Exhibit 10.2

EXECUTION VERSION

 

 

 

COLLATERAL AGREEMENT

Dated as of May 31, 2018

by and among

THE GRANTORS REFERRED TO HEREIN,

MUFG BANK, LTD.

as Administrative Agent,

and

MUFG UNION BANK, N.A.,

as Collateral Agent

 

 

 

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TABLE OF CONTENTS

Page

Article I

 

       DEFINITIONS       

Section 1.1

  Terms Defined in Credit Agreement      1  

Section 1.2

  Terms Defined in UCC      2  

Section 1.3

  Terms Generally      2  

Section 1.4

  Definitions of Certain Terms Used Herein      2   Article II        GRANT OF
SECURITY INTEREST        Article III        REPRESENTATIONS AND WARRANTIES     
 

Section 3.1

  Title, Perfection and Priority      9  

Section 3.2

  Type and Jurisdiction of Organization, Organizational and Identification
Numbers      11  

Section 3.3

  Principal Location      11  

Section 3.4

  Exact Names, Etc.      11  

Section 3.5

  Intellectual Property      11  

Section 3.6

  No Financing Statements or Security Agreements      11  

Section 3.7

  Pledged Collateral      11  

Section 3.8

  Commercial Tort Claims      12  

Section 3.9

  Perfection Certificate      12  

Section 3.10

  Limitation on Representations      12   Article IV        COVENANTS       

Section 4.1

  General      13  

Section 4.2

  Delivery of Pledged Collateral      14  

Section 4.3

  Pledged Collateral      14  

Section 4.4

  Intellectual Property      17  

Section 4.5

  Commercial Tort Claims      17   Article V        REMEDIES       

Section 5.1

  Remedies      17  

Section 5.2

  Grantors’ Obligations Upon Default      19  

 

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         Page  

Section 5.3

 

Grant of Intellectual Property License

     19   Article VI    ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY;
COLLATERAL ACCOUNT   

Section 6.1

 

Account Verification

     20  

Section 6.2

 

Authorization for Secured Party to Take Certain Action

     20  

Section 6.3

 

PROXY

     20  

Section 6.4

 

NATURE OF APPOINTMENT; LIMITATION OF DUTY

     21  

Section 6.5

 

Collateral Account

     21   Article VII    GENERAL PROVISIONS   

Section 7.1

 

Waivers

     22  

Section 7.2

 

Limitation on Collateral Agent’s and Secured Party’s Duty with Respect to the
Collateral

     22  

Section 7.3

 

Compromises and Collection of Collateral

     23  

Section 7.4

 

Collateral Agent Performance of Debtor Obligations

     23  

Section 7.5

 

No Waiver; Amendments; Cumulative Remedies

     24  

Section 7.6

 

Limitation by Law; Severability of Provisions

     24  

Section 7.7

 

Benefit of Agreement

     24  

Section 7.8

 

Survival of Representations

     24  

Section 7.9

 

Expenses

     24  

Section 7.10

 

Additional Grantors

     25  

Section 7.11

 

Termination or Release

     25  

Section 7.12

 

Entire Agreement

     26  

Section 7.13

 

GOVERNING LAW, ETC.

     26  

Section 7.14

 

WAIVER OF RIGHT TO TRIAL BY JURY

     27  

Section 7.15

 

Service of Process

     27  

Section 7.16

 

Subrogation and Subordination

     27  

Section 7.17

 

Counterparts

     28  

Section 7.18

 

Mortgages

     28   Article VIII    NOTICES   

Section 8.1

 

Sending Notices

     28  

Section 8.2

 

Change in Address for Notices

     28   Article IX   

INTERCREDITOR AGREEMENT(S)

 

  

 

ii

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         Page  

Section 9.1

  Intercreditor Agreement(s) Govern      28  

 

iii

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SCHEDULES:

 

Schedule I

  

Pledged Collateral

Schedule II

  

Jurisdictions

Schedule III

  

Commercial Tort Claims

EXHIBITS:

 

Exhibit A

  

Form of Joinder

Exhibit B

  

Form of Short Form Intellectual Property Security Agreement

 

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COLLATERAL AGREEMENT

This COLLATERAL AGREEMENT (this “Agreement”) is entered into as of May 31, 2018,
by and among Perspecta Inc. (formerly known as Ultra SC Inc.), a Nevada
corporation (the “Company”), each other Grantor (as defined below) from time to
time party hereto, MUFG Bank, Ltd., in its capacity as administrative agent (in
such capacity, together with its successors in such capacity, the
“Administrative Agent”), and MUFG Union Bank, N.A., in its capacity as
collateral agent for the Secured Parties (in such capacity, together with its
successors in such capacity, the “Collateral Agent”).

PRELIMINARY STATEMENTS

WHEREAS, reference is made to that certain Credit Agreement, dated as of May 31,
2018 (as amended, restated, amended and restated, refinanced, replaced,
extended, supplemented and/or otherwise modified from time to time, the “Credit
Agreement”), by and among the Company, the guarantors from time to time party
thereto (the “Guarantors”), the Administrative Agent, the Collateral Agent and
each Lender and other party from time to time party thereto;

WHEREAS, the Lenders have agreed to extend credit to the Company on the terms
and conditions set forth in the Credit Agreement;

WHEREAS, each Guarantor has, pursuant to Article VII of the Credit Agreement,
unconditionally guaranteed the obligations of the Company under the Credit
Agreement;

WHEREAS, the obligations of the Lenders to extend such credit are conditioned
upon, among other things, the execution and delivery of this Agreement by each
Grantor; and

WHEREAS, the Grantors are Affiliates of one another and will derive substantial
direct and indirect benefits from (i) the extensions of credit to the Company
pursuant to the Credit Agreement, (ii) the entering into and/or maintaining by
the Secured Hedge Banks of Secured Hedge Agreements with the Company and/or one
or more of its Restricted Subsidiaries, (iii) the issuance and/or maintenance by
the Secured Letter of Credit Banks of Secured Letters of Credit and (iv) the
entering into and/or maintaining by the Secured Cash Management Banks of Secured
Cash Management Services with the Company and/or one or more of its Restricted
Subsidiaries, and are willing to execute and deliver this Agreement in order to
induce the Lenders to extend such credit, the Secured Hedge Banks to enter into
and/or maintain such Secured Hedge Agreements, the Secured Letter of Credit
Banks to issue and/or maintain such Secured Letters of Credit and the Secured
Cash Management Banks to enter into and/or maintain such Secured Cash Management
Services.

ACCORDINGLY, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Terms Defined in Credit Agreement. All capitalized terms used in
this Agreement (including terms used in the preamble and preliminary statements
hereto) and not otherwise defined herein have the meanings specified in the
Credit Agreement.

 

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Section 1.2 Terms Defined in UCC. Terms defined in the UCC that are not
otherwise defined in this Agreement or the Credit Agreement are used herein as
defined in the UCC (and if defined in more than one article of the UCC, have the
meaning specified in Article 9 thereof).

Section 1.3 Terms Generally. The rules of construction and other interpretive
provisions specified in Sections 1.03 and 1.04 of the Credit Agreement also
apply to this Agreement (mutatis mutandis), including with respect to terms
defined in the preamble and preliminary statements hereto.

Section 1.4 Definitions of Certain Terms Used Herein. As used in this Agreement,
in addition to the terms defined in the preamble and preliminary statements
above, the following terms shall have the following meanings:

“Accommodation Payment” has the meaning specified in Section 7.16.

“Account Debtor” means any Person obligated to any Grantor in respect of an
Account.

“Administrative Agent” has the meaning specified in the preamble hereto.

“Agreement” has the meaning specified in the preamble hereto.

“Allocable Amount” has the meaning specified in Section 7.16.

“Cash Management Agreement” means any agreement entered into from time to time
by the Company or any Restricted Subsidiary for Cash Management Services,
including, for the avoidance of doubt, any such Cash Management Agreement that
was entered into before the Closing Date.

“Cash Management Services” means (a) commercial credit cards, merchant card
services, purchase or debit cards, including non-card e-payables services,
(b) treasury management services (including collection, controlled disbursement,
overdraft, automatic clearing house, fund transfer, lockbox, stop payment and
information reporting services, return items and interstate depository network
services), (c) foreign exchange, netting and currency management services and
(d) any other demand deposit or operating account relationships or other cash
management services, including under any Cash Management Agreements.

“Certificated Pledged Equity Interests” has the meaning specified in
Section 3.1(b).

“Collateral” has the meaning specified in Article II.

“Collateral Account” means an account established by the Collateral Agent for
the purpose of holding the Collateral.

“Collateral Agent” has the meaning specified in the preamble hereto.

“Company” has the meaning specified in the preamble hereto.

“Control” has the meaning specified in Section 8-106 of Article 8 of the UCC.

“Copyright Office” means the United States Copyright Office.

 

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“Copyrights” means, with respect to any Grantor, all of such Grantor’s right,
title, and interest in and to the following throughout the world: (a) any and
all copyrights, rights and interests in such copyrights, works protectable by
copyright, copyright registrations, exclusive licenses in and to registered
copyrights (but excluding any exclusive licenses to a Grantor of any registered
copyright not specifically identified in the agreement under which such
copyright is licensed), and applications to register copyright; (b) all
extensions, renewals and restorations of any of the foregoing; (c) all income,
royalties, damages, license fees and payments now or hereafter due and/or
payable under any of the foregoing, including damages or payments for past or
future infringements or other violations for any of the foregoing; and (d) the
right to sue for past, present, and future infringements or other violations of
any of the foregoing.

