EXHIBIT 10.4

 

SECURITY AND PLEDGE AGREEMENT

 

SECURITY AND PLEDGE AGREEMENT, dated as of May 7, 2012 (this “Agreement”), is
made by Digital Domain Media Group, Inc., a Florida corporation (the “Company”),
and the undersigned subsidiaries of the Company (each a “Grantor” and
collectively and together with the Company, the “Grantors”), in favor of Hudson
Bay Master Fund Ltd., a company organized under the laws of the Cayman Islands,
in its capacity as collateral agent (in such capacity, the “Collateral Agent”)
for the “Buyers” (as defined below) party to the Securities Purchase Agreement,
dated as of May 6, 2012 (as amended, restated or otherwise modified from time to
time, the “Securities Purchase Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and each party listed as a “Buyer” on the Schedule of
Buyers attached thereto (collectively, the “Buyers”) are parties to the
Securities Purchase Agreement, pursuant to which the Company shall be required
to sell, and the Buyers shall purchase or have the right to purchase, the
“Notes” (as defined therein) issued pursuant thereto (as such Notes may be
amended, restated, replaced or otherwise modified from time to time in
accordance with the terms thereof, collectively, the “Notes”);

 

WHEREAS, each of the Grantors (other than the Company) (collectively, the
“Guarantors”) has executed and delivered a Guaranty dated the date hereof (the
“Guaranty”) in favor of the Collateral Agent for itself and the ratable benefit
of the Buyers, with respect to the Company’s obligations under the Securities
Purchase Agreement, the Notes and the Transaction Documents (as defined below);

 

WHEREAS, it is a condition precedent to the Buyers purchasing the Notes issued
pursuant to the Securities Purchase Agreement that the Grantors shall have
executed and delivered to the Collateral Agent this Agreement providing for the
grant to the Collateral Agent for itself and for the ratable benefit of the
Buyers of a security interest in all personal property of each Grantor to secure
all of the Company’s obligations under the Securities Purchase Agreement, the
Notes, and the “Transaction Documents” (as defined in the Securities Purchase
Agreement) and the Guarantors’ obligations under the Guaranty; and

 

WHEREAS, the Grantors have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of,
the Grantors.

 

NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Buyers to perform under the Securities Purchase
Agreement, each Grantor agrees with the Collateral Agent, for the ratable
benefit of the Buyers, as follows:

 

SECTION 1.      Definitions.

 

(a)           Reference is hereby made to the Securities Purchase Agreement and
the Notes for a statement of the terms thereof.  All terms used in this
Agreement and the recitals hereto which are defined in the Securities Purchase
Agreement, the Notes or in Articles 8 or 9 of the Uniform Commercial Code as in
effect from time to time in the State of New York (the “Code”), and which are
not otherwise defined herein shall have the same meanings herein as set

 

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forth therein; provided that terms used herein which are defined in the Code as
in effect in the State of New York on the date hereof shall continue to have the
same meaning notwithstanding any replacement or amendment of such statute except
as the Collateral Agent may otherwise determine; provided, further that, if
perfection or the effect of perfection or non-perfection or the priority of any
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “Code” means
the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

 

(b)           The following terms shall have the respective meanings provided
for in the Code:  “Accounts”, “Cash Proceeds”, “Certificate of Title”, “Chattel
Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”,
“Deposit Account”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”,
“Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit
Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory
Notes”, “Security”, “Record”, “Security Account”, “Software”, and “Supporting
Obligations”.

 

(c)           As used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:

 

“Capital Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, and (ii) with respect
to any Person that is not a corporation, any and all partnership, membership or
other equity interests of such Person.

 

“Copyright Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any copyright
(including, without limitation, all Copyright Licenses set forth in Schedule II
hereto).

 

“Copyrights” means all domestic and foreign copyrights, whether registered or
not, including, without limitation, all copyright rights throughout the universe
(whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor (including,
without limitation, all copyrights described in Schedule II hereto), all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.

 

“Event of Default” shall have the meaning set forth in the Notes.

 

“Governmental Authority” means any nation or government, any Federal, state,
city, town, municipality, county, local or other political subdivision thereof
or thereto and any department, commission, board, bureau, instrumentality,
agency or other entity exercising

 

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executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United
States Code) or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.

 

“Intellectual Property” means the Copyrights, Trademarks and Patents.

 

“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent
Licenses.

 

“Lien” means any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract
rights).

 

“Patent Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any
Patent (including, without limitation, all Patent Licenses set forth in Schedule
II hereto).

 

“Patents” means all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired or used by any Grantor (including, without
limitation, all domestic and foreign letters patent, design patents, utility
patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how
and formulae described in Schedule II hereto), all applications, registrations
and recordings thereof (including, without limitation, applications,
registrations and recordings in the United States Patent and Trademark Office,
or in any similar office or agency of the United States or any other country or
any political subdivision thereof), and all reissues, divisions, continuations,
continuations in part and extensions or renewals thereof.

 

“Person” means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.

 

“Pledged Entity” means any issuer of Capital Stock.

 

“Trademark Licenses” means all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such trademark licenses, contracts or
agreements and the right to prepare for sale or lease and sell or lease any and
all Inventory now or hereafter owned by any Grantor and now or hereafter covered
by such licenses (including, without limitation, all Trademark Licenses
described in Schedule II hereto).

 

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“Trademarks” means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names,
d/b/a’s, Internet domain names, trade styles, designs, logos and other source or
business identifiers and all general intangibles of like nature, now or
hereafter owned, adopted, acquired or used by any Grantor (including, without
limitation, all domestic and foreign trademarks, service marks, collective
marks, certification marks, trade names, business names, d/b/a’s, Internet
domain names, trade styles, designs, logos and other source or business
identifiers described in Schedule II hereto), all applications, registrations
and recordings thereof (including, without limitation, applications,
registrations and recordings in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state thereof or any
other country or any political subdivision thereof), and all reissues,
extensions or renewals thereof, together with all goodwill of the business
symbolized by such marks and all customer lists, formulae and other Records of
any Grantor relating to the distribution of products and services in connection
with which any of such marks are used.

 

SECTION 2.      Grant of Security Interest.  As collateral security for all of
the “Obligations” (as defined in Section 3 hereof), each Grantor hereby pledges
and assigns to the Collateral Agent, for itself and for the ratable benefit of
the Buyers, and grants to the Collateral Agent, for itself and for the ratable
benefit of the Buyers, a continuing security interest in all personal property
of said Grantor, wherever located and whether now or hereafter existing and
whether now owned or hereafter acquired, of every kind and description, tangible
or intangible (collectively, the “Collateral”), including, without limitation,
the following:

 

(a)           all Accounts;

 

(b)           all Chattel Paper (whether tangible or electronic);

 

(c)           the Commercial Tort Claims specified on Schedule VI hereto;

 

(d)           all Deposit Accounts, all cash and other property from time to
time deposited therein and the monies and property in the possession or under
the control of the Collateral Agent or the Buyers or any affiliate,
representative, agent or correspondent of the Collateral Agent or the Buyers;

 

(e)           all Documents;

 

(f)            all Equipment;

 

(g)           all Fixtures;

 

(h)           all General Intangibles (including, without limitation, all
Payment Intangibles);

 

(i)            all Goods;

 

(j)            all Instruments (including, without limitation, Promissory Notes
and each certificated Security);

 

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(k)           all Inventory;

 

(l)            all Investment Property;

 

(m)          all Copyrights, Patents and Trademarks, and all Licenses;

 

(n)           all Letter-of-Credit Rights;

 

(o)           all Motor Vehicles;

 

(p)           all Supporting Obligations;

 

(q)           all other tangible and intangible personal property of each
Grantor (whether or not subject to the Code), including, without limitation, all
bank and other accounts and all cash and all investments therein, all proceeds,
products, offspring, accessions, rents, profits, income, benefits, substitutions
and replacements of and to any of the property of any Grantor described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of insurance thereon and all causes of action, claims and warranties now or
hereafter held by each Grantor in respect of any of the items listed above), and
all books, correspondence, files and other Records, including, without
limitation, all tapes, desks, cards, Software, data and computer programs in the
possession or under the control of any Grantor or any other Person from time to
time acting for any Grantor, in each case, to the extent of such Grantor’s
rights therein, that at any time evidence or contain information relating to any
of the property described in the preceding clauses of this Section 2 or are
otherwise necessary or helpful in the collection or realization thereof; and

 

(r)            all Proceeds, including all Cash Proceeds and Noncash Proceeds,
and products of any and all of the foregoing Collateral;

 

in each case howsoever any Grantor’s interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).

 

Each Grantor has agreed not to further encumber any of its Copyrights, Copyright
applications, Copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any Licenses,
Patents, Patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, Trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of such Grantor connected with and
symbolized thereby, know-how, operating manuals, trade secret rights, rights to
unpatented inventions, and any claims for damage by way of any past, present, or
future infringement of any of the foregoing, without the Collateral Agent’s
prior written consent.

 

In addition, to secure the prompt and complete payment, performance and
observance of the Obligations and in order to induce the Buyers as aforesaid,
each Grantor hereby grants to Collateral Agent for itself and for the ratable
benefit of the Buyers, a right of set-off against the property of such Grantor
held by the Collateral Agent for itself and for the ratable benefit of the
Buyers, consisting of property described above in Section 2 now or hereafter in
the possession or

 

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custody of or in transit to the Collateral Agent, for any purpose, including
safekeeping, collection or pledge, for the account of such Grantor, or as to
which such Grantor may have any right or power; provided that such right shall
only to be exercised after an Event of Default has occurred and is continuing.

