Exhibit 10.3

 

FORM OF SECURITY AGREEMENT

 

dated as of

 

December 7, 2016

 

among

 

PROTALIX BIOTHERAPEUTICS, INC.

 

THE GUARANTORS PARTY HERETO

 

and

 

WILMINGTON SAVINGS FUND SOCIETY, FSB,
as Collateral Agent

 

 

 

 

TABLE OF CONTENTS

 

 

 

  Page     SECTION 1. Definitions 1 SECTION 2. [Reserved.] 8 SECTION 3. Grant of
Transaction Liens 8 SECTION 4. General Representations and Warranties 10 SECTION
5. Further Assurances; General Covenants 13 SECTION 6. Intellectual Property 14
SECTION 7. Investment Property 15 SECTION 8. Deposit Accounts 16 SECTION 9.
[Reserved.] 17 SECTION 10. Commercial Tort Claims 17 SECTION 11. Transfer Of
Record Ownership 18 SECTION 12. Right to Vote Securities 18 SECTION 13.
[Reserved.] 18 SECTION 14. Remedies upon Event of Default 18 SECTION 15.
Application of Proceeds 20 SECTION 16. Fees and Expenses; Indemnification 20
SECTION 17. Authority to Administer Collateral 21 SECTION 18. Limitation on Duty
in Respect of Collateral 23 SECTION 19. General Provisions Concerning the
Collateral Agent 23 SECTION 20. Termination of Transaction Liens; Release of
Collateral 25 SECTION 21. Additional Grantors 26 SECTION 22. [Reserved.] 26
SECTION 23. Notices 26 SECTION 24. No Implied Waivers; Remedies Not Exclusive 26
SECTION 25. Successors and Assigns 26 SECTION 26. Entire Agreement; Amendments
and Waivers 26 SECTION 27. Choice of Law 26 SECTION 28. Submission to
Jurisdiction 26 SECTION 29. Waiver of Jury Trial 27 SECTION 30. Severability 27
SECTION 31. Counterparts 27

 

i 

 

 

SCHEDULES:

 

Schedule 1     Equity Interests in Subsidiaries and Affiliates Owned by Original
Grantors

 

Schedule 2     Other Investment Property Owned by Original Grantors

 

Schedule 3     Material Commercial Tort Claims

 

Schedule 4     Other Secured Obligations

 

EXHIBITS:

 

Exhibit A        Security Agreement Supplement

 

Exhibit B        Copyright Security Agreement

 

Exhibit C        Patent Security Agreement

 

Exhibit D        Trademark Security Agreement

 

Exhibit E         Perfection Certificate

 

Exhibit F         Issuer Control Agreement

 

ii 

 

  

SECURITY AGREEMENT

 

This SECURITY AGREEMENT dated as of December 7, 2016 (the “Effective Date”)
among Protalix BioTherapeutics, Inc., as Issuer (the “Issuer”), the Guarantors
party hereto and Wilmington Savings Fund Society, FSB, as Collateral Agent (the
“Collateral Agent”).

 

WHEREAS, pursuant to the Indenture dated as of December 7, 2016 among the
Issuer, the Guarantors party thereto, The Bank of New York Mellon Trust Company,
N.A., as Trustee, and Wilmington Savings Fund Society, FSB, as Collateral Agent
(as amended, modified, renewed or extended from time to time, the “Indenture”),
the Issuer intends to issue its 7.50% secured convertible notes (the “Notes”)
and the Guarantors intend to guarantee the Notes;

 

WHEREAS, the Issuer and the Guarantors are willing to secure their respective
obligations under the Indenture, by granting Liens on their respective assets to
the Collateral Agent as provided herein;

 

WHEREAS, the Collateral Agent has agreed to act as agent for the benefit of the
Secured Parties in connection with the transactions contemplated by the
Indenture and this Agreement; and

 

WHEREAS, upon any foreclosure or other enforcement action as provided herein,
the net proceeds of the relevant Collateral are to be received by or paid over
to the Collateral Agent and applied as provided herein;

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

SECTION 1. Definitions.

 

(a)          Terms Defined in Indenture. Terms defined in the Indenture and not
otherwise defined in subsection ‎(b) or ‎(c) of this Section have, as used
herein, the respective meanings provided for therein. The rules of construction
specified in Section 1.03 of the Indenture also apply to this Agreement.

 

(b)          Terms Defined in UCC. As used herein, each of the following terms
has the meaning specified in the UCC:

 

 1 

 

 

Term   UCC Account   9-102 Authenticate   9-102 Certificated Security   8-102
Chattel Paper   9-102 Commercial Tort Claim   9-102

Commodity Account   9-102 Commodity Customer   9-102 Deposit Account   9-102
Document   9-102 Equipment   9-102 Financial Asset   8-102 & 103 Fixtures  
9-102 General Intangibles   9-102 Goods   9-102 Instrument   9-102 Inventory  
9-102 Investment Property   9-102 Letter-of-Credit Right   9-102 Record   9-102
Securities Account   8-501 Security   8-102 & 103 Security Entitlement   8-102
Supporting Obligation   9-102 Uncertificated Security   8-102

 

(c)          Additional Definitions. The following additional terms, as used
herein, have the following meanings:

 

“Collateral” has the meaning set forth in Section 3(a)(xiv).

 

“Control” has the meaning specified in UCC Section 8-106, 9-104, 9-105, 9-106 or
9-107, as may be applicable to the relevant Collateral.

 

“Controlled Deposit Account” means a Deposit Account (i) that is subject to a
Deposit Account Control Agreement or (ii) as to which the Collateral Agent is
the Depositary Bank’s “customer” (as defined in UCC Section 4-104).

 

“Copyright License” means any agreement now or hereafter in existence granting
to any Grantor, or pursuant to which any Grantor grants to any other Person, any
right to use, copy, reproduce, distribute, prepare derivative works, display or
publish any records or other materials on which a Copyright is in existence or
may come into existence, including any agreement identified in Schedule 1 to any
Copyright Security Agreement.

 

 2 

 

 

“Copyrights” means all the following: (i) all copyrights under the laws of the
United States or any other country (whether or not the underlying works of
authorship have been published), all registrations and recordings thereof, all
copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any other
country, including registrations, recordings and applications in the United
States Copyright Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
including those described in Schedule 1 to any Copyright Security Agreement,
(ii) all renewals of any of the foregoing, (iii) all claims for, and rights to
sue for, past or future infringements of any of the foregoing and (iv) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including damages and payments for past or
future infringements thereof.

 

“Copyright Security Agreement” means a Copyright Security Agreement,
substantially in the form of Exhibit B, executed and delivered by a Grantor in
favor of the Collateral Agent for the benefit of the Secured Parties.

 

“Deposit Account Control Agreement” means, with respect to any Deposit Account
of any Grantor, a Deposit Account Control Agreement in a form reasonably
acceptable to the Collateral Agent among such Grantor, the Collateral Agent and
the relevant Depositary Bank.

 

“Depositary Bank” means a bank at which a Controlled Deposit Account is
maintained.

 

“Equity Interest” means Capital Stock; provided, however, that “Equity
Interests” does not include any debt security that is convertible into, or
exchangeable for, (x) Capital Stock or (b) Capital Stock and/or cash based on
the value of such Capital Stock).