“Credit Agreement” has the meaning specified in the preliminary statements
hereto.

“Excluded Accounts” means (a) payroll and other employee wage and benefit
accounts, (b) tax accounts, including sales tax accounts, (c) petty cash
accounts funded in the ordinary course of business, (d) escrow, fiduciary or
trust accounts, (e) designated disbursement accounts and non-U.S. bank accounts,
(f) accounts holding deposits pledged pursuant to cash pooling and notional
pooling arrangements permitted under the Credit Agreement, (g) each “collection
account” or other similar account under any non-recourse receivables purchase
facility permitted under the Credit Agreement and (h) the funds or other
property held in or maintained in any such account identified in clauses (a)
through (g).

“Excluded Assets” means:

(a) (i) any leasehold interest (including any ground lease interest) in real
property, (ii) any interest in any fee-owned real property other than any
Mortgaged Property and (iii) any Fixtures affixed to any real property that is
not Mortgaged Property;

(b) motor vehicles, aircraft and other assets subject to certificates of title
or ownership (including aircraft, airframes, aircraft engines or helicopters, or
any equipment or other assets constituting a part thereof, in each case to the
extent subject to Federal Aviation Act registration requirements and rolling
stock);

(c) (i) Letter-of-Credit Rights (other than to the extent consisting of
Supporting Obligations that can be perfected by the filing of a Uniform
Commercial Code financing statement) and (ii) Commercial Tort Claims having a
value of less than $10,000,000;

(d) any governmental licenses or state or local franchises, charters and
authorizations (together with any rights or interests under any of the
foregoing) to the extent a security interest therein is prohibited or restricted
thereby (except to the extent such prohibition or restriction is ineffective
under the UCC);

(e) assets to the extent the pledge thereof or grant of security interests
therein (x) is prohibited or restricted by applicable law, rule or regulation;
(y) solely with respect to any Intellectual Property, would cause the
destruction, invalidation or abandonment of such asset under applicable law,
rule or regulation or (z) requires any consent, approval, license or other
authorization of any third party or Governmental Authority that has not been
obtained (except to the extent such prohibition or restriction is ineffective
under the UCC);

(f) Excluded Equity Interests;

 

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(g) any lease, license or agreement, or any property or asset that is subject to
a purchase money security interest or Capital Lease, together with any rights or
interests under any of the foregoing, to the extent that a grant of a security
interest therein is prohibited by or would violate or invalidate such lease,
license or agreement or purchase money arrangement or Capital Lease (or any
right or interest under any of the foregoing) or create a right of termination,
re-negotiation or acceleration in favor of any party thereto after giving effect
to the applicable anti-assignment provisions of the UCC and any other applicable
law, other than proceeds and receivables thereof, the assignment of which is
expressly deemed effective under the UCC or other applicable law notwithstanding
such prohibition;

(h) any asset(s) to the extent a security interest in such assets would result
in adverse tax consequences as reasonably determined by the Company in
consultation with the Collateral Agent;

(i) any asset(s) as to which the Collateral Agent (at the direction of the
Administrative Agent) reasonably determines (in consultation with the Company)
that the cost or other consequence(s) of obtaining, perfecting or maintaining a
security interest or pledge in such asset(s) exceeds the fair market value (as
determined by the Company in its reasonable judgment) thereof or are excessive
in relation to the practical benefit to the Secured Parties of the security to
be afforded thereby;

(j) any assets to the extent (and only to the extent) that action would be
required under the law of any non-U.S. jurisdiction to create or perfect a
security interest in such assets, including any Intellectual Property arising
under the laws of, or registered or applied for in, any non-U.S. jurisdiction;

(k) as extracted collateral, timber to be cut, farm products, manufactured
homes, health care insurance receivables, or aircraft engines, satellites, ships
or railroad rolling stock;

(l) Excluded Accounts;

(m) any property or asset(s) securing any Indebtedness permitted under the
Credit Agreement if including such property or assets in the Collateral would
violate the terms of (or require a consent under) documents governing such
Indebtedness;

(n) any United States intent-to-use trademark applications 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 impair the validity or enforceability
of any registration issuing from such intent-to-use trademark application under
applicable federal law; and

(o) any account receivable or other monetary obligation of an account debtor to
the Company or any of its Subsidiaries that is sold or purported to be sold by
the Company or any of its Subsidiaries under any non-recourse receivables
purchase facility permitted under the Credit Agreement, together with all
related rights with respect thereto that are sold or purported to be sold in
connection therewith and all collections and other proceeds with respect to the
foregoing (other than proceeds of such sale);

provided that the Proceeds of, or in respect of, any Excluded Assets will
constitute Collateral (except to the extent such Proceeds are Excluded
Asset(s)).

 

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“Excluded Equity Interests” means any and all of the following: (i) more than
65% of the issued and outstanding voting Equity Interests of any (a) Foreign
Subsidiary or (b) Disregarded Domestic Person, (ii) any Equity Interests to the
extent the pledge thereof would be prohibited by any law or to the extent not
permitted by the terms of such Person’s Organizational Documents (in each case,
except to the extent that any such prohibition or restriction would be rendered
ineffective under the UCC or other applicable law), (iii) the Equity Interests
of any Subsidiary of a Foreign Subsidiary or any Subsidiary of a Disregarded
Domestic Person and (iv) the Equity Interests of any Unrestricted Subsidiary or
special purpose vehicle (or similar entity, including any securitization
subsidiary).

“Grantors” means the Company and each Guarantor.

“Hedge Agreement” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts or any other similar transactions
or any combination of any of the foregoing (including any options to enter into
any of the foregoing), whether or not any such transaction is governed by or
subject to any master agreement, and (b) any and all transactions of any kind,
and the related confirmations, which are subject to the terms and conditions of,
or governed by, any form of master agreement published by the International
Swaps and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement or any other master agreement (any such master agreement,
together with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

“Intellectual Property” means, with respect to any Grantor, any and all
intellectual property of every kind and nature now owned or hereafter acquired
by such Grantor, including any and all trade secrets, Patents, Copyrights,
Trademarks and Licenses, all related registrations of the foregoing and all
rights to sue or otherwise recover for any past, present and future
infringement, dilution, misappropriation or other violation or impairment
thereof, including the right to receive all Proceeds therefrom, including
without limitation license fees, royalties, income payments, claims, damages and
proceeds of suit, now or hereafter due and/or payable with respect thereto.

“Intellectual Property Security Agreements” means agreements substantially in
the form of the Form of Short Form Intellectual Property Security Agreements
specified in Exhibit B hereto (as applicable).

“IP Collateral” means, with respect to any Grantor, the Collateral consisting of
Intellectual Property of such Grantor.

“Joinder” means a joinder agreement substantially in the form of Exhibit A
hereto or such other form as the Collateral Agent and the applicable Grantor may
agree.

“Licenses” means, with respect to any Grantor, all of such Grantor’s right,
title, and interest in and to (a) any and all written licensing agreements or
similar arrangements in and to its (1) Patents, (2) Copyrights, or
(3) Trademarks, (b) all income, royalties, damages, claims, and payments now or
hereafter due or payable under and with respect thereto, including damages and
payments for past and future breaches thereof, and (c) all rights to sue for
past, present, and future breaches thereof.

“Patents” means, with respect to any Grantor, all of such Grantor’s right,
title, and interest in and to: (a) any and all patents and patent applications
throughout the world; (b) all inventions

 

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and improvements claimed therein; (c) all reissues, divisions, continuations,
renewals, extensions, reexaminations and continuations-in-part thereof; (d) all
income, royalties, damages, claims, and payments now or hereafter due or payable
under and with respect thereto, including damages and payments for past and
future infringements or other violation thereof; and (e) all rights to sue for
past, present, and future infringements or other violations thereof.

“Perfection Certificate” means the Perfection Certificate (as defined in the
Credit Agreement) dated as of the date hereof executed by the Company and the
other Grantors party hereto and delivered to the Administrative Agent.

“Permitted Liens” has the meaning specified in Section 3.1(a).

“Pledged Collateral” means Collateral consisting of any and all of the
following: (i) Equity Interests in any Restricted Subsidiary of the Company held
by the Grantors, including such Equity Interests described in Schedule I hereto
or required to be pledged in accordance with the Credit Agreement (all Equity
Interests described in this clause (i), the “Pledged Equity Interests”), and
(ii) any Instrument(s) evidencing Debt for borrowed money in an aggregate
principal amount in excess of $10,000,000 (individually) owed by the Company or
any Restricted Subsidiary to any Grantor (the “Pledged Debt”), including such
Collateral described in Schedule I hereto or required to be pledged pursuant to
the Credit Agreement. Notwithstanding the foregoing, “Pledged Collateral” does
not (and will not) include any Excluded Asset(s).

“Pledged Debt” has the meaning specified in the definition of “Pledged
Collateral”.

“Pledged Equity Interests” has the meaning specified in the definition of
“Pledged Collateral”.

“Pledged Instruments” has the meaning specified in Section 3.1(b).

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments and any other rights or claims to receive money that are General
Intangibles or that are otherwise included as Collateral.