 

SECTION 3.      Security for Obligations.  The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, whether direct or indirect, absolute or contingent, and
whether now existing or hereafter incurred (collectively, the “Obligations”):

 

(a)           for so long as the Notes are outstanding, (i) the payment by the
Company, as and when due and payable (by scheduled maturity, required
prepayment, acceleration, demand or otherwise), of all amounts from time to time
owing by it in respect of the Securities Purchase Agreement, the Notes and the
other Transaction Documents, and (ii) in the case of any Guarantors, the payment
by such Guarantors, as and when due and payable of all “Guaranteed Obligations”
under (and as defined in) the Guaranty, including, without limitation, in both
cases, (A) all principal of and interest on the Notes (including, without
limitation, all interest that accrues after the commencement of any Insolvency
Proceeding of any Grantor, whether or not the payment of such interest is
unenforceable or is not allowable due to the existence of such Insolvency
Proceeding), and (B) all fees, interests, premiums, penalties, contract causes
of action, costs, commissions, expense reimbursements, indemnifications and all
other amounts due or to become due under any of the Transaction Documents; and

 

(b)           for so long as the Notes are outstanding, the due performance and
observance by each Grantor of all of its other obligations from time to time
existing in respect of any of the Transaction Documents, including without
limitation, with respect to any conversion or redemption rights of the Buyers
under the Notes.

 

SECTION 4.      Representations and Warranties.  Each Grantor represents and
warrants as of the date of this Agreement as follows:

 

(a)           Schedule I hereto sets forth (i) the exact legal name of each
Grantor, and (ii) the state of incorporation, organization or formation and the
organizational identification number of each Grantor in such state.  The
information set forth in Schedule I hereto with respect to such Grantor is true
and accurate in all respects.  Such Grantor has not previously changed its name,
jurisdiction of organization or organizational identification number from those
set forth in Schedule I hereto except as disclosed in Schedule I hereto.

 

(b)           Except as disclosed on Schedule VI, there is no pending or, to its
knowledge, written notice threatening any action, suit, proceeding or claim
affecting any Grantor before any Governmental Authority or any arbitrator, or
any order, judgment or award issued by any Governmental Authority or arbitrator,
in each case, that may adversely affect the grant by any Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Collateral Agent of any of its rights or
remedies hereunder.

 

(c)           All Federal, state and local tax returns and other reports
required by applicable law to be filed by any Grantor have been filed, or
extensions have been obtained, and

 

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all taxes, assessments and other governmental charges imposed upon any Grantor
or any property of any Grantor (including, without limitation, all federal
income and social security taxes on employees’ wages) and which have become due
and payable on or prior to the date hereof have been paid, except to the extent
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves have been set aside for the payment thereof in
accordance with generally accepted accounting principles consistently applied
(“GAAP”).

 

(d)           All Equipment, Fixtures, Goods and Inventory of each Grantor now
existing are, and all Equipment, Fixtures, Goods and Inventory of each Grantor
hereafter existing will be, located and/or based at the addresses specified
therefor in Schedule III hereto, except that each Grantor will give the
Collateral Agent written notice of any change in the location of any such
Collateral within 20 days of such change, other than to locations set forth on
Schedule III hereto (or a new Schedule III delivered by Grantors to Collateral
Agent from time to time), and with respect to which the Collateral Agent has
filed financing statements and otherwise fully perfected its Liens thereon or
will take such actions pursuant to Section 5(m).  Each Grantor’s chief place of
business and chief executive office, the place where each Grantor keeps its
Records concerning Accounts and all originals of all Chattel Paper are located
at the addresses specified therefor in Schedule III hereto.  None of the
Accounts is evidenced by Promissory Notes or other Instruments.  Set forth in
Schedule IV hereto is a complete and accurate list, as of the date of this
Agreement, of (i) each Promissory Note, Security and other Instrument owned by
each Grantor and (ii) each Deposit Account, Securities Account and Commodities
Account of each Grantor, together with the name and address of each institution
at which each such account is maintained, the account number for each such
account and a description of the purpose of each such account.  Set forth in
Schedule II hereto is a complete and correct list of each trade name used by
each Grantor and the name of, and each trade name used by, each person from
which each Grantor has acquired any substantial part of the Collateral.

 

(e)           Each Grantor has delivered to the Collateral Agent complete and
correct copies of each License described in Schedule II hereto, including all
schedules and exhibits thereto, which represent all of the Licenses existing on
the date of this Agreement.  Each such License sets forth the entire agreement
and understanding of the parties thereto relating to the subject matter thereof,
and there are no other agreements, arrangements or understandings, written or
oral, relating to the matters covered thereby or the rights of such Grantor or
any of its affiliates in respect thereof.  Each material License now existing
is, and any material License entered into in the future will be, the legal,
valid and binding obligation of the parties thereto, enforceable against such
parties in accordance with its terms.  No default under any material License by
any such party has occurred and is continuing, nor does any defense, offset,
deduction or counterclaim exist thereunder in favor of any such party (other
than pursuant to contractual terms allocating economic benefits between the
parties thereto, which are described on Schedule 4(e).

 

(f)            Each Grantor owns and controls, or otherwise possesses adequate
rights to use, all Trademarks, Patents and Copyrights, which are the only
trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, and rights of publicity
necessary to conduct its business in substantially the same manner as conducted
as of the date hereof.  Schedule II hereto sets forth a true and complete list
of all

 

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registered copyrights, issued Patents, Trademarks, and Licenses owned or used by
each Grantor as of the date hereof.  To the best knowledge of each Grantor, all
such Intellectual Property of each Grantor is subsisting and in full force and
effect, has not been adjudged invalid or unenforceable, is valid and enforceable
and has not been abandoned in whole or in part.  Except as set forth in Schedule
II, no such Intellectual Property is the subject of any licensing or franchising
agreement.  Each Grantor has no knowledge of any conflict with the rights of
others to any such Intellectual Property and, to the best knowledge of each
Grantor, each Grantor is not now infringing or in conflict with any such rights
of others in any material respect, and to the best knowledge of each Grantor, no
other Person is now infringing or in conflict in any material respect with any
such properties, assets and rights owned or used by each Grantor.  No Grantor
has received any notice that it is violating or has violated the trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity or other intellectual
property rights of any third party.

 

(g)           Each Grantor is and will be at all times the sole and exclusive
owner of, or otherwise has and will have adequate rights in, the Collateral free
and clear of any Liens, except for Permitted Liens.  No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording or filing office except such as (i) may
have been filed in favor of the Collateral Agent and/or the Buyers relating to
this Agreement or the other Security Documents or (ii) are described on Schedule
4(g) hereto.

 

(h)           The exercise by the Collateral Agent of any of its rights and
remedies hereunder will not contravene any law or any contractual restriction
binding on or otherwise affecting any Grantor or any of its properties and will
not result in or require the creation of any Lien, upon or with respect to any
of its properties.

 

(i)            No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or other regulatory body, is required
for (i) the grant by each Grantor, or the perfection, of the security interest
purported to be created hereby in the Collateral, or (ii) the exercise by the
Collateral Agent of any of its rights and remedies hereunder, except (A) for the
filing under the Uniform Commercial Code as in effect in the applicable
jurisdiction of the financing statements described in Schedule V hereto (or a
new Schedule V delivered by Grantors to Collateral Agent from time to time), all
of which financing statements have been duly filed and are in full force and
effect or will be duly filed and in full force and effect, (B) with respect to
Deposit Accounts, and all cash and other property from time to time deposited
therein, for the execution of a control agreement with the depository
institution with which such account is maintained, as provided in Section 5(i),
(C) with respect to Commodity Contracts, for the execution of a control
agreement with the commodity intermediary with which such commodity contract is
carried, as provided in Section 5(i), (D) with respect to the perfection of the
security interest created hereby in the United States Intellectual Property and
Licenses, for the recording of the appropriate Assignment for Security,
substantially in the form of Exhibit A hereto in the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, (E) with
respect to the perfection of the security interest created hereby in foreign
Intellectual Property and Licenses, for registrations and filings in
jurisdictions located outside of the United States and covering rights in such
jurisdictions relating to such foreign Intellectual Property and Licenses,
(F) with respect to the perfection of the security interest created hereby in
certificated Collateral, for the submission of an appropriate application
requesting that the Lien

 