 

“Grantors” means the Issuer and the Guarantors.

 

“Guarantors” has the meaning set forth in the Indenture.

 

“Holder” or “Holders” has the meaning set forth in the Indenture.

 

“IIA Approval” means the approval of the Israel Innovation Authority granted in
connection with the transactions contemplated by the Note Documents.

 

“IIA-Funded Know-How” means the Intellectual Property forming part of the
Collateral that was developed with the support of the Israeli Innovation
Authority, including any rights derived therefrom.

 

“IIA Restrictions” means the following restrictions under Israeli law:

 

(a)the grant of a security interest in any IIA-Funded Know-How will require and
will be subject to the approval of the Israeli Innovation Authority and to the
execution and delivery by the Israeli Security Trustee or the Trustee on behalf
of the Holders, as applicable, of an undertaking towards the Israeli Innovation
Authority, in the form requested by the Israeli Innovation Authority, prior to
the creation of such security interest;

 

 3 

 

 

(b)any enforcement of a security interest in IIA-Funded Know-How, including the
sale, assignment or license of the IIA-Funded Know-How and its transfer within
the framework of enforcement procedures under the Note Documents, will require
and be subject to the approval of the Israeli Innovation Authority and to the
conditions of the IIA Approval and the provisions of the Research Law; and

 

(c)any enforcement of a security interest in IIA-Funded Know-How will be subject
to the receipt of an undertaking of the grantee, potential buyer or any other
transferee to assume the applicable obligations in respect of such IIA-Funded
Know-How in accordance with the Research Law and in accordance with the terms of
the program pursuant to which grants were provided to the applicable Israeli
Grantor.

 

“Indenture” has the meaning assigned to such term in the recitals of this
Agreement.

 

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

 

“Intellectual Property Filing” means (i) with respect to any Patent, Patent
License, Trademark or Trademark License, the filing of the applicable Patent
Security Agreement or Trademark Security Agreement with the United States Patent
and Trademark Office, together with an appropriately completed recordation form,
and (ii) with respect to any Copyright or Copyright License, the filing of the
applicable Copyright Security Agreement with the United States Copyright Office,
together with an appropriately completed recordation form, in each case
sufficient to record the Transaction Lien granted to the Collateral Agent in
such Intellectual Property.

 

“Intellectual Property Security Agreement” means a Copyright Security Agreement,
a Patent Security Agreement or a Trademark Security Agreement.

 

“Israeli Grantor” means Protalix Ltd., a limited company organized under the
laws of the State of Israel, and each other Grantor that is organized under the
laws of the State of Israel.

 

“Israeli Innovation Authority” means the Israeli National Authority for
Technological Innovation (formerly known as the Office of the Chief Scientist of
the Israeli Ministry of the Economy), or any successor governmental authority.

 

 4 

 

 

“Israeli Security Trustee” means Altshuler Shaham Trusts Ltd., in its capacity
as Security Trustee under the Israeli law governed Security Documents.

 

“Issuer Control Agreement” means an Issuer Control Agreement substantially in
the form of Exhibit F.

 

“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement relating to Intellectual Property to which
any Grantor is a party.

 

“Material Commercial Tort Claim” means a Commercial Tort Claim involving a claim
for more than $500,000.

 

“Note Documents” has the meaning set forth in the Indenture.

 

“Officer” means the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer, the President, the Chief Financial Officer, any Executive
Vice President, any Senior Vice President, any Vice President, the Chief
Accounting Officer, the Treasurer or the Secretary of the Company or any
Guarantor, as applicable.

 

“Officers’ Certificate” means a written certificate signed in the name of the
Grantor by any two Officers, and delivered to the Collateral Agent.

 

“Opinion of Counsel” means a written opinion of legal counsel (who may be
counsel to a Grantor or other counsel, in either case satisfactory to the
Collateral Agent) addressed and delivered to the Collateral Agent.

 

“Original Grantor” means any Grantor that grants a Lien on any of its assets
hereunder on the Effective Date.

 

“own” refers to the possession of sufficient rights in property to grant a
security interest therein as contemplated by UCC Section 9-203, and “acquire”
refers to the acquisition of any such rights.

 

“Patent License” means any agreement now or hereafter in existence granting to
any Grantor, or pursuant to which any Grantor grants to any other Person, any
right with respect to any Patent or any invention, whether patentable or not,
now or hereafter in existence, including any agreement identified in Schedule 1
to any Patent Security Agreement.

 

“Patents” means (i) all patents of the United States or any other country and
all applications for patents of the United States or any other country,
including applications 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, including those described in
Schedule 1 to any Patent Security Agreement, (ii) all reissues, reexaminations,
divisions, continuations, continuations-in-part, revisions and extensions of any
of the foregoing, (iii) all claims for, and rights to sue for, past or future
infringements of any of the foregoing and (iv) all income, royalties, damages
and payments now or hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or future infringements
thereof.

 

 5 

 

 

“Patent Security Agreement” means a Patent Security Agreement, substantially in
the form of Exhibit C, executed and delivered by a Grantor in favor of the
Collateral Agent for the benefit of the Secured Parties.

 

“Perfection Certificate” means, with respect to any Grantor, a certificate
substantially in the form of Exhibit E, completed and supplemented with the
schedules contemplated thereby, and signed by an officer of such Grantor.

 

“Permitted Liens” means (i) the Transaction Liens and (ii) any other Liens on
the Collateral permitted to be created or assumed or to exist pursuant to
Section 4.16 of the Indenture.

 

“Personal Property Collateral” means all property included in the Collateral
except Real Property Collateral.

 

“Pledged”, when used in conjunction with any type of asset, means at any time an
asset of such type that is included (or that creates rights that are included)
in the Collateral at such time. For example, “Pledged Equity Interest” means an
Equity Interest that is included in the Collateral at such time.

 

“Post-Petition Interest” means any interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of any one or more of the Grantors (or would accrue but for
the operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.

 

“Proceeds” means all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization upon, any
Collateral, including all claims of the relevant Grantor against third parties
for loss of, damage to or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral.

 

“Real Property Collateral” means all real property (including leasehold
interests in real property) included in the Collateral.

 

“Recordable Intellectual Property” means (i) any Patent registered with the
United States Patent and Trademark Office, and any Patent License with respect
to a Patent so registered, (ii) any Trademark registered with the United States
Patent and Trademark Office, and any Trademark License with respect to a
Trademark so registered, (iii) any Copyright registered with the United States
Copyright Office and any Copyright License with respect to a Copyright so
registered and (iv) all rights in, to or under any of the foregoing.

 

 6 

 

 

“Research Law” means the Israeli Encouragement of Research, Development and
Technological Innovation in Industry Law, 5744-1984 and the regulations, rules,
circulars and guidelines promulgated or published thereunder.

 

“Secured Agreement”, when used with respect to any Secured Obligation, refers
collectively to each instrument, agreement or other document that sets forth
obligations of the Issuer, obligations of a guarantor and/or rights of the
holder with respect to such Secured Obligation.

 

“Secured Obligations” means (i) all the principal of, premium on, if any, and
interest on (including Post-Petition Interest) all Notes outstanding from time
to time under the Indenture and (ii) all other amounts now or hereafter payable
by the Issuer or any Guarantor pursuant to the Note Documents.