“Secured Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between the Company or any Restricted Subsidiary and a
Secured Cash Management Bank and designated in writing by the Secured Cash
Management Bank and the Company to the Collateral Agent as a “Secured Cash
Management Agreement,” including, for the avoidance of doubt, any such Secured
Cash Management Agreement that was entered into before the Closing Date.

“Secured Cash Management Bank” means any Person party to a Secured Cash
Management Agreement that is the Administrative Agent, the Collateral Agent, a
Lender or an Affiliate of the Administrative Agent, the Collateral Agent or a
Lender on the Closing Date or at the time it entered into, or any obligations of
the Company or any Restricted Subsidiary arose under, such Secured Cash
Management Agreement.

“Secured Cash Management Obligations” means obligations owed by the Company or
any Restricted Subsidiary to any Secured Cash Management Bank under any Secured
Cash Management Agreement.

“Secured Hedge Agreement” means any Hedge Agreement that is (a) entered into by
and between the Company or a Restricted Subsidiary and any Secured Hedge Bank
and (b) designated in

 

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writing by the Secured Hedge Bank and the Company to the Collateral Agent as a
“Secured Hedge Agreement,” including, for the avoidance of doubt, any such
Secured Hedge Agreement that was entered into before the Closing Date.

“Secured Hedge Bank” means any Person party to a Secured Hedge Agreement that is
the Administrative Agent, the Collateral Agent, a Lender or an Affiliate of the
Administrative Agent, the Collateral Agent or a Lender on the Closing Date or at
the time it entered into such Secured Hedge Agreement.

“Secured Hedge Obligations” means obligations owed by the Company or any
Restricted Subsidiary to any Secured Hedge Bank under any Secured Hedge
Agreement.

“Secured Letter of Credit” means any letter of credit, bank guarantee or similar
instrument (a) issued by a Secured Letter of Credit Bank for the account of the
Company or a Restricted Subsidiary and (b) designated in writing by the Secured
Letter of Credit Bank and the Company to the Collateral Agent as a “Secured
Letter of Credit”.

“Secured Letter of Credit Bank” means any Person that is an issuer of a Secured
Letter of Credit and that is the Administrative Agent, the Collateral Agent, a
Lender or an Affiliate of the Administrative Agent, the Collateral Agent or a
Lender on the Closing Date or at the time it entered into such Secured Letter of
Credit.

“Secured Obligations” means all

(1) Obligations;

(2) Secured Hedge Obligations (other than Excluded Swap Obligations);

(3) obligations in respect of Secured Letters of Credit; and

(4) Secured Cash Management Obligations.

Notwithstanding the foregoing, (a) unless otherwise agreed to by the Company and
any applicable Secured Hedge Bank, Secured Letter of Credit Bank or Secured Cash
Management Bank, the obligations of the Company or any Restricted Subsidiary
under any Secured Hedge Agreement, under any Secured Letter of Credit and under
any Secured Cash Management Agreement shall be secured and guaranteed pursuant
to the Collateral Documents and the Credit Agreement only to the extent that,
and for so long as, the other Secured Obligations are so secured and guaranteed
and (b) any release of Collateral or Guarantors effected in the manner permitted
by the Credit Agreement and any other Loan Document shall not require the
consent of the holders of Secured Hedge Obligations, the holders of obligations
under any Secured Letter of Credit, or of the holders of Secured Cash Management
Obligations.

“Security Interest” has the meaning specified in Article II.

“Stock Rights” means all dividends, instruments or other distributions and any
other right or property which any Grantor shall receive or shall become entitled
to receive for any reason whatsoever with respect to, in substitution for or in
exchange for any Equity Interest constituting Collateral, any right to receive
an Equity Interest constituting Collateral and any right to receive earnings, in
which such Grantor now has or hereafter acquires any right, issued by an issuer
of such Equity Interest.

 

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“Trademarks” means, with respect to any Grantor, all of such Grantor’s right,
title, and interest in and to the following throughout the world: (a) any and
all trademarks (including service marks), trade names, trade dress, and trade
styles, logos, Internet domain names and the registrations and applications for
registration thereof and the goodwill of the business symbolized by the
foregoing; (b) all extensions and renewals of the foregoing; (c) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including damages, claims, and payments for past and future
infringements or other violations thereof; and (d) all rights to sue for past,
present, and future infringements, dilutions or other violations of the
foregoing.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if by reason of mandatory provisions of law,
perfection, or the effect of perfection or non-perfection or the priority of a
security interest in any Collateral or the availability of any remedy hereunder
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 in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection or priority or availability
of such remedy, as the case may be.

“UFCA” has the meaning specified in Section 7.16.

“UFTA” has the meaning specified in Section 7.16.

“USPTO” means the United States Patent and Trademark Office.

ARTICLE II

GRANT OF SECURITY INTEREST

Each Grantor hereby pledges, collaterally assigns and grants to the Collateral
Agent, on behalf of and for the benefit of the Secured Parties, to secure the
prompt and complete payment and performance of all Secured Obligations, a
security interest (“Security Interest”) in all of its right, title and interest
in, to and under all of the following property and assets, whether now owned by
or owing to, or hereafter acquired by or arising in favor of, such Grantor, and
regardless of where located (all of which is collectively referred to as the
“Collateral”):

(a) all Accounts;

(b) all Chattel Paper (including Electronic Chattel Paper and Tangible Chattel
Paper);

(c) all Intellectual Property;

(d) all Documents;

(e) all Equipment;

(f) all Fixtures;

(g) all General Intangibles;

(h) all Goods;

 

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(i) all Instruments;

(j) all Inventory;

(k) all Investment Property;

(l) all Supporting Obligations;

(m) all Deposit Accounts;

(n) all Commercial Tort Claims specified from time to time in Schedule III
hereto;

(o) all information contained in books, records, files, correspondence, computer
programs, tapes, disks and related data processing software identifying or
pertaining to any of the foregoing or any Account Debtor or showing the amounts
thereof or payments thereon or otherwise necessary or helpful in the realization
thereon or the collection thereof; and

(p) any and all accessions to, substitutions for and replacements, products and
cash and non-cash proceeds (including Stock Rights) of the foregoing (including
any claims to any items referred to in this definition and any claims against
third parties for loss of, damage to or destruction of any or all of the
Collateral or for proceeds payable under or unearned premiums with respect to
policies of insurance) in whatever form, including cash, negotiable instruments
and other instruments for the payment of money, Chattel Paper, security
agreements and other documents.

Notwithstanding the foregoing or anything herein to the contrary, in no event
shall the “Collateral” include, or the security interest attach to, any Excluded
Asset for so long as such asset or property constitutes an Excluded Asset.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Grantor, only as to itself, represents and warrants to the Collateral
Agent, for the benefit of the Secured Parties, at the time of each Advance
(solely to the extent required to be true and correct for such Advance pursuant
to Article III or Section 2.20 of the Credit Agreement, as applicable):

Section 3.1 Title, Perfection and Priority.

(a) Such Grantor has valid rights in the Collateral with respect to which it has
purported to grant a Security Interest hereunder, free and clear of all Liens
(other than Liens permitted under Section 4.1(e) (collectively, “Permitted
Liens)) (which rights are in any event sufficient under Section 9-203 of the
UCC), and has full power and authority to grant to the Collateral Agent, for the
benefit of the Secured Parties, the Security Interest in such Collateral
pursuant hereto. This Agreement creates in favor of the Collateral Agent, for
the benefit of the Secured Parties, a valid Security Interest in the Collateral
granted by each Grantor. No consent or approval of, registration or filing with,
or any other action by any Governmental Authority is required for the grant by
such Grantor of the security interest pursuant to this Agreement, except:

 

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(i) such as have been obtained, taken, given or made and are in full force and
effect (except to the extent not required to be obtained, taken, given or made
or in full force and effect pursuant to the Collateral and Guarantee
Requirement),

(ii) for filings and registrations necessary to perfect Liens created pursuant
to the Loan Documents, and

(iii) those approvals, consents, exemptions, authorizations or other actions,
notices or filings, the failure of which to obtain or make would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on the business, financial condition or operations of the Company and the
Subsidiaries, taken as a whole, or a material adverse effect on the rights and
remedies of the Secured Parties with respect to the Collateral or under this
Agreement.

(b) Subject to (x) the limitations set forth in clause (c) of this Section 3.1
and (y) the Collateral and Guarantee Requirement, the Security Interest granted
by such Grantor constitutes (i) a valid security interest and (ii) with respect
to any:

(A) Collateral in which a security interest may be perfected by filing a
financing statement in the United States (or any political subdivision thereof)
pursuant to the UCC, upon the filing of UCC financing statements naming such
Grantor as “debtor” and the Collateral Agent as “secured party” and describing
the Collateral in the filing office set forth opposite such Grantor’s name on
Schedule II hereto,

(B) IP Collateral (to the extent such IP Collateral cannot be perfected pursuant
to subparagraph (A) above), upon the filing and recording of fully executed
Intellectual Property Security Agreements describing the IP Collateral
consisting of U.S. Copyrights in the Copyright Office within the time period(s)
required pursuant to 17 U.S.C. § 205; and

(C) Pledged Collateral that consists of “certificated securities” (within the
meaning of Section 8-102(a)(4) of the UCC) (“Certificated Pledged Equity
Interests”) or “instruments” (within the meaning of Section 9-102(a)(47) of the
UCC) (“Pledged Instruments”), upon the delivery (and continued possession) of
the certificates or instruments evidencing such Pledged Collateral to the
Collateral Agent in the State of New York in accordance with this Agreement,

will constitute a perfected (subject to Permitted Liens) security interest, in
each case, in such Collateral in favor of the Collateral Agent for the benefit
of the Secured Parties to the extent that any such action can achieve such
perfection. Such Security Interest is prior to all other Liens (other than
Permitted Liens).