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of the Collateral Agent be noted on the Certificate of Title or certificate of
ownership, completed and authenticated by the applicable Grantor, together with
the Certificate of Title or certificate of ownership, with respect to such
Titled Collateral, to the appropriate Governmental Authority, (G) with respect
to the perfection of the security interest created hereby in any
Letter-of-Credit Rights, for the consent of the issuer of the applicable letter
of credit to the assignment of proceeds as provided in the Uniform Commercial
Code as in effect in the applicable jurisdiction, (H) with respect to Investment
Property constituting certificated securities or instruments, such items shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent; (I) with respect to Investment
Property constituting uncertificated securities, the applicable Grantor will
cause the issuer thereof either (i) to register the Collateral Agent as the
registered owner of such security or (ii) to agree in an authenticated record
with such Grantor and the Collateral Agent that such issuer will comply with
instructions with respect to such security originated by the Collateral Agent
without further consent of such Grantor, such authenticated record to be in form
and substance satisfactory to the Collateral Agent; (J) with respect to any
Collateral that constitutes a Commodity Contract, the applicable Grantor shall
cause the commodity intermediary with respect to such Commodity Contract to
agree in an authenticated record with such Grantor and the Collateral Agent that
such commodity intermediary will apply any value distributed on account of such
Commodity Contract as directed by the Collateral Agent without further consent
of such Grantor; (K) with respect to Deposit Accounts, all such accounts shall
be maintained with a bank (the “Pledged Account Bank”) that has agreed, in a
record authenticated by the Grantor, the Collateral Agent and the Pledged
Account Bank, to (i) comply with instructions originated by the Collateral Agent
during the pendency of an Event of Default directing the disposition of funds in
the Deposit Account without the further consent of the Grantor and (ii) waive or
subordinate in favor of the Collateral Agent all claims of the Pledged Account
Bank to the Collateral in the account; (L) with respect to Electronic Chattel
Paper, it shall be maintained so that the Collateral Agent has control of
(i) the Electronic Chattel Paper in the manner specified in Section 9-105 of the
Uniform Commercial Code and (ii) the transferable records in the manner
specified in Section 16 of the Uniform Electronic Transactions Act, as in effect
in the jurisdiction governing such transferable record; (M) with respect to
Letter-of-Credit-Rights, for each Grantor maintaining all Letter-of-Credit
Rights assigned to the Collateral Agent, including, without limitation, all
letter-of-credit rights associated with the letters of credit, so that the
Collateral Agent has control of the letter-of-credit rights in the manner
specified in Section 9-107 of the Uniform Commercial Code; and (N) for the
Collateral Agent having possession of all Documents, Chattel Paper, Instruments
and cash constituting Collateral (subclauses (A), (B), (C), (D), (E), (F), G),
(H) and (I), each a “Perfection Requirement” and collectively, the “Perfection
Requirements”).

 

(j)            This Agreement creates in favor of the Collateral Agent a legal,
valid and enforceable security interest in the Collateral, as security for the
Obligations.  The performance of the Perfection Requirements results in the
perfection of such security interests.  Such security interests are, or in the
case of Collateral in which any Grantor obtains rights after the date hereof,
will be, perfected, first priority security interests, subject only to Permitted
Liens (other than Liens securing Permitted Indebtedness, excluding for this
purpose Permitted Subordinated Indebtedness and the Subordinated Notes (as
defined in the Securities Purchase Agreement), which shall be subordinate to
Collateral Agent’s security interest in the Collateral).  Such

 

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recordings and filings and all other action necessary to perfect and protect
such security interest have been duly taken or will be taken pursuant to
Section 5(m), and, in the case of Collateral in which any Grantor obtains rights
after the date hereof, will be duly taken, except for the Collateral Agent’s
having possession of all Documents, Chattel Paper, Instruments and cash
constituting Collateral after the date hereof and the other actions, filings and
recordations described above, including the Perfection Requirements.

 

(k)           As of the date hereof, no Grantor holds any Commercial Tort Claims
or has knowledge of any pending Commercial Tort Claims, except for such
Commercial Tort Claims described in Schedule VI.

 

(l)            All of the pledged Securities and Capital Stock (the “Pledged
Equity”) is presently owned by the applicable Grantor as set forth in Schedule
IV, and is presently represented by the certificates listed on Schedule IV
hereto.  As of the date hereof, there are no existing options, warrants, calls
or commitments of any character whatsoever relating to the Pledged Equity other
than as contemplated and permitted by the Transaction Documents.  Each Grantor
is the sole holder of record and the sole beneficial owner of the Pledged
Equity, as applicable.  None of the Pledged Equity has been issued or
transferred in violation of the securities registration, securities disclosure
or similar laws of any jurisdiction to which such issuance or transfer may be
subject.  The Pledged Equity constitutes 100% or such other percentage as set
forth of Schedule IV of the issued and outstanding shares of Capital Stock of
the applicable Pledged Entity.

 

(m)          Each Grantor hereby represents and warrants as of the date first
written above as follows:

 

(i)            Such Grantor (A) is a corporation, limited liability company or
limited partnership duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (B) has all requisite
corporate, limited liability company or limited partnership power and authority
to conduct its business as now conducted and as presently contemplated and to
execute and deliver this Agreement and each other Transaction Document to which
such Grantor is a party, and to consummate the transactions contemplated hereby
and thereby and (C) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
or in which the transaction of its business makes such qualification necessary
except where the failure to be so qualified would not result in a Material
Adverse Effect.

 

(ii)           The execution, delivery and performance by each Grantor of this
Agreement and each other Transaction Document to which such Grantor is a party
(A) have been duly authorized by all necessary corporate, limited liability
company or limited partnership action, (B) do not and will not contravene its
charter or by-laws, its limited liability company or operating agreement or its
certificate of partnership or partnership agreement, as applicable, or any
applicable law or any contractual restriction binding on such Grantor or its
properties do not and will not result in or require the creation of any lien
(other than pursuant to any Transaction Document) upon or with respect to any of
its properties, and (C) to such Grantor’s knowledge, do not and will not result
in any default, noncompliance, suspension, revocation, impairment,

 

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forfeiture or nonrenewal of any material permit, license, authorization or
approval applicable to it or its operations or any of its properties.

 

(iii)          Each of this Agreement and the other Transaction Documents to
which any Grantor is or will be a party, when delivered, will be, a legal, valid
and binding obligation of the Grantor, enforceable against such Grantor in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or
other similar laws and equitable principles (regardless of whether enforcement
is sought in equity or at law).

 

(iv)          There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.

 

SECTION 5.                                Covenants as to the Collateral.  So
long as any of the Obligations shall remain outstanding, unless the Collateral
Agent shall otherwise consent in writing:

 

(a)           Further Assurances.  Each Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that the Collateral Agent may reasonably
request in order to:  (i) perfect and protect the security interest purported to
be created hereby; (ii) enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) otherwise
effect the purposes of this Agreement, including, without limitation: 
(A) marking conspicuously all Chattel Paper and each License and, at the request
of the Collateral Agent, each of its Records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Collateral Agent, indicating
that such Chattel Paper, License or Collateral is subject to the security
interest created hereby, (B)  delivering and pledging to the Collateral Agent
each Promissory Note, Security, Chattel Paper or other Instrument, now or
hereafter owned by any Grantor, duly endorsed and accompanied by executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent, (C) executing and filing (to the extent, if any, that any
Grantor’s signature is required thereon) or authenticating the filing of, such
financing or continuation statements, or amendments thereto, as may be necessary
or that the Collateral Agent may reasonably request in order to perfect and
preserve the security interest purported to be created hereby, (D) furnishing to
the Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral in each case as the Collateral Agent may reasonably request,
all in reasonable detail, (E) if any Collateral shall be in the possession of a
third party, notifying such Person of the Collateral Agent’s security interest
created hereby and obtaining a written acknowledgment from such Person that such
Person holds possession of the Collateral for the benefit of the Collateral
Agent, which such written acknowledgement shall be in form and substance
reasonably satisfactory to the Collateral Agent, (F) if at any time after the
date hereof, any Grantor acquires or holds any Commercial Tort Claim, promptly
notifying the Collateral Agent in a writing signed by such Grantor setting forth
a brief description of such Commercial Tort Claim and granting to the Collateral
Agent a security interest therein and in the proceeds thereof, which writing
shall incorporate the provisions hereof and shall be in form and substance
satisfactory to the Collateral Agent, (G) upon the acquisition after the date
hereof by any Grantor of any motor vehicle or other Equipment subject to a
certificate of title or ownership (other than a Motor Vehicle or Equipment that
is subject to a purchase money security interest), causing the

 

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Collateral Agent to be listed as the lienholder on such certificate of title or
ownership and delivering evidence of the same to the Collateral Agent in
accordance with Section 5(j) hereof; and (H) taking all actions required by any
earlier versions of the Uniform Commercial Code or by other law, as applicable,
in any relevant Uniform Commercial Code jurisdiction, or by other law as
applicable in any foreign jurisdiction.

 

(b)           Location of Equipment and Inventory.  Each Grantor will keep the
Equipment and Inventory (i) at the locations specified therefor on Schedule III
hereto, or (ii) at such other locations set forth on Schedule III (or a new
Schedule III delivered by Grantors to Collateral Agent from time to time) and
with respect to which the Collateral Agent has filed financing statements and
otherwise fully perfected its Liens thereon, or (iii) at such other locations in
the United States, provided that within 20 days following the relocation of
Equipment or Inventory to such other location or the acquisition of Equipment or
Inventory, Grantor shall deliver to the Collateral Agent a new Schedule III
indicating such new locations.

 

(c)           Condition of Equipment.  Each Grantor will maintain or cause the
Equipment (necessary or useful to its business) to be maintained and preserved
in good condition, repair and working order, ordinary wear and tear excepted,
and will forthwith, or in the case of any loss or damage to any Equipment of any
Grantor within a commercially reasonable time after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable, consistent with past
practice, or which the Collateral Agent may reasonably request to such end.  Any
Grantor will promptly furnish to the Collateral Agent a statement describing in
reasonable detail any such loss or damage in excess of $250,000 per occurrence
to any Equipment.

 

(d)           Taxes, Etc.  Each Grantor agrees to pay promptly when due all
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including claims for labor, materials and supplies)
against, the Equipment and Inventory, except to the extent the validity thereof
is being contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with
respect to which adequate reserves in accordance with GAAP have been set aside
for the payment thereof.

 

(e)           Insurance.