 

“Secured Parties” means the Trustee, the Collateral Agent and the Holders.

 

“Security Agreement Supplement” means a Security Agreement Supplement,
substantially in the form of Exhibit A, signed and delivered to the Collateral
Agent for the purpose of adding a Subsidiary as a party hereto pursuant to
‎Section 21 and/or adding additional property to the Collateral.

 

“Trademark License” means any agreement now or hereafter in existence granting
to any Grantor, or pursuant to which any Grantor grants to any other Person, any
right to use any Trademark, including any agreement identified in Schedule 1 to
any Trademark Security Agreement.

 

“Trademarks” means: (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos, brand names, domain names, rights of publicity, trade dress, prints and
labels on which any of the foregoing have appeared or appear, package and other
designs, and all other source or business identifiers, and all general
intangibles of like nature, and the rights in any of the foregoing which arise
under applicable law, (ii) the goodwill of the business symbolized thereby or
associated with each of them, (iii) all registrations and applications for
registration in connection therewith, including registrations and applications
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, including those described in Schedule 1 to any
Trademark Security Agreement, (iv) all renewals of any of the foregoing, (v) all
claims for, and rights to sue for, past or future infringements of any of the
foregoing and (vi) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including damages and
payments for past or future infringements thereof.

 

 7 

 

 

“Trademark Security Agreement” means a Trademark Security Agreement,
substantially in the form of Exhibit D, executed and delivered by a Grantor in
favor of the Collateral Agent for the benefit of the Secured Parties.

 

“Transaction Liens” means the Liens granted by the Grantors under this
Agreement.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any Transaction Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, “UCC” 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.

 

SECTION 2. [Reserved.]

 

SECTION 3. Grant of Transaction Liens.

 

(a)          The Issuer, in order to secure the payment or performance of the
Secured Obligations, and each Guarantor listed on the signature pages hereof, in
order to secure its Note Guarantee, grants to the Collateral Agent for the
ratable benefit of the Secured Parties a security interest in all the following
property of the Issuer or such Guarantor, as the case may be, whether now owned
or existing or hereafter acquired or arising and regardless of where located:

 

(i)          all Accounts;

 

(ii)         all Chattel Paper;

 

(iii)        all cash and Deposit Accounts;

 

(iv)        all Documents;

 

(v)         all Equipment;

 

(vi)        all General Intangibles (including (x) any Equity Interests in other
Persons that do not constitute Investment Property and (y) any Intellectual
Property);

 

(vii)       all Instruments;

 

(viii)      all Inventory;

 

(ix)         all Investment Property;

 

(x)          the Commercial Tort Claims described in Schedule 3;

 

 8 

 

 

(xi)         all Letter-of-Credit Rights;

 

(xii)        all Goods not otherwise described above;

 

(xiii)       all books and records (including customer lists, credit files,
computer programs, printouts and other computer materials and records) of such
Grantor pertaining to any of its Collateral;

 

(xiv)       such Grantor’s ownership interest in (1) its Controlled Deposit
Accounts, (2) all Financial Assets credited to its Controlled Deposit Accounts
from time to time and all Security Entitlements in respect thereof, (3) all cash
held in its Controlled Deposit Accounts from time to time and (4) all other
money in the possession of the Collateral Agent; and

 

(xv)        to the extent not otherwise included, all Proceeds of the Collateral
described in the foregoing clauses ‎(i) through (xiv) (all of the above, the
“Collateral”);

 

provided that the following property is excluded from the foregoing security
interests: (A) motor vehicles the perfection of a security interest in which is
excluded from the Uniform Commercial Code in the relevant jurisdiction, (B) any
United States “intent-to-use” Trademark application prior to the filing of a
“Statement of Use” or “Amendment to Allege Use” with respect thereto, to the
extent, if any, that, and solely during the period, if any, in which, the grant
of a security interest therein would impact the validity or enforceability of
such application under applicable federal law, (C) any permit or license or any
contractual obligation entered into by a Grantor that prohibits or requires the
consent of any Person other than the Issuer or any of its subsidiaries as a
condition to the creation by such Grantor of a Lien on any right, title or
interest in such permit, license or contractual agreement, except to the extent
such prohibition or consent requirement is ineffective under applicable law, (D)
any property to the extent that the grant of a security interest therein is
prohibited by any applicable law or regulation, requires a consent not obtained
of any governmental authority pursuant to any applicable law or regulation, or
is prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, any applicable
shareholder or similar agreement, except to the extent that such law or
regulation or the term in such contract, license, agreement, instrument or other
document or shareholder or similar agreement providing for such prohibition,
breach, default or termination or requiring such consent is ineffective under
applicable law and (E) those assets as to which the Collateral Agent and the
Issuer shall reasonably determine, in writing, that the cost or other
consequence of obtaining a lien thereon or perfection thereof are excessive in
relation to the benefit to the Secured Parties of the security to be afforded
thereby. Each Grantor shall upon request of the Collateral Agent use all
reasonable efforts to obtain any such required consent that is reasonably
obtainable. Notwithstanding anything herein to the contrary, the parties
acknowledge and agree that the “Collateral” of any Israeli Grantor shall only
include Intellectual Property registered in the United States of America;
provided that in respect of any such Collateral constituting IIA-Funded
Know-How, the creation of any security interest over such Collateral and any
enforcement thereof shall be (x) subject to the IIA Restrictions (including the
Research Law and the IIA Approval) and (y) separately governed by the laws of
the State of Israel and subject to the exclusive jurisdiction of the Israeli
courts. Notwithstanding anything contained herein or in any other Note Document
to the contrary, in no event shall the Collateral Agent be deemed to have been
granted a security interest in, nor shall the Collateral Agent have any
obligations with respect to or liability in connection with, any Collateral
constituting IIA-Funded Know-How Collateral. In furtherance of, and without
limiting the generality of the foregoing, in no event shall the Collateral Agent
have any obligations with respect to, or liability for, any Collateral governed
by the laws of the State of Israel and/or located (and in the case of any
Intellectual Property constituting Collateral, registered) in the State of
Israel.

 

 9 

 

 

(b)          With respect to each right to payment or performance included in
the Collateral from time to time, the Transaction Lien granted therein includes
a continuing security interest in (i) any Supporting Obligation that supports
such payment or performance and (ii) any Lien that (x) secures such right to
payment or performance or (y) secures any such Supporting Obligation.

 

(c)          The Transaction Liens are granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or transfer or in
any way affect or modify, any obligation or liability of any Grantor with
respect to any of the Collateral or any transaction in connection therewith.

 

SECTION 4. General Representations and Warranties. Each Grantor represents and
warrants that:

 

(a)          Such Grantor is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization.

 

(b)          With respect to each Original Grantor, Schedule 1 lists all Equity
Interests in Subsidiaries and Affiliates owned by such Grantor as of the
Effective Date. Such Grantor holds all such Equity Interests directly (i.e., not
through a Subsidiary, a Securities Intermediary or any other Person).

 

(c)          With respect to each Original Grantor, Schedule 2 lists, as of the
Effective Date, (i) all Securities owned by such Grantor (except Securities
evidencing Equity Interests in Subsidiaries and Affiliates) and (ii) all
Securities Accounts to which Financial Assets are credited in respect of which
such Grantor owns Security Entitlements.