(c) Notwithstanding anything to the contrary herein or in any other Loan
Document, no Grantor is or will be required to:

(i) take any action to grant or perfect the Security Interest with respect to
any Excluded Asset(s);

(ii) take any action that the definition of Collateral and Guarantee Requirement
expressly provides that such Grantor shall not be required to take;

 

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(iii) perfect the Security Interest by any means other than those filings and
other actions described in (a) clauses (A), (B) and, to the extent required by
Section 4.2, (C) of Section 3.1(b)(ii) (including, for the avoidance of doubt,
taking any action to perfect the Security Interest in any Letter-of-Credit
Rights other than the filing of a UCC financing statement) and (b) with respect
to any Commercial Tort Claims constituting Collateral, Section 4.5; or

(iv) except with respect to Fixtures covered by a Mortgage, make any fixture
filing.

Section 3.2 Type and Jurisdiction of Organization, Organizational and
Identification Numbers. The type of entity of such Grantor, its jurisdiction of
organization, the organizational number issued to it by its jurisdiction of
organization, if any, and its federal employer identification number, in each
case as of the Closing Date, are set forth in the Perfection Certificate. Each
Grantor is organized solely under the law of the jurisdiction so specified and
has not filed any certificates of domestication, transfer or continuance in any
other jurisdiction.

Section 3.3 Principal Location. Such Grantor’s chief executive office and
mailing address (if different), in each case as of the Closing Date, is
disclosed in the Perfection Certificate.

Section 3.4 Exact Names, Etc.. As of the Closing Date, the name of such Grantor
set forth in Section IA of the Perfection Certificate is the exact name of such
Grantor as it appears in such Grantor’s certificate of organization or like
document, as amended, as filed with such Grantor’s jurisdiction of organization.

Section 3.5 Intellectual Property. As of the Closing Date, such Grantor owns no
interest in, or title to, any United States federal issued, registered or
applied for Patent or Trademark or United States registered or applied for
Copyright (including, for the avoidance of doubt, any exclusive license in any
registered copyright to the extent constituting a Copyright) except as set forth
in Section IIB of the Perfection Certificate.

Section 3.6 No Financing Statements or Security Agreements. After giving effect
to the Transactions, such Grantor has not filed or consented to the filing of
any financing statement or security agreement naming such Grantor as debtor and
describing all or any portion of the Collateral that has not lapsed or been
terminated except (a) for financing statements or security agreements naming the
Collateral Agent, on behalf of the Secured Parties, as the secured party and
(b) as permitted by Sections 4.1(e) and 4.1(f).

Section 3.7 Pledged Collateral.

(a) Schedule I hereto sets forth a complete and accurate list, as of the Closing
Date, of all of the Pledged Collateral owned by such Grantor and, with respect
to any Certificated Pledged Equity Interest, the percentage of the total issued
and outstanding Equity Interests of the issuer represented thereby. As of the
Closing Date, such Grantor is the legal and beneficial owner of the Pledged
Collateral listed on Schedule I as being owned by it, free and clear of any
Liens, except for the security interest granted to the Collateral Agent, for the
benefit of the Secured Parties, hereunder and Liens permitted under
Section 5.02(a) of the Credit Agreement. Such Grantor further represents and
warrants that:

(i) all Certificated Pledged Equity Interests owned by such Grantor and issued
by a Grantor or a wholly owned Subsidiary of a Grantor have been (to the extent

 

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such concepts are relevant with respect to such Certificated Pledged Equity
Interests) duly authorized and validly issued by the issuer thereof and are
fully paid and (if applicable) non-assessable, and

(ii) to the best of its knowledge, any Pledged Instruments owed to such Grantor
have been duly authorized, authenticated or issued and delivered by the issuer
of such Pledged Instruments and are the legal, valid and binding obligations of
such issuer, subject to applicable debtor relief laws and general principles of
equity.

(b) No consent, approval or authorization of any Person is required for the
pledge by such Grantor of the Pledged Collateral pursuant to this Agreement.

(c) Except for restrictions and limitations imposed or permitted by the Loan
Documents or securities laws generally, none of the Pledged Collateral owned by
such Grantor is subject to any option, right of first refusal, shareholders
agreement, charter or by-law provisions or contractual restriction of any nature
that might prohibit, impair, delay or otherwise affect the pledge of such
Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or
the exercise by the Collateral Agent of rights and remedies hereunder; provided,
however, that the exercise of rights and remedies with respect to Pledged
Collateral is and will remain limited by and subject to the requirements of any
and all applicable requirements of law.

Section 3.8 Commercial Tort Claims. As of the Closing Date, such Grantor holds
no Commercial Tort Claims having a value in excess of $10,000,000 for which such
Grantor has filed a complaint in a court of competent jurisdiction, except as
indicated in Schedule III hereto.

Section 3.9 Perfection Certificate. The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete in all material respects as of the Closing Date.

Section 3.10 Limitation on Representations. Notwithstanding anything herein to
the contrary (including this Article III), such Grantor does not make (and will
not make) any representation or warranty as to:

(1) the effects of perfection or non-perfection, the priority or the
enforceability of any pledge of or security interest in any Equity Interests of
any Foreign Subsidiary, or as to the rights and remedies of the Collateral Agent
or any other Secured Party with respect thereto, under foreign law;

(2) the pledge or creation of any security interest, or the effects of
perfection or non-perfection, the priority or the enforceability of any pledge
of or security interest to the extent such pledge, security interest, perfection
or priority is not required pursuant to the Collateral and Guarantee
Requirement; or

(3) on the Closing Date and until required pursuant to Section 5.01(h), 3.01(b)
or 3.02(d), as applicable, of the Credit Agreement, the pledge or creation of
any security interest, or the effects of perfection or non-perfection, the
priority or enforceability of any pledge or security interest to the extent not
required on the Closing Date pursuant to Section 5.01(h), 3.01(b) or 3.02(d), as
applicable, of the Credit Agreement.

 

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ARTICLE IV

COVENANTS

From the Closing Date, and thereafter until the termination of the aggregate
Commitments and payment in full of all Secured Obligations (other than
(i) contingent obligations for indemnity, expense reimbursement, tax gross-up or
yield protection for which no claim has been made and (ii) Secured Obligations
under Secured Hedge Agreements, Secured Letters of Credit and Secured Cash
Management Obligations to the extent not currently due), each Grantor, only as
to itself, agrees that:

Section 4.1 General.

(a) Collateral Records. Each Grantor will maintain complete and accurate books
and records in accordance with the requirements of Section 5.01(f) of the Credit
Agreement.

(b) Authorization to File Financing Statements, etc.. Each Grantor hereby
authorizes the Collateral Agent (or another Agent on its behalf) to file, and if
requested will deliver to the Collateral Agent (or another Agent on its behalf),
all financing statements and other documents with respect to the Collateral (or
any part thereof) and take such other actions as may from time to time be
requested by the Collateral Agent in order to maintain a perfected security
interest in and, if applicable, Control of, the Collateral to the extent
required by Section 3.1. Any financing statement filed by the Collateral Agent
(or another Agent on its behalf) may be filed in any filing office in any
applicable UCC jurisdiction and may (i) describe the Collateral in the same
manner as described herein or may contain an indication or description of
collateral that describes such property in any other manner such as “all assets”
or “all personal property, whether now owned or hereafter acquired” of such
Grantor or words of similar effect as being of an equal or lesser scope or with
greater detail, and (ii) contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including, if applicable, whether such Grantor
is an organization, the type of organization and any organization identification
number issued to such Grantor. Each Grantor also agrees to furnish any such
information to the Collateral Agent promptly upon reasonable request. The
Collateral Agent (or another Agent on its behalf) is further irrevocably
authorized to file (to the extent the Grantors have not already made such
filings) Intellectual Property Security Agreements with respect to the
applicable IP Collateral, executed by the applicable Grantor(s) with the USPTO
or the Copyright Office (or any successor offices).

(c) Further Assurances. Each Grantor will:

(i) take or cause to be taken such further actions in accordance with
Section 5.01(h) of the Credit Agreement;

(ii) subject to the Collateral and Guarantee Requirement, and in accordance with
Sections 5.01(g), 5.01(h) and 5.01(i) of the Credit Agreement, take such other
actions as the Collateral Agent reasonably deems appropriate under applicable
law to evidence or perfect its Lien on any Collateral, or otherwise to give
effect to the intent of this Agreement; and

(iii) take commercially reasonable actions to defend the Security Interest and
the priority thereof against the claims and demands not permitted by the Loan
Documents of all Persons whomsoever.

 

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(d) Disposition of Collateral. No Grantor will sell, lease, transfer or
otherwise dispose of any Collateral except for licenses, sales, leases,
transfers and other dispositions specifically permitted under Section 5.02(f) of
the Credit Agreement.

(e) Liens. No Grantor will create, incur or assume any Lien on the Collateral
except (i) the Security Interest and (ii) Liens permitted by Section 5.02(a) of
the Credit Agreement.

(f) Other Financing Statements. No Grantor will authorize the filing of any
financing statement naming it as debtor covering all or any portion of the
Collateral, except to cover security interests as permitted under
Section 4.1(e).