 

(i)            Each Grantor will, at its own expense, maintain insurance
(including, without limitation, commercial general liability and property
insurance) with respect to the Equipment and Inventory in such amounts, against
such risks, in such form and with responsible and reputable insurance companies
or associations as is required by any Governmental Authority having jurisdiction
with respect thereto or as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated and in
any event, in amount, adequacy and scope reasonably satisfactory to the
Collateral Agent.  Each such policy for liability insurance shall provide for
all losses to be paid on behalf of the Collateral Agent and any Grantor as their
respective interests may appear, and each policy for property damage insurance
shall provide for all losses to be adjusted with, and paid directly to, the
Collateral Agent.  Each such policy shall in addition (A) name the Collateral
Agent as an additional insured party and loss payee thereunder (without any
representation or warranty by or

 

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obligation upon the Collateral Agent) as its interest may appear, (B) contain an
agreement by the insurer that, following and during the continuance of an Event
of Default, any loss thereunder shall be payable to the Collateral Agent in its
capacity as agent notwithstanding any action, inaction or breach of
representation or warranty by any Grantor, (C) provide that there shall be no
recourse against the Collateral Agent for payment of premiums or other amounts
with respect thereto, and (D) provide that at least 30 days’ prior written
notice of cancellation, lapse, expiration or other adverse change shall be given
to the Collateral Agent by the insurer.  Any Grantor will, if so requested by
the Collateral Agent, deliver to the Collateral Agent original or duplicate
policies of such insurance and, as often as the Collateral Agent may reasonably
request, a report of a reputable insurance broker with respect to such
insurance.  Any Grantor will also, at the request of the Collateral Agent,
execute and deliver instruments of assignment of such insurance policies and
cause the respective insurers to acknowledge notice of such assignment.

 

(ii)           Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 5(e) may be paid directly to the Person who
shall have incurred liability covered by such insurance.  In the case of any
loss involving damage to Equipment or Inventory, any Grantor will make or cause
to be made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance maintained by any Grantor pursuant to
this Section 5(e) shall be paid to said Grantor as reimbursement for the costs
of such repairs or replacements.

 

(iii)          Notwithstanding subsection (e)(ii) above, following and during
the continuance of an Event of Default, all insurance payments in respect of
such Equipment or Inventory shall be paid to the Collateral Agent and applied as
specified in Section 7(b) hereof.

 

(f)            Provisions Concerning the Accounts and the Licenses.

 

(i)            Each Grantor will (A) give the Collateral Agent at least 30 days’
prior written notice of any change in such Grantor’s name, identity or
organizational structure, (B) maintain its jurisdiction of incorporation,
organization or formation as set forth in Schedule I hereto, (C) immediately
notify the Collateral Agent upon obtaining an organizational identification
number, if on the date hereof such Grantor did not have such identification
number, and (D) keep adequate Records concerning the Accounts and Chattel Paper
and permit representatives of the Collateral Agent during normal business hours
on reasonable notice to such Grantor, to inspect and make abstracts from such
Records and Chattel Paper.

 

(ii)           Each Grantor will, except as otherwise provided in this
subsection (f), continue to collect, at its own expense, all amounts due or to
become due under the Accounts.  In connection with such collections, any Grantor
may (and, at the Collateral Agent’s direction, will) take such action as any
Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection or performance of the Accounts; provided, however, that the
Collateral Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Collateral
Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to any Grantor thereunder directly to the
Collateral Agent or its designated agent and, upon such notification and at the
expense of any Grantor and to the extent permitted by applicable law, to enforce
collection of

 

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any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as any Grantor might have
done.  After receipt by any Grantor of a notice from the Collateral Agent that
the Collateral Agent has notified, intends to notify, or has enforced or intends
to enforce any Grantor’s rights against the account debtors or obligors under
any Accounts as referred to in the proviso to the immediately preceding
sentence, (A) all amounts and proceeds (including Instruments) received by any
Grantor in respect of the Accounts shall be received in trust for the benefit of
the Collateral Agent hereunder, shall be segregated from other funds of any
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary endorsement) to be applied as specified
in Section 7(b) hereof, and (B) no Grantor will adjust, settle or compromise the
amount or payment of any Account or release wholly or partly any account debtor
or obligor thereof or allow any credit or discount thereon.  In addition, upon
the occurrence and during the continuance of an Event of Default, the Collateral
Agent may (with the consent or at the request of the Requisite Holders) direct
any or all of the banks and financial institutions with which any Grantor either
maintains a Deposit Account or a lockbox or deposits the proceeds of any
Accounts to send immediately to the Collateral Agent by wire transfer (to such
account as the Collateral Agent shall specify, or in such other manner as the
Collateral Agent shall direct) all or a portion of the securities, cash,
investments and other items held by such institution for the benefit of said
Grantor.  Any such securities, cash, investments and other items so received by
the Collateral Agent shall be applied as specified in accordance with
Section 7(b) hereof.

 

(iii)          Upon the occurrence and during the continuance of any breach or
default under any material License referred to in Schedule II hereto by any
party thereto other than any Grantor, each Grantor party thereto will, promptly
after obtaining knowledge thereof, give the Collateral Agent written notice of
the nature and duration thereof, specifying what action, if any, it has taken
and proposes to take with respect thereto and thereafter will take reasonable
steps to protect and preserve its rights and remedies in respect of such breach
or default, or will obtain or acquire an appropriate substitute License.

 

(iv)          Each Grantor will, at its expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by it by
which any other party to any material License referred to in Schedule II hereto
purports to exercise any of its rights or affect any of its obligations
thereunder, together with a copy of any reply by such Grantor thereto.

 

(v)           Each Grantor will exercise promptly and diligently each and every
right which it may have under each material License (other than any right of
termination) and will duly perform and observe in all respects all of its
obligations under each material License and will take all action reasonably
necessary to maintain such Licenses in full force and effect.  No Grantor will,
without the prior written consent of the Collateral Agent, cancel, terminate,
amend or otherwise modify in any respect, or waive any provision of, any
material License referred to in Schedule II hereto.

 

(g)           Transfers and Other Liens.

 

(i)            No Grantor will sell, assign (by operation of law or otherwise),
lease, license, exchange or otherwise transfer or dispose of any of the
Collateral, except

 

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(A) Inventory in the ordinary course of business, and (B) non-material worn out
or obsolete assets, not necessary to the business.

 

(ii)           No Grantor will create, suffer to exist or grant any Lien upon or
with respect to any Collateral other than a Permitted Lien.

 

(h)           Intellectual Property.

 

(i)            If applicable, any Grantor shall, upon the Collateral Agent’s
written request, duly execute and deliver the applicable Intellectual Property
Security Agreement in the form attached hereto as Exhibit A.  Each Grantor
(either itself or through licensees) will, and will cause each licensee thereof
to, take all action necessary to maintain all of the material Intellectual
Property in full force and effect, including, without limitation, using the
proper statutory notices and markings and using the material Trademarks on each
applicable trademark class of goods in order to so maintain such Trademarks in
full force and free from any claim of abandonment for non-use, and each Grantor
will not (nor permit any licensee thereof to) do any act or knowingly omit to do
any act whereby any material Intellectual Property may become invalidated.  Each
Grantor will cause to be taken all necessary steps in any proceeding before the
United States Patent and Trademark Office and the United States Copyright Office
or any similar office or agency in any other country or political subdivision
thereof to maintain each registration of the material Intellectual Property
(other than the Intellectual Property described in the proviso to the
immediately preceding sentence), including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and payment of maintenance fees,
filing fees, taxes or other governmental fees.  If any material Intellectual
Property (other than Intellectual Property described in the proviso to the first
sentence of subsection (i) of this clause (h)) is infringed, misappropriated,
diluted or otherwise violated in any material respect by a third party, each
Grantor shall (x) upon learning of such infringement, misappropriation, dilution
or other violation, promptly notify the Collateral Agent and (y) to the extent
any Grantor shall deem appropriate under the circumstances, promptly sue for
infringement, misappropriation, dilution or other violation, seek injunctive
relief where appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
such Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property.  Each Grantor shall furnish to the Collateral Agent from
time to time upon its request statements and schedules further identifying and
describing the Intellectual Property and Licenses and such other reports in
connection with the Intellectual Property and Licenses as the Collateral Agent
may reasonably request, all in reasonable detail.  Promptly upon request of the
Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, each Grantor shall modify this Agreement by
amending Schedule II hereto, as the case may be, to include any Intellectual
Property and License, as the case may be, which becomes part of the Collateral
under this Agreement and shall execute and authenticate such documents and do
such acts as shall be necessary or, in the reasonable judgment of the Collateral
Agent, desirable to subject such Intellectual Property and Licenses to the Lien
and security interest created by this Agreement.  Notwithstanding anything
herein to the contrary, upon the occurrence and during the continuance of an
Event of Default, no Grantor may abandon or otherwise permit any Intellectual
Property to become invalid without the prior written consent of the Collateral
Agent, and if any Intellectual Property is infringed, misappropriated, diluted
or otherwise violated in any material

 

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respect by a third party, each Grantor will take such action as the Collateral
Agent shall deem appropriate under the circumstances to protect such
Intellectual Property.

 

(ii)           In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for the registration
of any Trademark or Copyright or the issuance of any Patent with the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, or in any similar office or agency of the United States or any
country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof.  Upon request of the Collateral Agent, any
Grantor shall execute, authenticate and deliver any and all assignments,
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent’s security interest
hereunder in such Intellectual Property and the General Intangibles of any
Grantor relating thereto or represented thereby, and each Grantor hereby
appoints the Collateral Agent its attorney-in-fact to execute and/or
authenticate and file all such writings for the foregoing purposes, all acts of
such attorney being hereby ratified and confirmed, and such power (being coupled
with an interest) shall be irrevocable until the indefeasible payment in full in
cash of all of the Obligations in full.