 

(d)          All Pledged Equity Interests owned by such Grantor are owned by it
free and clear of any Lien other than (i) the Transaction Liens and (ii) any
Permitted Liens. All shares of capital stock of wholly-owned Subsidiaries of a
Grantor organized in the United States, any State thereof or the District of
Columbia included in such Pledged Equity Interests (including shares of capital
stock in respect of which such Grantor owns a security entitlement) have been
duly authorized and validly issued and are fully paid and non-assessable.

 

 10 

 

 

(e)          Such Grantor has good and marketable title to all its Collateral
(subject to exceptions that are, in the aggregate, not material), free and clear
of any Lien other than Permitted Liens.

 

(f)          After the Effective Date, no Collateral owned by such Grantor will
be in the possession or under the Control of any other Person having a claim
thereto or security interest therein, other than a Permitted Lien.

 

(g)          The Transaction Liens on all Personal Property Collateral owned by
such Grantor (i)have been validly created, (ii)will attach to each item of such
Collateral on the Effective Date (or, if such Grantor first obtains rights
thereto on a later date, on such later date) and (iii)when so attached, will
secure all the Secured Obligations or such Grantor’s Note Guarantee, as the case
may be.

 

(h)          Such Grantor has delivered a Perfection Certificate to the
Collateral Agent. With respect to each Original Grantor, information set forth
therein is correct and complete in all material respects as of the Effective
Date.

 

(i)          When UCC financing statements describing the Personal Property
Collateral as “all personal property” have been filed in the offices specified
in such Perfection Certificate, the Transaction Liens will constitute perfected
security interests in the Personal Property Collateral owned by such Grantor to
the extent that a security interest therein may be perfected by filing pursuant
to the UCC, prior to all Liens and rights of others therein except Permitted
Liens. When, in addition to the filing of such UCC financing statements, the
applicable Intellectual Property Filings have been made with respect to such
Grantor’s Recordable Intellectual Property (including any future filings
required pursuant to Sections ‎5(a) and 6(a)), the Transaction Liens will
constitute perfected security interests in all right, title and interest of such
Grantor in its Recordable Intellectual Property to the extent that security
interests therein may be perfected by such filings, prior to all Liens and
rights of others therein except Permitted Liens. Except for (i) the filing of
such UCC financing statements, (ii) the filing, in the case of any Israeli
Grantor, of this Agreement with the Israeli Registrar of Companies, and (iii)
such Intellectual Property Filings, no registration, recordation or filing with
any governmental body, agency or official is required in connection with the
execution or delivery of this Agreement or is necessary for the validity or
enforceability thereof or for the perfection or due recordation of the
Transaction Liens or for the enforcement of the Transaction Liens.
Notwithstanding anything herein to the contrary, no Israeli Grantor shall be
required to perfect any security interest or Transaction Lien, or record any
notice thereof, in any Intellectual Property registered in any jurisdiction
other than Intellectual Property registered in the United States of America.

 

 11 

 

 

(j)          As of the date hereof, Schedules 11(a), 11(b) and 11(c) to the
Perfection Certificate sets forth a true and accurate list of (i) all
registrations of and applications for Patents, Trademarks, and Copyrights owned
by any Grantor and (ii) all Copyright Licenses pursuant to which any Grantor is
granted an exclusive license to one or more registered United States Copyrights
that are identified in such Copyright License.

 

(k)          With respect to all Intellectual Property listed on Schedules
11(a), 11(b) and 11(c) to the Perfection Certificate that is owned by a Grantor,
except as could not reasonably be expected to have a Material Adverse Effect,
such Grantor is the owner of the entire right, title, and interest in and to
such Intellectual Property, free and clear of all Liens (other than Permitted
Liens). To the knowledge of such Grantor, such Grantor owns or is validly
licensed to use all other Intellectual Property necessary for the conduct of its
business as currently conducted, free and clear of all Liens (other than
Permitted Liens), except as would not reasonably be expected to have a Material
Adverse Effect.

 

(l)          All registrations and applications for Copyrights, Patents and
Trademarks included in the Collateral are standing in the name of a Grantor and
are subsisting and in full force and effect, and to such Grantor’s knowledge,
valid and enforceable, except as would not reasonably be expected to have a
Material Adverse Effect.

 

(m)         No holding, decision, or judgment has been rendered in any action or
proceeding against any Grantor before any court, administrative or other
governmental authority, challenging the validity or enforceability of any
Intellectual Property included in the Collateral, or such Grantor’s right to
register, own or use such Intellectual Property, and no such action or
proceeding against such Grantor is pending or, to the Grantors’ knowledge,
threatened in writing, except as would not reasonably be expected to have a
Material Adverse Effect.

 

(n)          With respect to each Copyright License, Trademark License, Patent
License, and Trade Secret License to which any Grantor is a party: (i) such
agreement constitutes a legal, valid and binding obligation of such Grantor and
represents the entire agreement between the respective licensor and licensee
with respect to the subject matter of such license; (ii) such Grantor has not
received any written notice of termination or cancellation under such license;
(iii) such Grantor has not received any written notice of a breach or default
under such license, which breach or default has not been cured; and (iv) such
Grantor is not in breach or default, and no event has occurred that, with notice
and/or lapse of time, would constitute such a breach or default or otherwise
permit termination, modification or acceleration under such agreement, except as
would not reasonably be expected to have a Material Adverse Effect.

 

(o)          Each Grantor has taken commercially reasonable steps to protect in
all material respects: (i) the confidentiality of all Intellectual Property
owned by such Grantor the value of which to such Grantor is contingent upon
maintaining the confidentiality thereof and (ii) its interest in its material
Intellectual Property owned by such Grantor.

 

 12 

 

 

SECTION 5. Further Assurances; General Covenants. So long as any of the Secured
Obligations (other than contingent indemnification obligations) remain
unsatisfied, each Grantor covenants as follows:

 

(a)          Such Grantor will, from time to time, at the Issuer’s expense,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including any
Intellectual Property Filing) that from time to time may be necessary or
commercially reasonable, or that the Collateral Agent may reasonably request, in
order to:

 

(i)          create, preserve, perfect, confirm or validate the Transaction
Liens on such Grantor’s Collateral;

 

(ii)         in the case of Pledged Deposit Accounts, Pledged Investment
Property and Pledged Letter-of-Credit Rights, cause the Collateral Agent to have
Control thereof;

 

(iii)        enable the Collateral Agent and the other Secured Parties to obtain
the contractual benefits of this Agreement; or

 

(iv)        enable the Collateral Agent to exercise and enforce any of its
rights, powers and remedies with respect to any of such Grantor’s Collateral.

 

Such Grantor authorizes the Collateral Agent, without any obligation, to execute
and file such financing statements or continuation statements in such
jurisdictions with such descriptions of collateral (including “all assets” or
“all personal property” or other words to that effect) and other information set
forth therein as the Collateral Agent may reasonably deem necessary or desirable
for the purposes set forth in the preceding sentence. Each Grantor also ratifies
its authorization for the Collateral Agent to file in any such jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof. The Collateral Agent is further authorized to file with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) such documents as
may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the security interests granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party. The Issuer will
pay the actual and documented costs of, or reasonably incidental to, any
Intellectual Property Filings and any recording or filing of any financing or
continuation statements or other documents recorded or filed pursuant hereto.

