, its successors and permitted assigns, for the benefit of the
Secured Parties, a security interest in, all right, title and interest in, to
and under any and all of the following assets and properties now owned or at any
time hereafter acquired by such Loan Party or in which such Loan Party now has
or at any time in the future may acquire any right, title or interest
(collectively, the “Copyright Collateral”):

(a) all copyright rights in any work subject to the copyright laws of the United
States, whether as author, assignee, transferee or otherwise; and

(b) all registrations and applications for registration of any such copyright in
the United States, including registrations, recordings, supplemental
registrations and pending applications for registration in the United States
Copyright

--------------------------------------------------------------------------------

Office, including those registered Copyrights (as defined in the Collateral
Agreement) and Copyright applications listed on Schedule I.

SECTION 3. Collateral Agreement., The security interests granted to the
Collateral Agent herein are granted in furtherance, and not in limitation of,
the security interests granted to the Collateral Agent pursuant to the
Collateral Agreement. Each Loan Party hereby acknowledges and affirms that the
rights and remedies of the Collateral Agent with respect to the Copyright
Collateral are more fully set forth in the Collateral Agreement, the terms and
provisions of which are hereby incorporated herein by reference as if fully set
forth herein. In the event of any conflict between the terms of this Agreement
and the Collateral Agreement, the terms of the Collateral Agreement shall
govern.

SECTION 4. Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York.

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IN WITNESS WHEREOF, the parties hereto have duly executed this Copyright
Security Agreement as of the day and year first above written.

 

PHARMERICA CORPORATION, By:  

 

  Name:   Title: [SUBSIDIARY LOAN PARTIES], By:  

 

  Name:   Title: CITIBANK, N.A., as Collateral Agent, By:  

 

  Name:   Title:

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SCHEDULE I

United States Registered Copyrights

Copyright Applications