(g) Change of Name, Etc. Each Grantor agrees to promptly furnish to the
Collateral Agent (and in any event within fifteen (15) Business Days of such
change or such longer period as the Collateral Agent may agree) written notice
of any change in: (i) such Grantor’s legal name; (ii) such Grantor’s
organizational legal entity designation or jurisdiction of incorporation or
formation; (iii) the location of such Grantor’s chief executive office or sole
place of business; (iv) such Grantor’s organizational identification number, if
any; and (v) such Grantor’s taxpayer identification number.

(h) Further Documentation. Each Grantor shall furnish 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 assets and property
of such Grantor as the Collateral Agent may reasonably request, all in
reasonable detail.

(i) Exercise of Duties. Anything herein to the contrary notwithstanding, (i) the
exercise by the Collateral Agent of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under the contracts
and agreements included in the Collateral and (ii) each Grantor shall remain
liable under each of the contracts and agreements included in the Collateral,
including, without limitation, any Receivables and any agreements relating to
Pledged Equity Interests, to perform all of the obligations undertaken by it
thereunder all in accordance with and pursuant to the terms and provisions
thereof and no Secured Party shall have any obligation or liability under any
such contracts or agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to make any inquiry as to the nature or sufficiency of any payment received by
it or 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
or any rights under any contract or agreement included in the Collateral,
including, without limitation, any Receivables and any agreements relating to
Pledged Equity Interests.

Section 4.2 Delivery of Pledged Collateral. Each Grantor will promptly deliver
to the Collateral Agent (or its non-fiduciary agent or designee) upon execution
of this Agreement (or at such later time as permitted under the Credit Agreement
or as the Collateral Agent may agree) all certificates or instruments, if any,
representing or evidencing the Certificated Pledged Equity Interests or Pledged
Instruments (other than checks received in the ordinary course of business),
together with duly executed instruments of transfer or assignment in blank.

Section 4.3 Pledged Collateral.

(a) Registration in Nominee Name; Denominations. The Collateral Agent (or its
non-fiduciary agent or designee), on behalf of the Secured Parties, shall hold
Certificated Pledged Equity Interests and Pledged Instruments in the name of the
applicable Grantor, endorsed or

 

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assigned in blank or in favor of the Collateral Agent. Following the occurrence
and during the continuance of an Event of Default, each Grantor will promptly
give to the Collateral Agent (or its non-fiduciary agent or designee) copies of
any notices or other communications received by it with respect to Certificated
Pledged Equity Interests and Pledged Instruments registered in the name of such
Grantor. Following the occurrence and during the continuance of an Event of
Default and after prior written notice to the applicable Grantor, the Collateral
Agent (or its non-fiduciary agent or designee) shall at all times have the right
to exchange the certificates representing Certificated Pledged Equity Interests
and Pledged Instruments for certificates of smaller or larger denominations for
any purpose consistent with this Agreement.

(b) Exercise of Rights in Pledged Collateral.

(i) Without in any way limiting the foregoing and subject to clause (ii) below,
each Grantor has the right to exercise all voting rights or other rights
relating to the Pledged Collateral for all purposes not in conflict with the
Loan Documents. Subject to clause (ii) below, the Collateral Agent will promptly
execute and deliver to each Grantor, or cause to be executed and delivered to
such Grantor, all such proxies, powers of attorney and other instruments as such
Grantor may reasonably request in writing for the purpose of enabling such
Grantor to exercise such voting or other rights, in each case as specified in
such request and in form and substance reasonably satisfactory to the Collateral
Agent and such Grantor.

(ii) Each Grantor will permit the Collateral Agent (or its non-fiduciary agent
or designee) at any time after the occurrence and during the continuance of an
Event of Default, and, except in the case of an Event of Default under
Section 6.01(e) of the Credit Agreement on account of the actual or deemed entry
of an order for relief with respect to the Company under the Bankruptcy Code,
after prior written notice to the applicable Grantor to exercise all voting
rights or other rights relating to Pledged Collateral, including exchange,
subscription or any other rights, privileges, or options pertaining to any
Equity Interest or Investment Property constituting Pledged Collateral as if it
were the absolute owner thereof; provided that, unless otherwise directed by the
Majority Lenders, the Collateral Agent will have the right at any time after the
occurrence and during the continuance of an Event of Default to permit the
Grantors to exercise such rights; provided, further that the exercise of rights
and remedies with respect to Pledged Collateral is and will remain limited by
and subject to the requirements of any and all applicable requirements of law.

(iii) Unless an Event of Default has occurred and is continuing and, except in
the case of an Event of Default under Section 6.01(e) of the Credit Agreement on
account of the actual or deemed entry of an order for relief with respect to the
Company under the Bankruptcy Code, such Grantor shall have received written
notice from the Collateral Agent or the Administrative Agent pursuant to
Section 4.3(b)(iv), each Grantor is entitled to receive and retain any and all
dividends, interest, principal and other distributions paid on or distributed in
respect of the Pledged Collateral to the extent and only to the extent that such
dividends, interest, principal and other distributions are permitted by, and
otherwise paid or distributed in accordance with, the terms and conditions of
the Loan Documents and applicable law; provided, however, that any non-cash
dividends, interest, principal or other distributions that would constitute
Certificated Pledged Equity Interests or Pledged Instruments, whether resulting
from a subdivision, combination or reclassification of the outstanding Equity
Interests of the issuer of any Certificated Pledged Equity Interests or received
in exchange for Certificated Pledged Equity Interests

 

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or Pledged Instruments or any part thereof, or in redemption thereof, or as a
result of any merger, consolidation, acquisition or other exchange of assets to
which such issuer may be a party or otherwise, shall be and become part of the
Pledged Collateral and shall, to the extent constituting Certificated Pledged
Equity Interests or Pledged Instruments, be promptly delivered to the Collateral
Agent (or its non-fiduciary agent or designee) in the same form as so received
(with any necessary endorsement or instrument of assignment). So long as no
Event of Default has occurred and is continuing, the Collateral Agent shall
promptly deliver to each Grantor (at the expense of such Grantor) any
Certificated Pledged Equity Interests or Pledged Instruments in its possession
if requested to be delivered to the issuer thereof in connection with any
exchange, redemption or sale of such Certificated Pledged Equity Interests or
Pledged Instruments permitted pursuant to the terms of the Credit Agreement.

(iv) Upon the occurrence and during the continuance of an Event of Default and,
except in the case of an Event of Default under Section 6.01(e) of the Credit
Agreement on account of the actual or deemed entry of an order for relief with
respect to the Company under the Bankruptcy Code, written notice from the
Collateral Agent or the Administrative Agent to such Grantor, all dividends,
interest, principal and other distributions paid on or distributed in respect of
Pledged Collateral shall be paid or distributed to the Collateral Agent and any
such dividends, interest, principal or other distributions received by the
applicable Grantor shall be received by such Grantor as the agent of the
Collateral Agent for the benefit of the Secured Parties, and held by such
Grantor in trust for the Collateral Agent for the benefit of the Secured Parties
and delivered forthwith by such Grantor to the Collateral Agent in the exact
form received (with any necessary endorsement or instrument of assignment).

(v) Each Grantor which is an issuer agrees that (i) it will be bound by the
terms of this Agreement relating to the Pledged Equity Interests issued by it
and will comply with such terms insofar as such terms are applicable to it,
(ii) it will notify the Collateral Agent promptly in writing of the occurrence
of any of the events described in the proviso to Section 4.3(b)(iii) with
respect to the Pledged Equity Interests issued by it and (iii) the terms of
Section 4.3(b)(vi) shall apply to it, mutatis mutandis, with respect to all
actions that may be required of it pursuant to Section 4.3(b)(vi) with respect
to the Pledged Equity Interests issued by it. Each Grantor which is either an
issuer or an owner of any Pledged Equity Interests hereby consents to the grant
by each other Grantor of the security interest hereunder in such Pledged Equity
Interests in favor of the Collateral Agent and to the transfer of any Pledged
Equity Interests to the Collateral Agent or its nominee following an Event of
Default and to the substitution of the Collateral Agent or its nominee as a
partner, member or shareholder or other equity holder of the issuer of the
related Pledged Equity Interest.

(vi) Each Grantor hereby authorizes and instructs each issuer of any Pledged
Debt or Pledged Equity Interests pledged by such Grantor hereunder to (i) comply
with any instruction received by it from the Administrative Agent in writing
that (x) states that an Event of Default has occurred and is continuing and
(y) is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from such Grantor, and each Grantor agrees that
each Issuer shall be fully protected in so complying, and (ii) to the extent
required by Section 4.3(b)(iv), pay any dividends or other payments with respect
to the Pledged Debt or Pledged Equity Interests directly to the Collateral
Agent.

 

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Section 4.4 Intellectual Property.

(a) In the event that any Grantor, either directly or through any agent,
employee, licensee or designee, files an application for the registration of any
Patent, Trademark or Copyright with the USPTO or the Copyright Office or
otherwise becomes the owner of any Patent, Trademark or Copyright registered or
applied for in the USPTO or the Copyright Office, such Grantor will, together
with the delivery of a Compliance Certificate with respect to the financial
statements delivered pursuant to Section 5.01(b)(ii) of the Credit Agreement,
provide the Collateral Agent with a report setting forth the information
required by Section IIB of the Perfection Certificate (or confirming that there
has been no change in such information since the latter of the Closing Date or
the last such report), and, upon request of the Collateral Agent, such Grantor
shall promptly execute and deliver any and all security agreements or other
instruments as the Collateral Agent may reasonably request to evidence and
perfect the Collateral Agent’s security interest in such Patent, Trademark or
Copyright, and the General Intangibles of such Grantor relating thereto or
represented thereby.