 

(b)          Such Grantor will not (i) change its name or organizational form or
structure, (ii) change its location (determined as provided in UCC Section
9-307) or (iii)become bound, as provided in UCC Section 9 203(d) or otherwise,
by a security agreement entered into by another Person, unless it shall have
given the Collateral Agent prior notice thereof.

 

 13 

 

 

(c)          Such Grantor will, promptly upon request, provide to the Collateral
Agent all information and evidence concerning such Grantor’s Collateral that the
Collateral Agent may reasonably request from time to time to enable it to
enforce the provisions of this Agreement.

 

(d)          Such Grantors shall (i) each year, at the time of delivery of
annual financial statements with respect to the preceding fiscal year pursuant
to Section 4.03 of the Indenture, deliver to the Collateral Agent an updated
Perfection Certificate signed by an officer of such Grantor and (ii) not later
than 15 calendar days following the end of each fiscal quarter, deliver to the
Collateral Agent updated Schedules 11(a), (b) and (c) of the Perfection
Certificate dated as of the date hereof.

 

SECTION 6. Intellectual Property. Each Grantor covenants as follows:

 

(a)          If such Grantor, at any time after the date hereof, obtains any
ownership or other rights in and to any additional Intellectual Property, then
the provisions of this Agreement shall automatically apply thereto and any such
Intellectual Property shall automatically constitute Collateral and shall be
subject to the security interest created by this Agreement, without further
action by any party (except as expressly set forth in Section 3 hereof).
Further, Schedules 11(a), 11(b) and 11(c) to the Perfection Certificate shall be
amended or deemed to be amended to include any applications or registrations for
Patents, Trademarks and Copyrights included in the Collateral (but the failure
to so amend shall not be deemed to affect the Collateral Agent’s security
interest in or lien upon such Intellectual Property).

 

(b)          On the Effective Date (in the case of an Original Grantor) or the
date on which it signs and delivers its first Security Agreement Supplement (in
the case of any other Grantor), such Grantor will sign and deliver to the
Collateral Agent Intellectual Property Security Agreements with respect to all
Recordable Intellectual Property then owned by it. Such Grantor will also
promptly make and execute all other Intellectual Property Filings necessary to
record, not later than 30 calendar days following the end of each fiscal
quarter, the Transaction Liens on such Recordable Intellectual Property in
connection with any Intellectual Property over which the Collateral Agent does
not have a perfected Lien.

 

(c)          Such Grantor will notify the Collateral Agent promptly if it knows
that any registration or application for registration relating to any material
Recordable Intellectual Property owned or licensed by it may become abandoned or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any adverse determination or development in,
any proceeding in the United States Copyright Office, the United States Patent
and Trademark Office or any court) regarding such Grantor’s ownership of or
right to use such Recordable Intellectual Property, its right to register or
patent the same, or its right to keep and maintain the same.

 

(d)          Such Grantor shall not take any act or omit to take any
commercially reasonable act whereby any material Intellectual Property included
in the Collateral may be abandoned, forfeited, dedicated to the public,
invalidated, lapse or materially impaired in any way other than in the ordinary
course of business or as consistent with such Grantor’s past practice.

 

 14 

 

 

(e)          Such Grantor shall not grant any exclusive license to any third
party of any material Intellectual Property included in the Collateral that
would materially detract from the value of the Collateral (taking into account
the value of the license as well) or materially interfere with the ordinary
course of business of any Grantor, other than in the ordinary course of
business.

 

(f)          Such Grantor shall take all actions reasonably necessary or
advisable, or otherwise reasonably requested by the Collateral Agent, to
maintain and pursue each application, to obtain the relevant registration and to
maintain the registration of each of the Recordable Intellectual Property (now
or hereafter existing) material to the conduct of such Grantor’s business,
including the filing of applications for renewal, affidavits of use and, if
consistent with good business judgment, to initiate opposition, interference,
inter partes and post-grant review proceedings against third parties.

 

(g)          Upon the occurrence and during the continuance of an Event of
Default, at the request of the Collateral Agent, each Grantor shall use its
commercially reasonable efforts to obtain all requisite consents or approvals by
the licensor of each Copyright License, Patent License, Trademark License or any
other License under which such Grantor is a licensee to effect the assignment of
all such Grantor’s right, title and interest thereunder to the Collateral Agent,
for the ratable benefit of the Secured Parties, or its designee.

 

SECTION 7. Investment Property. Each Grantor represents, warrants and covenants
as follows:

 

(a)          Certificated Securities. On the Effective Date (in the case of an
Original Grantor) or the date on which it signs and delivers its first Security
Agreement Supplement (in the case of any other Grantor), such Grantor will
deliver to the Collateral Agent as Collateral hereunder all certificates
representing Pledged Certificated Securities then owned by such Grantor.
Thereafter, whenever such Grantor acquires any other certificate representing a
Pledged Certificated Security, such Grantor will promptly deliver such
certificate to the Collateral Agent as Collateral hereunder.

 

(b)          Uncertificated Securities. On the Effective Date (in the case of an
Original Grantor) or the date on which it signs and delivers its first Security
Agreement Supplement (in the case of any other Grantor), such Grantor will enter
into (and cause the relevant issuer to enter into) an Issuer Control Agreement
in respect of each Pledged Uncertificated Security then owned by such Grantor
and deliver such Issuer Control Agreement to the Collateral Agent (which, if
satisfactory to the Collateral Agent, shall enter into the same). Thereafter,
whenever such Grantor acquires any other Pledged Uncertificated Security, such
Grantor will enter into (and cause the relevant issuer to enter into) an Issuer
Control Agreement in respect of such Pledged Uncertificated Security and deliver
such Issuer Control Agreement to the Collateral Agent (which, if satisfactory to
the Collateral Agent, shall enter into the same).

 

 15 

 

 

(c)          Perfection as to Certificated Securities. When such Grantor
delivers the certificate representing any Pledged Certificated Security owned by
it to the Collateral Agent and complies with Section 13(h) in connection with
such delivery, (i)the Transaction Lien on such Pledged Certificated Security
will be perfected, subject to no prior Liens or rights of others, (ii)the
Collateral Agent will have Control of such Pledged Certificated Security and
(iii)the Collateral Agent will be a protected purchaser (within the meaning of
UCC Section 8-303) thereof.

 

(d)          Perfection as to Uncertificated Securities. When such Grantor, the
Collateral Agent and the issuer of any Pledged Uncertificated Security owned by
such Grantor enter into an Issuer Control Agreement with respect thereto, (i)the
Transaction Lien on such Pledged Uncertificated Security will be perfected,
subject to no prior Liens or rights of others, (ii)the Collateral Agent will
have Control of such Pledged Uncertificated Security and (iii)the Collateral
Agent will be a protected purchaser (within the meaning of UCC Section 8-303)
thereof.

 

(e)          Delivery of Pledged Certificates. All certificates representing
Pledged Certificated Securities, when delivered to the Collateral Agent, will be
in suitable form for transfer by delivery, or accompanied by duly executed
instruments of transfer or assignment in blank, with signatures appropriately
guaranteed (to the extent required by applicable law), all in form and substance
reasonably satisfactory to the Collateral Agent.