 

(i)            Deposit, Commodities and Securities Accounts.  Within thirty (30)
days following the date hereof (or such later date as agreed to by Collateral
Agent), each Grantor shall cause each bank and other financial institution with
an account referred to in Schedule IV hereto to execute and deliver to the
Collateral Agent a control agreement, in form and substance reasonably
satisfactory to the Collateral Agent, duly executed by each Grantor and such
bank or financial institution, or enter into other arrangements in form and
substance satisfactory to the Collateral Agent, pursuant to which such
institution shall irrevocably agree, inter alia, that (i) it will comply at any
time with the instructions originated by the Collateral Agent to such bank or
financial institution directing the disposition of cash, Commodity Contracts,
securities, Investment Property and other items from time to time credited to
such account, without further consent of any Grantor, which instructions the
Collateral Agent will not give to such bank or other financial institution in
the absence of a continuing Event of Default, (ii) all Commodity Contracts,
securities, Investment Property and other items of each Grantor deposited with
such institution shall be subject to a perfected, first priority security
interest in favor of the Collateral Agent, (iii) any right of set off (other
than recoupment of standard fees), banker’s Lien or other similar Lien, security
interest or encumbrance shall be fully waived as against the Collateral Agent,
and (iv) upon receipt of written notice from the Collateral Agent during the
continuance of an Event of Default, such bank or financial institution shall
immediately send to the Collateral Agent by wire transfer (to such account as
the Collateral Agent shall specify, or in such other manner as the Collateral
Agent shall direct) all such cash, the value of any Commodity Contracts,
securities, Investment Property and other items held by it.  Without the prior
written consent of the Collateral Agent, each Grantor shall not make or maintain
any Deposit Account, Commodity Account or Securities Account except for the
accounts set forth in Schedule IV hereto.  The provisions of this paragraph
5(i) shall not apply to Deposit Accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
the benefit of each Grantor’s salaried or hourly employees.

 

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(j)            Motor Vehicles.

 

(i)            Upon the Collateral Agent’s written request, each Grantor shall
deliver to the Collateral Agent originals of the certificates of title or
ownership for all motor vehicles with an individual value in excess of $50,000,
owned by it with the Collateral Agent listed as lienholder, for the benefit of
the Buyers.

 

(ii)           Each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact, effective the date hereof and terminating upon the termination
of this Agreement, for the purpose of (A) executing on behalf of such Grantor
title or ownership applications for filing with appropriate state agencies to
enable motor vehicles now owned or hereafter acquired by such Grantor to be
retitled and the Collateral Agent listed as lienholder thereof, (B) filing such
applications with such state agencies, and (C) executing such other documents
and instruments on behalf of, and taking such other action in the name of, such
Grantor as the Collateral Agent may deem necessary or advisable to accomplish
the purposes hereof (including, without limitation, for the purpose of creating
in favor of the Collateral Agent a perfected Lien on the motor vehicles and
exercising the rights and remedies of the Collateral Agent hereunder).  This
appointment as attorney-in-fact is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash.

 

(iii)          Any certificates of title or ownership delivered pursuant to the
terms hereof shall be accompanied by odometer statements for each motor vehicle
covered thereby.

 

(iv)          So long as no Event of Default shall have occurred and be
continuing, upon the request of any Grantor, the Collateral Agent shall execute
and deliver to said Grantor such instruments as said Grantor shall reasonably
request to remove the notation of the Collateral Agent as lienholder on any
certificate of title for any motor vehicle; provided, however, that any such
instruments shall be delivered, and the release effective, only upon receipt by
the Collateral Agent of a certificate from any Grantor stating that such motor
vehicle is to be sold or has suffered a casualty loss (with title thereto in
such case passing to the casualty insurance company therefor in settlement of
the claim for such loss) and the amount that any Grantor will receive as sale
proceeds or insurance proceeds.  Any proceeds of such sale or casualty loss
shall be paid to the Collateral Agent hereunder immediately upon receipt, to be
applied to the Obligations then outstanding.

 

(k)           Control.  Each Grantor hereby agrees to take any or all action
that may be necessary or that the Collateral Agent may reasonably request in
order for the Collateral Agent to obtain control in accordance with Sections
9-105 — 9-107 of the Code with respect to the following Collateral: 
(i) Electronic Chattel Paper, (ii) Investment Property, and
(iii) Letter-of-Credit Rights.

 

(l)            Inspection and Reporting.  Each Grantor shall permit the
Collateral Agent and each Buyer, or any agent or representatives thereof or such
professionals or other Persons as the Collateral Agent or any Buyer may
designate, during normal business hours, after reasonable notice in the absence
of an Event of Default and not more than once a year in the absence of an Event
of Default, (i) to examine and make copies of and abstracts from any Grantor’s
records

 

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and books of account, (ii) to visit and inspect its properties, (iii) to verify
materials, leases, Instruments, Accounts, Inventory and other assets of any
Grantor from time to time, and (iv) to conduct audits, physical counts,
appraisals and/or valuations, and examinations at the locations of any Grantor. 
Each Grantor shall also permit the Collateral Agent and each Buyer, or any agent
or representatives thereof or such professionals or other Persons as the
Collateral Agent may designate to discuss such Grantor’s affairs, finances and
accounts with any of its directors, officers, managerial employees, independent
accountants or any of its other professional representatives.

 

(m)          Future Subsidiaries.  If (A) any Inactive Subsidiary shall, after
the date hereof, acquire any assets, incur any liabilities or engage in any
business, simultaneously with the acquisition of such assets, incurrence of such
liabilities or undertaking of such business, or (B) any Grantor shall hereafter
create or acquire any Subsidiary, simultaneously with the creation or
acquisition of such Subsidiary, Grantors (i) shall cause such Inactive
Subsidiary or Subsidiary to become a party to this Agreement as an additional
“Grantor” hereunder, (ii) shall deliver to the Collateral Agent revised
Schedules to this Agreement, as appropriate, (iii) shall cause such Inactive
Subsidiary or Subsidiary to duly execute and deliver a guaranty of the
Obligations in favor of the Collateral Agent in form and substance reasonably
acceptable to the Collateral Agent, and (iv) shall cause such Inactive
Subsidiary or Subsidiary to duly execute and/or deliver such opinions of counsel
and other documents, in form and substance reasonably acceptable to the
Collateral Agent, as the Collateral Agent shall reasonably request with respect
thereto; provided, that no Grantor shall pledge Capital Stock in excess of
shares representing 100% of the nonvoting Capital Stock and 65% of the total
combined voting power of all classes of Capital Stock entitled to vote of any
and all Persons now or hereafter existing who is a Subsidiary organized under
the laws of a jurisdiction other than the United States, any states thereof or
the District of Columbia (a “Foreign Subsidiary”), if such action would result
in material adverse, incremental tax liabilities to such Grantor under
Section 956 of the IRC.  Each Grantor hereby authorizes Collateral Agent to
attach such revised Schedules to this Agreement and agrees that all Pledged
Equity listed on any revised Schedule delivered to Collateral Agent shall for
all purposes hereunder be considered Collateral.  The Grantors agree that the
pledge of the shares of Capital Stock acquired by a Grantor of Foreign
Subsidiary may be supplemented by one or more separate pledge agreements, deeds
of pledge, share charges, or other similar agreements or instruments, executed
and delivered by the relevant Grantor in favor of the Collateral Agent, which
pledge agreements will provide for the pledge of such shares of Capital Stock in
accordance with the laws of the applicable foreign jurisdiction.  With respect
to such shares of Capital Stock, the Collateral Agent may, at any time and from
time to time, in its sole discretion, take actions in such foreign jurisdictions
that will result in the perfection of the Lien created in such shares of Capital
Stock.

 

SECTION 6.      Additional Provisions Concerning the Collateral.

 

(a)           To the maximum extent permitted by applicable law, and for the
purpose of taking any action that the Collateral Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, each
Grantor hereby (i) authorizes the Collateral Agent, in connection with the
perfection of the security interests hereunder, to execute any such agreements,
instruments or other documents in such Grantor’s name and to file such
agreements, instruments or other documents in such Grantor’s name and in any
appropriate filing office, (ii)

 

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authorizes the Collateral Agent at any time and from time to time to file one or
more financing or continuation statements, and amendments thereto relating to
the Collateral (including, without limitation, any such financing statements
that (A) describe the Collateral as “all assets” or “all personal property” (or
words of similar effect) or that describe or identify the Collateral by type or
in any other manner as the Collateral Agent may determine regardless of whether
any particular asset of such Grantor falls within the scope of Article 9 of the
Code or whether any particular asset of such Grantor constitutes part of the
Collateral, and (B) contain any other information required by Part 5 of
Article 9 of the Code for the sufficiency or filing office acceptance of any
financing statement, continuation statement or amendment, including, without
limitation, whether such Grantor is an organization, the type of organization
and any organizational identification number issued to such Grantor) and
(iii) ratifies such authorization to the extent that the Collateral Agent has
filed any such financing or continuation statements, or amendments thereto,
prior to the date hereof.  A photocopy or other reproduction of this Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.

 

(b)           Each Grantor hereby irrevocably appoints the Collateral Agent as
its attorney-in-fact and proxy, with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise, from time to time in
the Collateral Agent’s discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument
which the Collateral Agent may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement (subject to the rights of each Grantor
under Section 5 hereof), including, without limitation, (i) to obtain and adjust
insurance required to be paid to the Collateral Agent pursuant to
Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any Collateral, (iii) to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper in connection with
clause (i) or (ii) above, (iv) to file any claims or take any action or
institute any proceedings which the Collateral Agent may deem necessary or
desirable for the collection of any Collateral or otherwise to enforce the
rights of the Collateral Agent and the Buyers with respect to any Collateral,
and (v) to execute assignments, licenses and other documents to enforce the
rights of the Collateral Agent and the Buyers with respect to any Collateral. 
This power is coupled with an interest and is irrevocable until all of the
Obligations are indefeasibly paid in full in cash.