(b) Nothing in this Agreement shall prevent any Grantor from disposing of,
discontinuing the use or maintenance of, abandoning, failing to pursue or
enforce, or otherwise allowing to lapse, terminate or put into the public
domain, any of its Collateral constituting Intellectual Property to the extent
permitted by the Credit Agreement if such Grantor determines in its reasonable
business judgment that such disposition, discontinuance, abandonment or other
action (or non-action) could not reasonably be expected to result in a material
adverse effect on the business, financial condition or operations of the Company
and its Restricted Subsidiaries, taken as a whole.

Section 4.5 Commercial Tort Claims. Each Grantor shall, together with the
delivery of a Compliance Certificate with respect to the financial statements
delivered pursuant to Section 5.01(b)(ii) of the Credit Agreement, notify the
Collateral Agent of any Commercial Tort Claims for which such Grantor has filed
complaint(s) in court(s) of competent jurisdiction and, unless the Collateral
Agent otherwise consents, such Grantor shall update Schedule III hereof, thereby
granting to the Collateral Agent a security interest in such Commercial Tort
Claim(s). The requirement in the preceding sentence shall not apply to the
extent that the amount of any such Commercial Tort Claim does not exceed
$10,000,000 or to the extent such Grantor shall have previously notified the
Collateral Agent with respect to any previously held or acquired Commercial Tort
Claim.

ARTICLE V

REMEDIES

Section 5.1 Remedies. Upon the occurrence and during the continuance of an Event
of Default and, except in the case of an Event of Default under Section 6.01(e)
of the Credit Agreement on account of the actual or deemed entry of an order for
relief with respect to the Company under the Bankruptcy Code, after written
notice by the Collateral Agent to the Company and the applicable Grantor of its
intent to do so:

(a) the Collateral Agent may (and at the direction of the Majority Lenders,
shall) exercise any or all of the following rights and remedies:

(i) those rights and remedies provided in this Agreement, the Credit Agreement
or any other Loan Document;

 

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(ii) those rights and remedies available to a secured party under the UCC
(whether or not the UCC applies to the affected Collateral) or under any other
applicable law (including any law governing the exercise of a bank’s right of
setoff or bankers’ Lien) when a debtor is in default under a security agreement;
and

(iii) enter the premises of any Grantor where any Collateral is located (with or
without judicial process but without breach of the peace) for a reasonable
period of time to, subject to the mandatory requirements of applicable law,
collect, receive, assemble, process, appropriate, sell, lease, assign, grant an
option or options to purchase or otherwise dispose of, deliver, or realize upon,
the Collateral or any part thereof in one or more parcels at public or private
sale or sales (which sales may be adjourned or continued from time to time with
or without notice and may take place at such Grantor’s premises or elsewhere),
for cash, on credit or for future delivery without assumption of any credit
risk, and upon such other terms as the Collateral Agent may deem commercially
reasonable.

provided, however, that the exercise of rights and remedies with respect to
Pledged Collateral is and will remain limited by and subject to the requirements
of any and all applicable requirements of law.

(b) Each Grantor acknowledges and agrees that the compliance by the Collateral
Agent, on behalf of the Secured Parties, with any applicable state or federal
law requirements in connection with a disposition of the Collateral will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.

(c) The Collateral Agent shall have the right upon any public sale or sales and,
to the extent permitted by law, upon any private sale or sales, to purchase for
the benefit of the Collateral Agent and the other Secured Parties, the whole or
any part of the Collateral so sold, free of any right of equity of redemption,
which equity of redemption each Grantor hereby expressly releases to the extent
permitted by applicable law.

(d) Until the Collateral Agent is able to effect a sale, lease, transfer or
other disposition of Collateral, the Collateral Agent shall have the right to
hold or use Collateral, or any part thereof, to the extent that it deems
appropriate for the purpose of preserving Collateral or the value of the
Collateral, or for any other purpose deemed appropriate by the Collateral Agent.
The Collateral Agent may, if it so elects, seek the appointment of a receiver or
keeper to take possession of Collateral and to enforce any of the Collateral
Agent’s remedies (for the benefit of the Collateral Agent and the other Secured
Parties) with respect to such appointment without prior notice or hearing as to
such appointment.

(e) Notwithstanding the foregoing, neither the Collateral Agent nor the other
Secured Parties shall be required to (i) make any demand upon, or pursue or
exhaust any of their rights or remedies against, the Grantors, any other
obligor, guarantor, pledgor or any other Person with respect to the payment of
the Secured Obligations or to pursue or exhaust any of their rights or remedies
with respect to any Collateral therefor or any direct or indirect guarantee
thereof, (ii) marshal the Collateral or any guarantee of the Secured Obligations
or to resort to the Collateral or any such guarantee in any particular order, or
(iii) effect a public sale of any Collateral.

(f) Each Grantor recognizes that the Collateral Agent may be unable to effect a
public sale of any or all of the Pledged Collateral and may be compelled to
resort to one or more private sales thereof. Each Grantor also acknowledges that
any private sale may result in prices

 

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and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall not be deemed to have been made in a commercially unreasonable manner
solely by virtue of such sale being private. The Collateral Agent shall be under
no obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit any Grantor or the issuer of the Pledged Collateral to
register such securities for public sale under the Securities Act of 1933, as
amended, or under applicable state securities laws, even if any Grantor and the
issuer would agree to do so (it being acknowledged and agreed that no Grantor
shall have any obligation hereunder to do so).

Section 5.2 Grantors’ Obligations Upon Default. Upon the written request of the
Collateral Agent after the occurrence and during the continuance of an Event of
Default, each Grantor will:

(a) assemble and make available to the Collateral Agent the Collateral and all
books and records relating thereto at any place or places reasonably specified
by the Collateral Agent, whether at such Grantor’s premises or elsewhere; and

(b) permit the Collateral Agent, by the Collateral Agent’s representatives and
agents, but without breach of the peace, to enter, occupy and use any premises
where all or any part of the Collateral, or the books and records relating
thereto, or both, are located, to take possession of all or any part of the
Collateral or the books and records relating thereto, or both, to remove all or
any part of the Collateral or the books and records relating thereto, or both,
and to conduct sales of the Collateral, without any obligation to pay any
Grantor for such use and occupancy.

Section 5.3 Grant of Intellectual Property License. For the purpose of enabling
the Collateral Agent to exercise the rights and remedies under this Article V
upon the occurrence and during the continuance of an Event of Default, at such
time as the Collateral Agent shall be lawfully entitled to exercise such rights
and remedies, each Grantor hereby (a) grants to the Collateral Agent, for the
benefit of the Collateral Agent and the other Secured Parties, a nonexclusive
license (exercisable without payment of royalty or other compensation to such
Grantor) to use, license or sublicense any Intellectual Property rights now
owned or hereafter acquired by such Grantor, wherever the same may be located,
and including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer software and programs used
for the compilation or printout thereof; provided, however, (i) that such
licenses to be granted hereunder with respect to Trademarks shall be subject to
the maintenance of quality standards with respect to the goods and services on
which such Trademarks are used sufficient to preserve the validity of such
Trademarks; (ii) that such licenses granted with regard to trade secrets shall
be subject to the requirement that the secret status of trade secrets be
maintained and reasonable steps are taken to ensure that they are maintained;
and (iii) that the Collateral Agent shall have no greater rights than those of
any such Grantor under such license or sublicense; and (b) as to the rights of
Grantor’s themselves, and subject to the rights of any third party at law, in
equity, or pursuant to any license agreement entered into by a Grantor,
irrevocably agrees that, at any time and from time to time following the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may sell any Grantor’s Inventory directly to any Person, including Persons
who have previously purchased any Grantor’s Inventory from such Grantor and in
connection with any such sale or other enforcement of the Collateral Agent’s
rights under this Agreement, may (subject to any restrictions contained in
applicable third party licenses entered into by a Grantor) sell Inventory which
bears any Trademark owned by or licensed to any Grantor and any Inventory that
is covered by any intellectual property interest owned by or licensed to such
Grantor and the Collateral Agent may finish any work in process and affix any
relevant Trademark owned by or licensed to any Grantor and sell such Inventory
as provided herein. The use of the license granted pursuant to clause (a) of the
preceding sentence by the Collateral Agent may be exercised, at the option of
the Collateral Agent, only upon the occurrence and during the continuance of

 

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an Event of Default; provided, however, that any permitted 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.

ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY; COLLATERAL ACCOUNT

Section 6.1 Account Verification. The Grantors acknowledge that after the
occurrence and during the continuance of an Event of Default, except in the case
of an Event of Default under Section 6.01(e) of the Credit Agreement on account
of the actual or deemed entry of an order for relief with respect to the Company
under the Bankruptcy Code, after prior written notice to the relevant Grantor of
its intent to do so, the Collateral Agent may in its own name, or in the name of
such Grantor, communicate with the Account Debtors of such Grantor to verify
with such Persons the existence, amount and terms of, and any other matter
reasonably relating to, the Accounts owing by such Account Debtor to such
Grantor (including any Instruments and/or Receivables that are Collateral
relating to such Accounts).