 

(f)          Certification of Limited Liability Company and Partnership
Interests. To the extent any interest in a limited liability company or
partnership organized in the United States, any State thereof or the District of
Colombia and controlled by any Grantor that is required to be pledged pursuant
to the terms hereof or pursuant to the terms of the Indenture is certificated or
becomes certificated, each such certificate shall be delivered to the Collateral
Agent pursuant to ‎Section ‎7(a) and such Grantor shall fulfill all other
requirements under ‎Section 7 applicable in respect thereof.

 

SECTION 8. Deposit Accounts. Each Grantor represents, warrants and covenants as
follows:

 

(a)          On and after the date that is 30 days following the date hereof,
all cash owned by such Grantor will be deposited, upon or promptly after the
receipt thereof, in one or more Controlled Deposit Accounts, other than (i) non
U.S. Deposit Accounts and (ii) Deposit Accounts exclusively used for (A)
payroll, payroll taxes and other employee wage and benefit payments to or for
any Grantor’s or its Subsidiaries’ employees, (B) health-savings accounts and
worker’s compensation accounts, (C) trust accounts (to the extent no funds are
held therein other than amounts held therein in trust in the ordinary course of
business on behalf of third parties that are not Loan Parties or Affiliates of
Loan Parties) and (D) zero balance accounts used in the ordinary course of
business.

 

 16 

 

 

(b)          In respect of each Controlled Deposit Account, the Depositary
Bank’s jurisdiction (determined as provided in UCC Section 9-304) will at all
times be a jurisdiction in which Article 9 of the Uniform Commercial Code is in
effect.

 

(c)          So long as the Collateral Agent has Control of a Controlled Deposit
Account, the Transaction Lien on such Controlled Deposit Account will be
perfected, subject to no prior Liens other than Permitted Liens.

 

(d)          Materiality Exception. The Grantors have the right not to comply
with the foregoing provisions of this Section with respect to Deposit Accounts
having total collected balances that do not at any time exceed $500,000 in the
aggregate for all Grantors.

 

SECTION 9. [Reserved.]

 

SECTION 10. Commercial Tort Claims. Each Grantor represents, warrants and
covenants as follows:

 

(a)          In the case of an Original Grantor, Schedule 3 accurately
describes, with the specificity required to satisfy Official Comment 5 to UCC
Section 9-108, each Material Commercial Tort Claim with respect to which such
Original Grantor is the claimant as of the Effective Date. In the case of any
other Grantor, Schedule 3 to its first Security Agreement Supplement will
accurately describe, with the specificity required to satisfy said Official
Comment 5, each Material Commercial Tort Claim with respect to which such
Grantor is the claimant as of the date on which it signs and delivers such
Security Agreement Supplement.

 

(b)          If any Grantor acquires a Material Commercial Tort Claim after the
Effective Date (in the case of an Original Grantor) or the date on which it
signs and delivers its first Security Agreement Supplement (in the case of any
other Grantor), such Grantor will promptly sign and deliver to the Collateral
Agent a Security Agreement Supplement granting a security interest in such
Commercial Tort Claim (which shall be described therein with the specificity
required to satisfy said Official Comment 5) to the Collateral Agent for the
benefit of the Secured Parties.

 

 17 

 

 

SECTION 11. Transfer Of Record Ownership. At any time when an Event of Default
shall have occurred and be continuing, the Collateral Agent may (and to the
extent that action by it is required, the relevant Grantor, if reasonably
directed to do so by the Collateral Agent, will as promptly as practicable)
cause each of the Pledged Securities (or any portion thereof specified in such
direction) to be transferred of record into the name of the Collateral Agent or
its nominee. Each Grantor will take any and all actions reasonably requested by
the Collateral Agent to facilitate compliance with this Section. If the
provisions of this Section are implemented, Section ‎7(b) shall not thereafter
apply to any Pledged Security that is registered in the name of the Collateral
Agent or its nominee. The Collateral Agent will promptly give to the relevant
Grantor copies of any notices and other communications received by the
Collateral Agent with respect to Pledged Securities registered in the name of
the Collateral Agent or its nominee.

 

SECTION 12. Right to Vote Securities. If an Event of Default shall have occurred
and be continuing, the Collateral Agent will have the exclusive right to the
extent permitted by law to vote, to give consents, ratifications and waivers and
to take any other reasonable action with respect to the Pledged Investment
Property and the other Pledged Equity Interests, with the same force and effect
as if the Collateral Agent were the absolute and sole owner thereof, and each
Grantor will take all such reasonable action as necessary or as the Collateral
Agent may reasonably request from time to time to give effect to such right.

 

SECTION 13. [Reserved.]

 

SECTION 14. Remedies upon Event of Default. (a) If an Event of Default shall
have occurred and be continuing, the Collateral Agent may exercise (or cause its
sub-agents to exercise) any or all of the remedies available to it (or to such
sub-agents) under this Agreement.

 

 18 

 

 

(b)          Without limiting the generality of the foregoing, if an Event of
Default shall have occurred and be continuing, the Collateral Agent may exercise
on behalf of the Secured Parties all the rights of a secured party under the UCC
(whether or not in effect in the jurisdiction where such rights are exercised)
or other applicable law or in equity with respect to any Personal Property
Collateral and, in addition, the Collateral Agent may, without being required to
give any notice, except as herein provided or as may be required by mandatory
provisions of law, sell or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any of the Collateral Agent’s offices or elsewhere, for
cash, on credit or for future delivery, at such time or times and at such price
or prices and upon such other terms as may be commercially reasonable,
irrespective of the impact of any such sales on the market price of the
Collateral. To the maximum extent permitted by applicable law, any Secured Party
may be the purchaser of any or all of the Collateral at any such sale and shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply all of any part of the Secured Obligations as a credit on
account of the purchase price of any Collateral payable at such sale. Upon any
sale of Collateral by the Collateral Agent (including pursuant to a power of
sale granted by statute or under a judicial proceeding), the receipt of the
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted by
law) all rights of redemption, stay or appraisal that it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. The Collateral Agent shall not be obliged to make any sale of
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, upon ten (10) days’ prior
written notice, be made at the time and place to which it was so adjourned. To
the maximum extent permitted by law, each Grantor hereby waives any claim
against any Secured Party arising because the price at which any Collateral may
have been sold at such a private sale was less than the price that might have
been obtained at a public sale, even if the Collateral Agent accepts the first
offer received and does not offer such Collateral to more than one offeree. The
Collateral Agent may disclaim any warranty, as to title or as to any other
matter, in connection with such sale or other disposition, and its doing so
shall not be considered adversely to affect the commercial reasonableness of
such sale or other disposition.

 

(c)          If the Collateral Agent sells any of the Collateral upon credit,
the Grantors will be credited only with payment actually made by the purchaser,
received by the Collateral Agent and applied in accordance with Section 15
hereof. In the event the purchaser fails to pay for the Collateral, the
Collateral Agent may resell the same, subject to the same rights and duties set
forth herein.

 

(d)          Notice of any such sale or other disposition shall be given to the
relevant Grantor(s) as (and if) required by ‎Section 17.