 

(c)           For the purpose of enabling the Collateral Agent to exercise
rights and remedies hereunder, at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, and for no other
purpose, each Grantor hereby grants to the Collateral Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to any Grantor) to use, assign, license or
sublicense any Intellectual Property now owned or hereafter acquired by such
Grantor, wherever the same may be located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof. 
Notwithstanding anything contained herein to the contrary, but subject to the
provisions of the Securities Purchase Agreement that limit the right of any
Grantor to dispose of its property, and Section 5(g) and Section 5(h) hereof, so
long as no Event of Default shall have occurred and be continuing, any Grantor
may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of
or take other actions with respect to the Intellectual Property in the

 

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ordinary course of its business.  In furtherance of the foregoing, unless an
Event of Default shall have occurred and be continuing, the Collateral Agent
shall from time to time, upon the request of any Grantor, execute and deliver
any instruments, certificates or other documents, in the form so requested,
which such Grantor shall have certified are appropriate (in such Grantor’s
judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to this clause (c) as to any
Intellectual Property).  Further, upon the indefeasible payment in full in cash
of all of the Obligations, the Collateral Agent (subject to
Section 10(e) hereof) shall release and reassign to each Grantor all of the
Collateral Agent’s right, title and interest in and to the Intellectual
Property, and the Licenses, all without recourse, representation or warranty
whatsoever.  The exercise of rights and remedies hereunder by the Collateral
Agent shall not terminate the rights of the holders of any licenses or
sublicenses theretofore granted by each Grantor in accordance with the second
sentence of this clause (c).  Each Grantor hereby releases the Collateral Agent
from any claims, causes of action and demands at any time arising out of or with
respect to any actions taken or omitted to be taken by the Collateral Agent
under the powers of attorney granted herein other than actions taken or omitted
to be taken through the Collateral Agent’s gross negligence or willful
misconduct, as determined by a final determination of a court of competent
jurisdiction.

 

(d)           If any Grantor fails to perform any agreement or obligation
contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement or obligation, in the name of such Grantor or the Collateral
Agent, and the expenses of the Collateral Agent incurred in connection therewith
shall be payable by such Grantor pursuant to Section 8 hereof and shall be
secured by the Collateral.

 

(e)           The powers conferred on the Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers.  Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.

 

(f)            Anything herein to the contrary notwithstanding (i) each Grantor
shall remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed,
(ii) the exercise by the Collateral Agent of any of its rights hereunder shall
not release any Grantor from any of its obligations under the Licenses or
otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not
have any obligation or liability by reason of this Agreement under the Licenses
or with respect to any of the other Collateral, nor shall the Collateral Agent
be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

 

(g)           As long as no Event of Default shall have occurred and be
continuing and until written notice shall be given to the applicable Grantor:

 

(i)            Each Grantor shall have the right, from time to time, to vote and
give consents with respect to the Pledged Equity, or any part thereof for all
purposes not

 

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inconsistent with the provisions of this Agreement, the Securities Purchase
Agreement or any other Transaction Document; provided, however, that no vote
shall be cast, and no consent shall be given or action taken, which would have
the effect of impairing the position or interest of Collateral Agent in respect
of the Pledged Equity or which would authorize, effect or consent to (unless and
to the extent expressly permitted by the Securities Purchase Agreement):

 

(A)          the dissolution or liquidation, in whole or in part, of a Pledged
Entity;

 

(B)           the consolidation or merger of a Pledged Entity with any other
Person;

 

(C)           the sale, disposition or encumbrance of all or substantially all
of the assets of a Pledged Entity, except for Liens in favor of Collateral
Agent;

 

(D)          any change in the authorized number of shares, the stated capital
or the authorized share capital of a Pledged Entity or the issuance of any
additional shares of its Capital Stock; or

 

(E)           the alteration of the voting rights with respect to the Capital
Stock of a Pledged Entity.

 

(h)           (i)            Each Grantor shall be entitled, from time to time,
to collect and receive for its own use all cash dividends and interest paid in
respect of the Pledged Equity to the extent not in violation of the Securities
Purchase Agreement other than any and all: (A) dividends and interest paid or
payable other than in cash in respect of any Pledged Equity, and instruments and
other property received, receivable or otherwise distributed in respect of, or
in exchange for, any Pledged Equity;  (B) dividends and other distributions paid
or payable in cash in respect of any Pledged Equity in connection with a partial
or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in capital of a Pledged Entity; and (C) cash
paid, payable or otherwise distributed, in respect of principal of, or in
redemption of, or in exchange for, any Pledged Equity; provided, however, that
until actually paid all rights to such distributions shall remain subject to the
Lien created by this Agreement; and

 

(ii)           all dividends and interest (other than such cash dividends and
interest as are permitted to be paid to any Grantor in accordance with clause
(i) above) and all other distributions in respect of any of the Pledged Equity,
whenever paid or made, shall be delivered to Collateral Agent to hold as Pledged
Equity and shall, if received by any Grantor, be received in trust for the
benefit of Collateral Agent, be segregated from the other property or funds of
such Grantor, and be forthwith delivered to Collateral Agent as Pledged Equity
in the same form as so received (with any necessary endorsement).

 

SECTION 7.      Remedies Upon Event of Default.  If any Event of Default shall
have occurred and be continuing:

 

(a)           The Collateral Agent may (with the consent or at the direction of
the Requisite Holders) exercise in respect of the Collateral, in addition to any
other rights and remedies provided for herein or otherwise available to it, all
of the rights and remedies of a

 

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secured party upon default under the Code (whether or not the Code applies to
the affected Collateral), and also may (i) take absolute control of the
Collateral, including, without limitation, transfer into the Collateral Agent’s
name or into the name of its nominee or nominees (to the extent the Collateral
Agent has not theretofore done so) and thereafter receive, for the benefit of
the Buyers, all payments made thereon, give all consents, waivers and
ratifications in respect thereof and otherwise act with respect thereto as
though it were the outright owner thereof, (ii) require each Grantor to, and
each Grantor hereby agrees that it will at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of its respective Collateral as
directed by the Collateral Agent and make it available to the Collateral Agent
at a place or places to be designated by the Collateral Agent that is reasonably
convenient to both parties, and the Collateral Agent may enter into and occupy
any premises owned or leased by any Grantor where the Collateral or any part
thereof is located or assembled for a reasonable period in order to effectuate
the Collateral Agent’s rights and remedies hereunder or under law, without
obligation to any Grantor in respect of such occupation, and (iii) without
notice except as specified below and without any obligation to prepare or
process the Collateral for sale, (A) sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Collateral Agent’s
offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable and/or (B) lease, license or dispose of the Collateral
or any part thereof upon such terms as the Collateral Agent may deem
commercially reasonable.  Each Grantor agrees that, to the extent notice of sale
or any other disposition of its respective Collateral shall be required by law,
at least ten (10) days’ notice to any Grantor of the time and place of any
public sale or the time after which any private sale or other disposition of its
respective Collateral is to be made shall constitute reasonable notification. 
The Collateral Agent shall not be obligated to make any sale or other
disposition of any Collateral regardless of notice of sale having been given. 
The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. 
Each Grantor hereby waives any claims against the Collateral Agent and the
Buyers arising by reason of the fact that the price at which its respective
Collateral may have been sold at a private sale was less than the price which
might have been obtained at a public sale or was less than the aggregate amount
of the Obligations, even if the Collateral Agent accepts the first offer
received and does not offer such Collateral to more than one offeree, and waives
all rights that any Grantor may have to require that all or any part of such
Collateral be marshaled upon any sale (public or private) thereof.  Each Grantor
hereby acknowledges that (i) any such sale of its respective Collateral by the
Collateral Agent shall be made without warranty, (ii) the Collateral Agent may
specifically disclaim any warranties of title, possession, quiet enjoyment or
the like, and (iii) such actions set forth in clauses (i) and (ii) above shall
not adversely affect the commercial reasonableness of any such sale of
Collateral.  In addition to the foregoing, (1) upon written notice to any
Grantor from the Collateral Agent after and during the continuance of an Event
of Default, such Grantor shall cease any use of the Intellectual Property or any
trademark, patent or copyright similar thereto for any purpose described in such
notice; (2) the Collateral Agent may, at any time and from time to time after
and during the continuance of an Event of Default, upon 10 days’ prior notice to
such Grantor, license, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Intellectual Property, throughout
the universe for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its sole discretion determine; and

 

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(3) the Collateral Agent may, at any time, pursuant to the authority granted in
Section 6 hereof (such authority being effective upon the occurrence and during
the continuance of an Event of Default), execute and deliver on behalf of such
Grantor, one or more instruments of assignment of the Intellectual Property (or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.

 

(b)           Any cash held by the Collateral Agent as Collateral and all Cash
Proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part of the Collateral
shall be applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 8 hereof) by the Collateral Agent against, all or any part
of the Obligations in such order as provided in the Securities Purchase
Agreement and the Notes.  Any surplus of such cash or Cash Proceeds held by the
Collateral Agent and remaining after the indefeasible payment in full in cash of
all of the Obligations shall be paid over to whomsoever shall be lawfully
entitled to receive the same or as a court of competent jurisdiction shall
direct.

 

(c)           In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent
and the Buyers are legally entitled, each Grantor shall be liable for the
deficiency, together with interest thereon at the highest rate specified in the
Notes for interest on overdue principal thereof or such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses and other client charges of any attorneys
employed by the Collateral Agent to collect such deficiency.