Section 6.2 Authorization for Secured Party to Take Certain Action.

(a) Each Grantor hereby appoints, effective upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent as its attorney in fact
(1) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically permitted by
Section 5.02(a) of the Credit Agreement), (2) to endorse and collect any cash
proceeds of the Collateral and to apply the proceeds of any Collateral received
by the Collateral Agent to the Secured Obligations as provided in Section 6.02
of the Credit Agreement, (3) to demand payment or enforce payment of the
Receivables in the name of the Collateral Agent or any Grantor and to endorse
any and all checks, drafts, and other instruments for the payment of money
relating to the Receivables, (4) to sign any Grantor’s name on any invoice or
bill of lading relating to the Receivables, drafts against any Account Debtor of
such Grantor, assignments and verifications of Receivables, (5) to exercise all
of any Grantor’s rights and remedies with respect to the collection of the
Receivables and any other Collateral, (6) to settle, adjust, compromise, extend
or renew the Receivables, (7) to settle, adjust or compromise any legal
proceedings brought to collect Receivables, (8) to prepare, file and sign any
Grantor’s name on a proof of claim in bankruptcy or similar document against any
Account Debtor of such Grantor, (9) to prepare, file and sign any Grantor’s name
on any notice of Lien, assignment or satisfaction of Lien or similar document in
connection with the Receivables, and (10) to use information contained in any
data processing, electronic or information systems relating to Collateral; and
each Grantor agrees to reimburse the Collateral Agent for any reasonable payment
made or any reasonable documented expense incurred by the Collateral Agent in
connection with any of the foregoing, in accordance with, and solely to the
extent required by, the provisions Section 9.04 of the Credit Agreement;
provided that, this authorization shall not relieve any Grantor of any of its
obligations under this Agreement or under the Credit Agreement.

(b) All acts of said attorney or designee are hereby ratified and approved by
the Grantors. The powers conferred on the Collateral Agent, for the benefit of
the Collateral Agent and the other Secured Parties, under this Section 6.2 are
solely to protect the Collateral Agent’s interests in the Collateral and shall
not impose any duty upon the Collateral Agent or any other Secured Party to
exercise any such powers.

Section 6.3 PROXY EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS,
EFFECTIVE UPON THE OCCURRENCE AND DURING THE

 

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CONTINUANCE OF AN EVENT OF DEFAULT, THE COLLATERAL AGENT AS ITS PROXY AND
ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 6.2 ABOVE) WITH RESPECT TO THE PLEDGED
COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER
OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED
COLLATERAL, THE APPOINTMENT OF THE COLLATERAL AGENT AS PROXY AND
ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH
PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF
THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED
COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT.

Section 6.4 NATURE OF APPOINTMENT; LIMITATION OF DUTY. THE APPOINTMENT OF THE
COLLATERAL AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED
WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS AGREEMENT
IS TERMINATED IN ACCORDANCE WITH SECTION 7.11. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN, NEITHER THE COLLATERAL AGENT, NOR ANY OTHER SECURED PARTY, NOR
ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED
HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY
FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT TO THE EXTENT SUCH DAMAGES
ARE ATTRIBUTABLE TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT
SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.

Section 6.5 Collateral Account

(a) The Grantors acknowledge and agree that the Collateral Agent will establish
a Collateral Account with respect to the Collateral.

(b) The Collateral Agent shall, on a monthly basis, and at such other times as
the Administrative Agent, any Lender or the Company, or their respective agents
or representatives may from time to time reasonably request, provide to the
Administrative Agent, such Lender or the Company, or their respective agents or
representatives, a balance statement for the Collateral Account delivered via
the Collateral Agent’s Online Trust and Custody service and upon electing such
service, paper statements will be provided only upon request of the
Administrative Agent, any Lender or the Company, or their respective agents or
representatives, as applicable. Statements will be deemed to be correct and
final upon receipt thereof by the Administrative Agent, the Lenders or the
Company, or their respective agents or representatives unless the Collateral
Agent is notified in writing to the contrary within thirty Business Days of the
date of such statement. The Administrative Agent, each Lender and the Borrower,
or their respective agents or representatives understand that trade
confirmations for securities transactions effected by the Collateral Agent will
be available upon request and at no additional cost and waive the right to
receive brokerage confirmations of security transactions effected by the
Collateral Agent as they occur, other trade confirmations may be obtained from
the applicable broker.

 

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ARTICLE VII

GENERAL PROVISIONS

Section 7.1 Waivers. Each Grantor hereby waives notice of the time and place of
any public sale or the time after which any private sale or other disposition of
all or any part of the Collateral may be made. To the extent such notice may not
be waived under applicable law, any notice made shall be deemed reasonable if
sent to the Grantors, addressed as set forth in Article VIII, at least ten days
prior to (i) the date of any such public sale or (ii) the time after which any
such private sale or other disposition may be made. To the maximum extent
permitted by applicable law, each Grantor waives all claims, damages, and
demands against the Collateral Agent or any other Secured Party arising out of
the repossession, retention or sale of the Collateral (after the occurrence and
during the continuance of an Event of Default), except such as arise solely out
of the bad faith, gross negligence or willful misconduct of the Collateral Agent
or such Secured Party as finally determined by a court of competent
jurisdiction. To the extent it may lawfully do so, each Grantor absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and covenants
not to assert against the Collateral Agent or any other Secured Party, any
valuation, stay, appraisal, extension, moratorium, redemption or similar laws
and any and all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale of any
Collateral after the occurrence of and during the continuance of an Event of
Default, made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Agreement, or otherwise. Except as
otherwise specifically provided herein, each Grantor hereby waives presentment,
demand, protest or any notice (to the maximum extent permitted by applicable
law) of any kind in connection with this Agreement or any Collateral.

Section 7.2 Limitation on Collateral Agent’s and Secured Party’s Duty with
Respect to the Collateral.

(a) The Collateral Agent shall have no obligation to clean-up or otherwise
prepare the Collateral for sale. The Collateral Agent and each Secured Party
shall use reasonable care with respect to the Collateral in its possession or
under its control. Neither the Collateral Agent, nor any other Secured Party
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of the Collateral Agent or
such Secured Party, or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. Without limiting
the generality of the foregoing, the Collateral Agent shall not be liable or
responsible for (i) any loss or diminution in the value of any of the
Collateral, by reason of the act or omission of any carrier, forwarding agency
or other agent or bailee selected by the Collateral Agent in good faith,
(ii) the existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Liens in any of the
Collateral, (iii) the validity or sufficiency of the Collateral or any agreement
or assignment contained therein, (iv) the validity of the title of the Grantors
to the Collateral, (v) insuring the Collateral or (vi) the payment of taxes,
charges, assessments or Liens upon the Collateral or otherwise as to the
maintenance of the Collateral. In particular, the Collateral Agent shall not be
responsible for filing any financing or continuation statements or recording any
documents or instruments in any public office at any time or times or otherwise
perfecting or maintaining the perfection of any security interest in the
Collateral.

(b) To the extent that applicable law imposes duties on the Collateral Agent to
exercise remedies, after the occurrence and during the continuance of an Event
of Default, in a commercially reasonable manner, each Grantor acknowledges and
agrees that it would be 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

 

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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 a 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 at the Grantors’ cost 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 assist the Collateral Agent in the collection or disposition of
any of the Collateral. Each Grantor acknowledges that the purpose of this
Section 7.2 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, after the
occurrence and during the continuance of an Event of Default, 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 7.2.
Without limitation upon the foregoing, nothing contained in this Section 7.2
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 7.2.

(c) In the performance of its obligations and the exercise of its rights and
remedies under this Agreement, the Collateral Agent shall be entitled to the
benefits of, and shall be entitled to enforce, all provisions of Articles VIII
and IX of the Credit Agreement.

Section 7.3 Compromises and Collection of Collateral. Each Grantor and the
Collateral Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be recovered
with respect to a Receivable. In view of the foregoing, each Grantor agrees that
the Collateral Agent may at any time and from time to time, if an Event of
Default has occurred and is continuing, compromise with the obligor on any
Receivable, accept in full payment of any Receivable such amount as the
Collateral Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Collateral Agent shall be commercially
reasonable so long as the Collateral Agent acts in good faith based on
information known to it at the time it takes any such action.

Section 7.4 Collateral Agent Performance of Debtor Obligations. Without having
any obligation to do so, following the occurrence and during the continuance of
an Event of Default, the Collateral Agent may perform or pay any obligation
which any Grantor has agreed to perform or pay

 

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under this Agreement and such Grantor shall reimburse the Collateral Agent for
any amounts paid by the Collateral Agent pursuant to this Section 7.4 in
accordance with Section 9.04 of the Credit Agreement. Each Grantor’s obligation
to reimburse the Collateral Agent pursuant to the preceding sentence shall be a
Secured Obligation payable in accordance with Section 9.04 of the Credit
Agreement.

Section 7.5 No Waiver; Amendments; Cumulative Remedies. No failure or delay by
the Collateral Agent or any other Secured Party in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Collateral Agent and the other Secured Parties hereunder are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by any
Secured Party therefrom shall in any event be effective unless in writing signed
by the Collateral Agent to the extent discretion is given to the Collateral
Agent herein or pursuant to any other Loan Documents, or otherwise by the
Collateral Agent with the concurrence or at the direction of the Lenders
required under Section 9.01 of the Credit Agreement (if any), and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.