 

(e)          At any time after the occurrence and during the continuance of an
Event of Default upon the written demand of the Collateral Agent, each Grantor
shall execute and deliver to the Collateral Agent an assignment or assignments,
in favor of the Collateral Agent or its designee, of such Grantor’s right,
title, and interest in, to and under the Intellectual Property included in the
Collateral in recordable form as applicable, and such other documents as are
necessary or appropriate to carry out the intent and purposes hereof.

 

 19 

 

 

(f)          For the purpose of enabling the Collateral Agent to exercise rights
and remedies under this Agreement at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Agent an unlimited irrevocable, worldwide,
royalty-free, fully paid-up license and sublicense to use, license or sublicense
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor to make, have made, use, sell, copy, distribute,
perform, make derivative works, publish, and exploit in any other manner for
which an authorization from the owner of such Intellectual Property would be
required under applicable law, provided that the applicable Grantor shall have
such rights of quality control and inspection which are reasonably necessary
under applicable law to maintain the validity and enforceability of Trademarks
included in the Collateral. The use of such license by the Collateral Agent may
be exercised only upon the occurrence and during the continuation of an Event of
Default; provided, however, that any license, sublicense or other transaction
entered into by the Collateral Agent in accordance herewith shall be binding
upon each Grantor notwithstanding any subsequent cure of an Event of Default.

 

(g)          The foregoing provisions of this Section shall not apply to Real
Property Collateral other than Fixtures as to which such provisions shall apply
to the extent such Fixtures are governed by Article 9 of the UCC.

 

SECTION 15. Application of Proceeds. Any cash held in the Controlled Deposit
Accounts and the proceeds of any sale or other disposition of all or any part of
the Collateral shall be applied in the order specified in Section 6.11 of the
Indenture.

 

SECTION 16. Fees and Expenses; Indemnification. (a)The Issuer and the Guarantors
will jointly and severally forthwith upon demand pay to the Collateral Agent:

 

(i)          the amount of any taxes that the Collateral Agent may have been
required to pay by reason of the Transaction Liens or to free any Collateral
from any other Lien thereon;

 

(ii)         the amount of any and all reasonable and documented out-of-pocket
expenses, including transfer taxes and reasonable fees and expenses of counsel
and other experts, that the Collateral Agent may incur in connection with (x)
the administration or enforcement of this Agreement, including such expenses as
are incurred to preserve the value of the Collateral or the validity,
perfection, rank or value of any Transaction Lien, (y) the collection, sale or
other disposition of any Collateral or (z) the exercise by the Collateral Agent
of any of its rights or powers under this Agreement or any other Note Document;

 

(iii)        the amount of any fees that the Issuer shall have agreed in writing
to pay to the Collateral Agent and that shall have become due and payable in
accordance with such written agreement; and

 

(iv)        the amount required to indemnify the Collateral Agent for, or hold
it harmless and defend it against, any loss, liability, claim, damage, injuries,
penalties, action, suits, judgments, costs or expense (including the reasonable
fees and expenses of its counsel and any experts or sub-agents appointed by it
hereunder) incurred or suffered by the Collateral Agent in connection with this
Agreement or the other Note Documents, except to the extent that such loss,
liability or expense arises from the Collateral Agent’s gross negligence or
willful misconduct as determined by a final judgment issued by a court of
competent jurisdiction no longer subject to appeal or review.

 

 20 

 

 

(b)          If any transfer tax, documentary stamp tax or other tax is payable
in connection with any transfer or other transaction provided for in this
Agreement, the Issuer will pay such tax and provide any required tax stamps to
the Collateral Agent or as otherwise required by law.

 

(c)          The Issuer shall indemnify each of the Secured Parties, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all liabilities, losses, damages, costs and
expenses of any kind (including reasonable expenses of investigation by
engineers, environmental consultants and similar technical personnel and
reasonable fees and disbursements of counsel) arising out of, or in connection
with any and all Environmental Liabilities. Without limiting the generality of
the foregoing, each Grantor waives all rights for contribution and all other
rights of recovery with respect to liabilities, losses, damages, costs and
expenses arising under or related to Environmental Laws that it might have by
statute or otherwise against any Indemnitee.

 

(d)          The obligations of the Issuer under this Section 16 shall survive
the termination of this Agreement and the earlier resignation or removal of the
Collateral Agent.

 

SECTION 17. Authority to Administer Collateral.

 

(a)          Each Grantor irrevocably appoints the Collateral Agent its true and
lawful attorney, with full power of substitution, in the name of such Grantor,
any Secured Party or otherwise, for the sole use and benefit of the Secured
Parties, but at the Issuer’s expense, to the extent permitted by law to
exercise, at any time and from time to time while an Event of Default shall have
occurred and be continuing, all or any of the following powers with respect to
all or any of such Grantor’s Collateral:

 

(i)          to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof,

 

(ii)         to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto,

 

(iii)        to sell, lease, license or otherwise dispose of the same or the
proceeds or avails thereof, as fully and effectually as if the Collateral Agent
were the absolute owner thereof, and

 

(iv)        to extend the time of payment of any or all thereof and to make any
allowance or other adjustment with reference thereto;

 

 21 

 

 

provided that, except in the case of Personal Property Collateral that is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, the Collateral Agent will give the relevant Grantor
at least ten days’ prior written notice of the time and place of any public sale
thereof or the time after which any private sale or other intended disposition
thereof will be made. Any such notice shall (i) contain the information
specified in UCC Section 9-613, (ii) be Authenticated and (iii) be sent to the
parties required to be notified pursuant to UCC Section 9-611(c); provided that,
if the Collateral Agent fails to comply with this sentence in any respect, its
liability for such failure shall be limited to the liability (if any) imposed on
it as a matter of law under the UCC.

 

(b)          The foregoing provisions of this Section shall not apply to Real
Property Collateral other than Fixtures as to which such provisions shall apply
to the extent such Fixtures are governed by Article 9 of the UCC.

 

 22 

 

 

SECTION 18. Limitation on Duty in Respect of Collateral. Beyond the exercise of
reasonable care in the custody and preservation thereof, the Collateral Agent
will have no duty as to any Collateral in its possession or control or in the
possession or control of any sub-agent or bailee or any income therefrom or as
to the preservation of rights against prior parties or any other rights
pertaining thereto. To the extent that applicable law imposes duties on the
Collateral Agent to exercise remedies in a commercially reasonable manner, the
Issuer and each Guarantor acknowledges and agrees that it is commercially
reasonable for the Collateral Agent (a) to fail to incur expenses reasonably
deemed significant by the Collateral Agent to prepare Collateral for disposition
or otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (b) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of,
(c) to fail to exercise collection remedies against Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims against
Collateral, (d) to exercise collection remedies against any other Persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (e) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (f) to contact other Persons, whether or
not in the same business as the Issuer or any Guarantor, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
including, without limitation, any warranties of title, (k) 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
(l) to the extent deemed reasonable and appropriate by the Collateral Agent, to
obtain the services of brokers, investment bankers, consultants and other
professionals to assist the Collateral Agent in the collection or disposition of
any of the Collateral. The Issuer and each Guarantor acknowledges that the
purpose of this Section 18 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 specifically referred
to in this Section 18. Without limitation upon the foregoing, nothing contained
in this Section 18 shall be construed to grant any rights to the Company or any
Guarantor 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 18.

 

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SECTION 19. General Provisions Concerning the Collateral Agent.