 

(d)           To the extent that applicable law imposes duties on the Collateral
Agent to exercise remedies in a commercially reasonable manner, each Grantor
acknowledges and agrees that it is commercially reasonable for the Collateral
Agent (i) to fail to incur expenses deemed significant by the Collateral Agent
to prepare Collateral for disposition or otherwise to transform raw material or
work in process into finished goods or other finished products for disposition,
(ii) to fail to obtain third party consents for access to Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors or other persons obligated on Collateral or to
remove Liens on or any adverse claims against Collateral, (iv) to exercise
collection remedies against account debtors and other Persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other Persons, whether or not in the
same business as any Grantor, for expressions of interest in acquiring all or
any portion of such Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Collateral Agent against risks of loss, collection or
disposition of Collateral or to provide to the Collateral Agent a guaranteed
return from the collection or disposition of Collateral, or (xii) to the extent
deemed appropriate by the Collateral Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to

 

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assist the Collateral Agent in the collection or disposition of any of the
Collateral.  Each Grantor acknowledges that the purpose of this section is to
provide non-exhaustive indications of what actions or omissions by the
Collateral Agent would be commercially reasonable in the Collateral Agent’s
exercise of remedies against the Collateral and that other actions or omissions
by the Collateral Agent shall not be deemed commercially unreasonable solely on
account of not being indicated in this section.  Without limitation upon the
foregoing, nothing contained in this section shall be construed to grant any
rights to any Grantor or to impose any duties on the Collateral Agent that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this section.

 

(e)           The Collateral Agent shall not be required to marshal any present
or future collateral security (including, but not limited to, this Agreement and
the Collateral) for, or other assurances of payment of, the Obligations or any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of the Collateral Agent’s rights hereunder and
in respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising.  To
the extent that any Grantor lawfully may, each Grantor hereby agrees that it
will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of the Collateral Agent’s rights under
this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, each Grantor hereby irrevocably waives the
benefits of all such laws.

 

SECTION 8.      Indemnity and Expenses.

 

(a)           Each Grantor agrees, jointly and severally, to defend, protect,
indemnify and hold the Collateral Agent and each of the Buyers, jointly and
severally, harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees, costs, expenses, and disbursements of
such Person’s counsel) to the extent that they arise out of or otherwise result
from this Agreement (including, without limitation, enforcement of this
Agreement), except to the extent resulting from such Person’s gross negligence
or willful misconduct, as determined by a final judgment of a court of competent
jurisdiction.

 

(b)           Each Grantor agrees, jointly and severally, to pay to the
Collateral Agent upon demand the amount of any and all costs and expenses,
including the reasonable fees, costs, expenses and disbursements of counsel for
the Collateral Agent and of any experts and agents (including, without
limitation, any collateral trustee which may act as agent of the Collateral
Agent), which the Collateral Agent may incur in connection with (i) the
preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder, or (iv) the
failure by any Grantor to perform or observe any of the provisions hereof.

 

SECTION 9.           Notices, Etc.  All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return

 

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receipt requested), telecopied, e-mailed or delivered, if to any Grantor to it
at the address of the Company below, and if to the Collateral Agent, to it at
its address specified on the signature pages below; or as to any such Person, at
such other address as shall be designated by such Person in a written notice to
all other parties hereto complying as to delivery with the terms of this
Section 9.  All such notices and other communications shall be effective (a) if
sent by certified mail, return receipt requested, when received or three days
after deposited in the mail, whichever occurs first, (b) if telecopied or
e-mailed, when transmitted (during normal business hours) and confirmation is
received, and otherwise, the day after the notice or communication was
transmitted and confirmation is received, or (c) if delivered in person, upon
delivery.  For the avoidance of doubt, each of the Foreign Subsidiaries, as
Grantors, hereby appoints the Company as its agent for receipt of service of
process and all notices and other communications in the United States at the
address of the Company specified below.

 

SECTION 10.         Miscellaneous.

 

(a)           No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by each Grantor and the Collateral Agent
(with the consent or at the direction of the Requisite Holders), and no waiver
of any provision of this Agreement, and no consent to any departure by said
Grantor therefrom, shall be effective unless it is in writing and signed by said
Grantor and the Collateral Agent (with the consent or at the direction of the
Requisite Holders), and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

 

(b)           No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any of the other Transaction
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.  The rights and remedies of the Collateral Agent or
any Buyer provided herein and in the other Transaction Documents are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided by
law.  The rights of the Collateral Agent or any Buyer under any of the other
Transaction Documents against any party thereto are not conditional or
contingent on any attempt by such Person to exercise any of its rights under any
of the other Transaction Documents against such party or against any other
Person, including but not limited to, any Grantor.

 

(c)           Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.

 

(d)           This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the indefeasible
payment in full in cash of the Obligations, and (ii) be binding on each Grantor
and all other Persons who become bound as debtor to this Agreement in accordance
with Section 9-203(d) of the Code and shall inure, together with all rights and
remedies of the Collateral Agent and the Buyers hereunder, to the benefit of the
Collateral Agent and the Buyers and their respective permitted successors,
transferees and assigns.  Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to any Grantor, the Collateral
Agent and the Buyers may

 

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assign or otherwise transfer their rights and obligations under this Agreement
and any of the other Transaction Documents, to the extent permitted by the
Securities Purchase Agreement, to any other Person and such other Person shall
thereupon become vested with all of the benefits in respect thereof granted to
the Collateral Agent and the Buyers herein or otherwise.  Upon any such
assignment or transfer, all references in this Agreement to the Collateral Agent
or any such Buyer shall mean the assignee of the Collateral Agent or such
Buyer.  None of the rights or obligations of any Grantor hereunder may be
assigned or otherwise transferred without the prior written consent of the
Collateral Agent, and any such assignment or transfer without the consent of the
Collateral Agent shall be null and void.

 

(e)           Upon the indefeasible payment in full in cash of the Obligations,
(i) this Agreement and the security interests created hereby shall terminate and
all rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon any
Grantor’s request and at such Grantor’s expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.

 

(f)            THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES (EXCEPT 5-1401 OF
THE NEW YORK GENERAL OBLIGATION LAW).  FURTHER, THE LAW OF THE STATE OF NEW YORK
SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR
WITH THIS AGREEMENT WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES (EXCEPT 5-1401
OF THE NEW YORK GENERAL OBLIGATION LAW).

 

(g)           ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO SHALL BE BROUGHT EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFOREMENTIONED COURTS.  EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, OR BASED ON UPON 28 U.S.C. § 1404, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING AND ADJUDICATION OF ANY SUCH ACTION, SUIT OR
PROCEEDING IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

 

(h)           EACH GRANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS AND IN ANY SUCH

 

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ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO ITS ADDRESS FOR NOTICES AS SET FORTH ON THE SIGNATURE
PAGE HERETO, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. 
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.  TO THE EXTENT THAT ANY GRANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH GRANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

 

(i)            EACH GRANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR
THE OTHER TRANSACTION DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER,
CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE
FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY
FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  EACH GRANTOR
CERTIFIES THAT NO OFFICER, REPRESENTATIVE, OR ATTORNEY OF THE COLLATERAL AGENT
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT COLLATERAL AGENT WOULD NOT, IN THE
EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING
WAIVERS.  EACH GRANTOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE COLLATERAL AGENT ENTERING INTO THIS AGREEMENT.

 

(j)            Each Grantor irrevocably consents to the service of process of
any of the aforesaid courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to any Grantor at its address provided
herein, such service to become effective 10 days after such mailing.

 

(k)           Nothing contained herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Grantor or any property of any
Grantor in any other jurisdiction.

 

(l)            Each Grantor irrevocably and unconditionally waives any right it
may have to claim or recover in any legal action, suit or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.

 

(m)          Section headings herein are included for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.

 

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(n)           This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together constitute one and the
same Agreement.  Delivery of any executed counterpart of a signature page of
this Agreement by pdf, facsimile or other electronic transmission shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

(o)           This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by any Buyer or by any other Person upon
the insolvency, bankruptcy or reorganization of the Company or any Grantor or
otherwise, all as though such payment had not been made.

 

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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.

 

 

COMPANY:

 

 

 

DIGITAL DOMAIN MEDIA GROUP, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:

John C. Textor

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

Address:

c/o Digital Domain Media Group, Inc.

 

 

 

 

10250 SW Village Parkway

 

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

 

Facsimile:

   (772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

GRANTORS:

 

 

 

DIGITAL DOMAIN MEDIA GROUP, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:

John C. Textor

 

 

Title:

Chief Executive Officer

 

 

 

 

 

 

Address:

c/o Digital Domain Media Group, Inc.

 

 

 

 

10250 SW Village Parkway

 

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

 

Facsimile:

   (772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

D2 SOFTWARE, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

 

 Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DDH LAND HOLDINGS, LLC

 

 

 

By:

Digital Domain Media Group, Inc.,

 

 

its Managing Member

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DDH LAND HOLDINGS II, LLC

 

 

 

By:

Digital Domain Media Group, Inc.,

 

 

its Managing Member

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DIGITAL DOMAIN

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

 

Facsimile:  (772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DIGITAL DOMAIN INSTITUTE, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chairman

 

 

 

 

 

Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DIGITAL DOMAIN INTERNATIONAL, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

  Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DIGITAL DOMAIN PRODUCTIONS, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

  Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DIGITAL DOMAIN STEREO GROUP, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

  Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

DIGITAL DOMAIN TACTICAL, INC.

 

 

 

 

 

By:

/s/ Mark Covey

 

 

Name:  Mark Covey

 

 

Title:    President

 

 

 

 

 

  Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

MOTHERSHIP MEDIA, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

  Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

 

TRADITION STUDIOS, INC.

 

 

 

 

 

By:

/s/ John C. Textor

 

 

Name:  John C. Textor

 

 

Title:   Chief Executive Officer

 

 

 

 

 

  Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

Facsimile:

(772) 345-8114

 

Security and Pledge Agreement - Signature Page

 

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

 

ACCEPTED BY:

 

 

HUDSON BAY MASTER FUND LTD.,

 

as Collateral Agent

 

 

 

 By:

/s/ Charles Winkler

 

 

Name: Charles Winkler

 

 

Title:  Authorized Signatory

 

 

 

Address:

777 Third Avenue, 30th Floor

 

 

New York, NY 10017

 

 

Attention: Yoav Roth

 

 

 

 

 

Facsimile: (212) 571-1325

 

 

Security and Pledge Agreement - Signature Page

 

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

 

EXHIBIT A

 

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and restated,
supplemented or otherwise modified from time to time, the “IP Security
Agreement”), dated                 ,         , is made by the Persons listed on
the signature pages hereof (collectively, the “Grantors”) in favor of [Hudson
Bay Master Fund Ltd.], a company organized under the laws of the Cayman Islands,
as Collateral Agent (the “Collateral Agent”) for the Buyers (as defined in the
Notes referred to below).  All capitalized terms not otherwise defined herein
shall have the meanings respectively ascribed thereto in the Security Agreement
(as defined below).

 

WHEREAS, Digital Domain Media Group, Inc., a Florida company (the “Company”) and
each party listed as a “Buyer” therein (collectively, the “Buyers”) are parties
to that certain Securities Purchase Agreement, dated March     , 2012, pursuant
to which the Company shall be required to sell, and the Buyers shall purchase or
have the right to purchase, the “Notes” (as defined therein) issued pursuant
thereto (as such Notes may be amended, restated, replaced or otherwise modified
from time to time in accordance with the terms thereof, collectively, the
“Notes”);

 

WHEREAS, as a condition precedent to the making of the loans under the Notes
that each Grantor has executed and delivered that certain Security and Pledge
Agreement dated March     , 2012 made by the Grantors to the Collateral Agent
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the “Security Agreement”);

 

WHEREAS, under the terms of the Security Agreement, the Grantors have granted to
the Collateral Agent, for the ratable benefit of the Buyers, a security interest
in, among other property, certain intellectual property of the Grantors, and
have agreed as a condition thereof to execute this IP Security Agreement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

 

WHEREAS, the Grantors have determined that the execution, delivery and
performance of this IP Security Agreement directly benefits, and is in the best
interest of, the Grantors.

 

NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Buyers to perform under the Securities Purchase
Agreement, each Grantor agrees with the Collateral Agent, for the benefit of the
Buyers, as follows

 

SECTION 1.  Grant of Security.  Each Grantor hereby grants to the Collateral
Agent for the ratable benefit of the Buyers a security interest in all of such
Grantor’s right, title and interest in and to the following (the “Collateral”):

 

(i)            the Patents and Patent applications set forth in Schedule A
hereto;

 

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

 

(ii)           the Trademark and service mark registrations and applications set
forth in Schedule B hereto (provided that no security interest shall be granted
in United States intent-to-use trademark applications to the extent that, and
solely during the period in which, the grant of a security interest therein
would impair the validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby;

 

(iii)          all Copyrights, whether registered or unregistered, now owned or
hereafter acquired by such Grantor, including, without limitation, the copyright
registrations and applications and exclusive copyright licenses set forth in
Schedule C hereto;

 

(iv)          all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of and as applicable to any of the
foregoing, all rights in the foregoing provided by international treaties or
conventions, all rights corresponding thereto throughout the world and all other
rights of any kind whatsoever of such Grantor accruing thereunder or pertaining
thereto;

 

(v)           any and all claims for damages and injunctive relief for past,
present and future infringement, dilution, misappropriation, violation, misuse
or breach with respect to any of the foregoing, with the right, but not the
obligation, to sue for and collect, or otherwise recover, such damages; and

 

(vi)          any and all proceeds of, collateral for, income, royalties and
other payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Collateral of or arising from any of
the foregoing.

 

SECTION 2.  Security for Obligations.  The grant of a security interest in, the
Collateral by each Grantor under this IP Security Agreement secures the payment
of all Obligations of such Grantor now or hereafter existing under or in respect
of the Notes and the Transaction Documents, whether direct or indirect, absolute
or contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise.

 

SECTION 3.  Recordation.  Each Grantor authorizes and requests that the Register
of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer (and any state, foreign or other
authority to which this IP Security Agreement is submitted) record this IP
Security Agreement (and any corresponding or separate forms of such
jurisdiction) in order to publicly reflect the interests of the Collateral Agent
and the Buyer in the Collateral.

 

SECTION 4.             Newly Registered Patents, Trademarks and Copyrights. 
Each Grantor hereby agrees to provide the Collateral Agent, for the ratable
benefit of the Buyers, every quarter, a schedule of newly registered Patents,
Trademarks and Copyrights (if any).

 

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

 

SECTION 5.             Power of Attorney.  Each Grantor hereby irrevocably
grants to the Collateral Agent, for the ratable benefit of the Buyers, a power
of attorney, to act as such Grantor’s attorney-in-fact, with full authority in
the name, place and stead of such Grantor, from time to time in the Collateral
Agent’s discretion, to take any action and to execute any instrument that the
Collateral Agent may reasonably deem necessary or advisable to accomplish the
purposes of this IP Security Agreement.  This authority includes, without
limitation, the following:

 

(i)            To modify or amend (in the sole discretion of the Collateral
Agent and the Buyers and without first obtaining such Grantor’s approval thereof
or signature thereto) Schedule A, Schedule B and/or Schedule C hereof, as
appropriate, to include references to any registered intellectual property (or
application or license therefor) acquired by such Grantor after the execution
hereof or to delete any reference to any Collateral in which such Grantor no
longer has or claims any right, title or interest;

 

(ii)           To execute, file and pursue (in the sole discretion of the
Collateral Agent and the Buyers and without first obtaining such Grantor’s
approval thereof or signature thereto, unless otherwise prohibited by applicable
law) any application, form or other document in order to perfect, maintain,
continue or otherwise protect the Collateral Agent’s interest or such Grantor’s
rights in the Collateral, including, without limitation, executing and filing
(i) any financing statement, any continuation statement or any amendment
thereto, and (ii) any document in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or the relevant office
of any state or foreign jurisdiction (including, without limitation, the filing
of applications for renewal, affidavits of use, affidavits of incontestability
and opposition, interference and cancellation proceedings) and to pay any fees
and taxes in connection therewith or otherwise; and

 

(iii)          To execute any document required to acknowledge, register or
perfect the interest of the Collateral Agent and the Buyers in any part of the
Collateral without the signature of such Grantor unless prohibited by applicable
law.

 

SECTION 6.           This IP Security Agreement has been entered into in
conjunction with the provisions of and the security interest granted to the
Collateral Agent, for the ratable benefit of the Buyers, under the Security
Agreement.  The rights and remedies of the Grantor and the Collateral Agent with
respect to the security interests granted herein are in addition and without
prejudice to those set forth in the Security Agreement, all terms and provisions
of which are hereby incorporated herein by reference.  In the event that any
provisions of this IP Security Agreement are deemed to conflict with the
Security Agreement or the other Notes or Transaction Documents, the provisions
of the Security Agreement or the other Notes or Transaction Documents shall
govern.

 

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

 

SECTION 7.  Execution in Counterparts.  This IP Security Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

 

SECTION 8.  Grants, Rights and Remedies.  This IP Security Agreement has been
entered into in conjunction with the provisions of the Security Agreement.  Each
Grantor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Collateral Agent with
respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if
fully set forth herein.

 

SECTION 9.  Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.

 

 

GRANTORS:

 

 

 

DIGITAL DOMAIN MEDIA GROUP, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

  Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

 

 

D2 SOFTWARE, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

DDH LAND HOLDINGS, LLC

 

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

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

 

 

DDH LAND HOLDINGS II, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

 

 

DIGITAL DOMAIN

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

 

 

DIGITAL DOMAIN INSTITUTE, INC.

 

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

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

 

 

DIGITAL DOMAIN INTERNATIONAL, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

Facsimile:

 

 

 

 

 

DIGITAL DOMAIN PRODUCTIONS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

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

 

 

DIGITAL DOMAIN STEREO GROUP, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

 

 

DIGITAL DOMAIN TACTICAL, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

 

 

MOTHERSHIP MEDIA, INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

 

 

 

 Facsimile:

 

 

 

 

TRADITION STUDIOS, INC.

 

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

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 Address:

c/o Digital Domain Media Group, Inc.

 

 

 

10250 SW Village Parkway

 

 

 

Port St. Lucie, FL 34987

 

 

 

Facsimile:

 

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

 

STATE OF

 

 

ss.:

COUNTY OF

 

 

On this          day of                               , 20    , before me
personally came                                 , to me known to be the person
who executed the foregoing instrument, and who, being duly sworn by me, did
depose and say that s/he is the                                  of
                                                                              ,
a                                         , and that s/he executed the foregoing
instrument in the firm name of
                                                                              ,
and that s/he had authority to sign the same, and s/he acknowledged to me that
he executed the same as the act and deed of said firm for the uses and purposes
therein mentioned.

 

 

 

 

 

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