 

(a)          The provisions of Article 2.05 of the Indenture shall inure to the
benefit of the Collateral Agent, and shall be binding upon all Grantors and all
Secured Parties, in connection with this Agreement. Without limiting the
generality of the foregoing, (i)the Collateral Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether an Event of Default has
occurred and is continuing, (ii)the Collateral Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, and (iii)
the Collateral Agent shall not have any duty to disclose, and shall not be
liable for any failure to disclose, any information relating to any Grantor that
is communicated to or obtained by the bank serving as Collateral Agent or any of
its Affiliates in any capacity. The Collateral Agent shall not be responsible
for the existence, genuineness or value of any Collateral or for the validity,
perfection, priority or enforceability of any Transaction Lien, whether impaired
by operation of law or by reason of any action or omission to act on its part
under this Agreement. The Collateral Agent shall be deemed not to have knowledge
of any Event of Default unless and until written notice thereof is given to the
Collateral Agent by the Issuer or a Secured Party.

 

(b)          Information as to Secured Obligations and Actions by Secured
Parties. For all purposes of this Agreement, including determining the amounts
of the Secured Obligations and whether a Secured Obligation is contingent in
nature or not, or whether any action has been taken under any Secured Agreement,
the Collateral Agent will be entitled to rely on information from (i) its own
records for information as to the Holders and actions taken by them, (ii) any
Secured Party for information as to its Secured Obligations and actions taken by
it, to the extent that the Collateral Agent has not obtained information from
its own records and (iii) the Issuer, to the extent that the Collateral Agent
has not obtained information from the foregoing sources.

 

(c)          Refusal to Act. The Collateral Agent may refuse to act on any
notice, consent, direction or instruction from any Secured Parties or any agent
or similar representative thereof that, in the Collateral Agent’s opinion, (i)is
contrary to law or the provisions of this Agreement or any other Note Document,
(ii)may expose the Collateral Agent to liability, financial or otherwise (unless
the Collateral Agent shall have been indemnified, to its reasonable
satisfaction, for such liability by the Secured Parties that gave such notice,
consent, direction or instruction), (iii) contrary to any law or regulation or
(iv) is unduly prejudicial to Secured Parties not joining in such notice,
consent, direction or instruction.

 

(d)          In addition to any rights, protections, immunities and indemnities
afforded to the Collateral Agent herein, the Collateral Agent shall be afforded
the rights, protections, immunities and indemnities that are afforded to it
under the Indenture.

 

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SECTION 20. Termination of Transaction Liens; Release of Collateral. (a) The
Transaction Liens granted by the Issuer and the Guarantors shall terminate
pursuant to Section 14.10 of the Indenture.

 

(b)          Notwithstanding anything in the Note Documents to the contrary, at
any time before the Transaction Liens granted by the Issuer terminated, the
Collateral Agent may, at the written request of the Issuer, (i) release any
Collateral (but not all or substantially all the Collateral) with the prior
written consent of the Holders of at least a majority of the aggregate principal
amount of the Notes then outstanding under the Indenture (including any consents
obtained in connection with an exchange offer or tender offer and associated
consent solicitation) or (ii) release all or substantially all the Collateral
with the consent of Holders of at least 66 and 2/3% in aggregate principal
amount of the Notes then outstanding under the Indenture (including any consents
obtained in connection with a tender offer or exchange for the Notes).

 

(c)          Upon any termination of a Transaction Lien or release of
Collateral, the Collateral Agent will, at the expense of the relevant Grantor
and, if requested by the Collateral Agent, upon receipt of an Officers’
Certificate and/or Opinion of Counsel (which request, and determination of
whether to require an Officer’s Certificate and an Opinion of Counsel, shall
each be at the sole discretion of the Collateral Agent), each certifying or
opining, as applicable, that such release and the execution of documents
evidencing such release are authorized and permitted under the Note Documents
and all conditions precedent to such release and to the execution of documents
evidencing such release have been satisfied, execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence the
termination of such Transaction Lien or the release of such Collateral, as the
case may be.

 

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SECTION 21. Additional Grantors. Any Subsidiary may become a party hereto by
signing and delivering to the Collateral Agent a Security Agreement Supplement,
whereupon such Subsidiary shall become a “Grantor” as defined herein.

 

SECTION 22. [Reserved.]

 

SECTION 23. Notices. Each notice, request or other communication given to any
party hereunder shall be given in accordance with Section 15.02 of the
Indenture, and in the case of any such notice, request or other communication to
a Grantor other than the Issuer, shall be given to it in care of the Issuer.

 

SECTION 24. No Implied Waivers; Remedies Not Exclusive. No failure on the part
of the Collateral Agent or any other Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right or remedy under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise by the Collateral Agent or any Secured Party of any such right
or remedy under any Note Document preclude any other or further exercise thereof
or the exercise of any other right or remedy. The rights and remedies under this
Agreement are cumulative and are not exclusive of any other rights or remedies
provided by law.

 

SECTION 25. Successors and Assigns. This Agreement is for the benefit of the
Collateral Agent and the Secured Parties. If all or any part of any Secured
Party’s interest in any Secured Obligation is assigned or otherwise transferred,
the transferor’s rights hereunder, to the extent applicable to the obligation so
transferred, shall be automatically transferred with such obligation. This
Agreement shall be binding on the Grantors and their respective successors and
assigns.

 

SECTION 26. Entire Agreement; Amendments and Waivers. This Agreement contains
the entire agreement of the parties with respect to the subject matter hereof
and supersedes any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Neither this Agreement nor any
provision hereof may be waived, amended, modified or terminated except pursuant
to an agreement or agreements in writing entered into by the Grantors and the
Collateral Agent with respect to such waiver, amendment, modification or
termination.

 

SECTION 27. Choice of Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York, except as otherwise required
by mandatory provisions of law and except to the extent that remedies provided
by the laws of any jurisdiction other than the State of New York are governed by
the laws of such jurisdiction.

 

SECTION 28. Submission to Jurisdiction.

 

Each of the Issuer and the other Grantors: (a) agrees that any suit, action or
proceeding against it arising out of or relating to this Agreement may be
instituted in any U.S. federal court with applicable subject matter jurisdiction
sitting in The City of New York; (b) waives, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding, and any claim that any suit,
action or proceeding in such a court has been brought in an inconvenient forum;
and (c) submits to the nonexclusive jurisdiction of such courts in any suit,
action or proceeding.

 

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SECTION 29. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 30. Severability. If any provision of this Agreement is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions of this Agreement shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the Collateral
Agent and the Secured Parties in order to carry out the intentions of the
parties thereto as nearly as may be possible and (ii) the invalidity or
unenforceability of such provision in such jurisdiction shall not affect the
validity or enforceability thereof in any other jurisdiction.

 

SECTION 31. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement. Delivery by any
Grantor of an executed counterpart of a signature page of this Agreement by
facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

  Issuer:       Protalix BioTherapeutics, Inc.       By:       Name:     Title:

 

  Israeli Grantor (solely with respect to the provisions directly relating to
the Israeli Grantor’s Intellectual Property registered in the United States of
America):       Protalix Ltd.       By:       Name:     Title:

 

  Collateral Agent:       Wilmington Savings Fund Society, FSB       By:      
Name:     Title:

 

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