Section 7.6 Limitation by Law; Severability of Provisions. All rights, remedies
and powers provided in this Agreement may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law, and all
the provisions of this Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and limited to the extent
necessary so that they shall not render this Agreement invalid, unenforceable or
not entitled to be recorded or registered, in whole or in part. Any provision in
this Agreement that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Agreement are declared to
be severable.

Section 7.7 Benefit of Agreement. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of each Grantor, the Collateral
Agent and the other Secured Parties and their respective successors and
permitted assigns (including all Persons who become bound as a debtor to this
Agreement), except that (other than as expressly permitted under the Credit
Agreement) no Grantor shall have the right to assign its rights or delegate its
obligations under this Agreement or any interest herein, without the prior
written consent of the Collateral Agent. No sales of participations,
assignments, transfers, or other dispositions of any agreement governing the
Secured Obligations or any portion thereof or interest therein shall in any
manner impair the Lien granted to the Collateral Agent, for the benefit of the
Collateral Agent and the other Secured Parties, hereunder.

Section 7.8 Survival of Representations. All representations and warranties of
each Grantor contained in this Agreement shall survive the execution and
delivery of this Agreement.

Section 7.9 Expenses. Solely to the extent required by Section 9.04 of the
Credit Agreement, each Grantor jointly and severally agrees to reimburse the
Collateral Agent for any and all reasonable and documented out-of-pocket
expenses paid or incurred by the Collateral Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Agreement and in the audit, analysis, administration, collection,
preservation or sale of the Collateral. Any and all costs and expenses incurred
by any Grantor in the performance of actions required pursuant to the terms
hereof shall be borne solely by such Grantor.

 

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Section 7.10 Additional Grantors. Pursuant to and in accordance with
Section 5.01(g) of the Credit Agreement, each Grantor shall cause (i) each
Significant Domestic Subsidiary formed or acquired after the date of this
Agreement in accordance with the terms of the Credit Agreement and (ii) any
Domestic Subsidiary that was an Excluded Subsidiary but has ceased to be an
Excluded Subsidiary and that becomes a Significant Domestic Subsidiary, to enter
into this Agreement as a Grantor by executing a Joinder. Upon the execution and
delivery by the Collateral Agent and such Subsidiary of a Joinder, such
Subsidiary shall become a Grantor hereunder with the same force and effect as if
originally named a Grantor herein. The execution and delivery of any such
instrument shall not require the consent of any other Grantor hereunder. The
rights and obligations of each Grantor hereunder will remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.

Section 7.11 Termination or Release.

(a) Subject to the last sentence of the definition of “Secured Obligations”,
this Agreement shall continue in effect until, and shall terminate upon, the
termination of the aggregate Commitments and payment in full of all Secured
Obligations (other than (i) contingent obligations for indemnity, expense
reimbursement, tax gross-up or yield protection for which no claim has been made
and (ii) Secured Obligations under Secured Hedge Agreements, Secured Letters of
Credit and Secured Cash Management Obligations to the extent not currently due).

(b) A Grantor shall automatically be released from its obligations hereunder and
the security interests created hereunder in the Collateral of such Grantor shall
be automatically released in the circumstances set forth in Section 9.08 of the
Credit Agreement, including, with respect to any Guarantor, as a result of any
transaction permitted under the Credit Agreement pursuant to which such
Guarantor ceases to be a Subsidiary of the Company or becomes an Excluded
Subsidiary.

(c) Upon any sale, transfer or other disposition by any Grantor of any
Collateral that is permitted under Section 4.1(d) to any Person that is not
another Grantor, or upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral as set forth in
Section 9.08 of the Credit Agreement, the security interest in such Collateral
shall be automatically released.

(d) The security interests granted hereunder in any Collateral, to the extent
such Collateral is comprised of property leased to a Grantor, shall be
automatically released upon termination or expiration of such lease, pursuant to
Section 9.08 of the Credit Agreement.

(e) The security interest in any Collateral shall be automatically released in
any circumstance set forth in Section 9.08 of the Credit Agreement that provides
for such release or upon any release of the Lien on such Collateral in
accordance with Section 9.08 of the Credit Agreement.

(f) In connection with any termination or release pursuant to Section 7.11(a),
(b), (c), (d) or (e), the Collateral Agent shall promptly execute and deliver to
any Grantor, at such Grantor’s expense, all UCC termination statements and
similar documents that such Grantor shall reasonably request to evidence such
termination or release and shall perform such other actions reasonably requested
by such Grantor to effect such release, including delivery of certificates,
securities and instruments. Any execution and delivery of documents pursuant to
this Section 7.11 shall be without recourse to or representation or warranty by
the Collateral Agent or any other Secured Party. Without limiting the provisions
of Section 7.9, the Company shall reimburse (or cause to be reimbursed) the
Collateral Agent in accordance with Section 9.04 of the

 

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Credit Agreement for all reasonable and documented out-of-pocket costs and
expenses, including the fees, charges and expenses of counsel, incurred by it in
connection with any action contemplated by this Section 7.11.

Section 7.12 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding between each Grantor,
the Administrative Agent and the Collateral Agent relating to the Collateral and
supersedes all prior agreements and understandings, oral or written, between any
Grantor, the Administrative Agent and the Collateral Agent relating to the
Collateral.

Section 7.13 GOVERNING LAW, ETC.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(b) CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. EACH GRANTOR IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR
PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT OR ANY OTHER SECURED PARTY, OR ANY RELATED PARTY OF THE
FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR THE TRANSACTIONS RELATING
HERETO, IN EACH CASE IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE
AGENT, THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE COMPANY,
THE OTHER GRANTORS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION. THE
COMPANY AND THE OTHER GRANTORS EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN THIS SECTION. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

 

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Section 7.14 WAIVER OF RIGHT TO TRIAL BY JURY. EACH OF THE COMPANY, THE OTHER
GRANTORS, THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND, BY THEIR
ACCEPTANCE OF THE BENEFITS HEREOF, THE OTHER SECURED PARTIES HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each of the Company, the other Grantors,
the Administrative Agent, the Collateral Agent and, by their acceptance of the
benefits here, the other Secured Parties (i) acknowledges that this waiver is a
material inducement for the Company, the other Grantors, the Administrative
Agent, the Collateral Agent and the other Secured Parties to enter into a
business relationship, that the Company, the other Grantors, the Administrative
Agent, the Collateral Agent and the other Secured Parties have already relied on
this waiver in entering into this Agreement or accepting the benefits thereof,
as the case may be, and that each will continue to rely on this waiver in their
related future dealings and (ii) further warrants and represents that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.

Section 7.15 Service of Process. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8.1. NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

Section 7.16 Subrogation and Subordination. Upon payment by any Grantor of any
Secured Obligations, all rights of such Grantor against the Company or any other
Grantor arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior termination of the
aggregate Commitments and payment in full of all Secured Obligations (other than
(i) contingent obligations for indemnity, expense reimbursement, tax gross-up or
yield protection for which no claim has been made and (ii) Secured Obligations
under Secured Hedge Agreements, Secured Letters of Credit and Secured Cash
Management Obligations to the extent not currently due). If any amount shall be
paid to the Company or any other Grantor in contravention of the foregoing
subordination on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of the Company or any
other Grantor, such amount shall be held in trust for the benefit of the Secured
Parties and shall promptly be paid to the Collateral Agent to be credited
against the payment of the Secured Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement and the other Loan Documents.
Subject to the foregoing, to the extent that any Grantor (other than the
Company) shall, under this Agreement or the Credit Agreement as a joint and
several obligor, repay any of the Secured Obligations (an “Accommodation
Payment”), then the Grantor making such Accommodation Payment shall be entitled
to contribution and indemnification from, and be reimbursed by, each of the
other Grantors in an amount equal to a fraction of such Accommodation Payment,
the numerator of which fraction is such other Grantor’s Allocable Amount and the
denominator of which is the sum of the Allocable Amounts of all of the Grantors.
As of any date of determination, the “Allocable Amount” of each Grantor shall be
equal to the maximum amount of liability for Accommodation Payments which could
be asserted against such Grantor hereunder and under the Credit Agreement
without (a) rendering such Grantor “insolvent” within the meaning of Section 101
(31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act
(“UFTA”) or Section 2 of the Uniform

 

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Fraudulent Conveyance Act (“UFCA”), (b) leaving such Grantor with unreasonably
small capital or assets, within the meaning of Section 548 of the Bankruptcy
Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such
Grantor unable to pay its debts as they become due within the meaning of
Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the
UFCA.

Section 7.17 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 one and the same agreement. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile or other
electronic imaging (including in .pdf format) means shall be effective as
delivery of a manually executed counterpart of this Agreement.

Section 7.18 Mortgages . In the case of a conflict between this Agreement and
the Mortgages (if any) with respect to Collateral that is real property
(including Fixtures), the Mortgages shall govern. In all other conflicts between
this Agreement and the Mortgages, this Agreement shall govern.

Section 7.19 Actions by the Collateral Agent. Notwithstanding anything herein or
in any other Loan Document to the contrary, any action required to be taken by
the Collateral Agent hereunder or under any other Loan Document shall be taken
by the Collateral Agent solely at the direction of the Administrative Agent;
provided that the Administrative Agent hereby covenants and agrees to promptly
provide such direction in connection with any such action.

ARTICLE VIII

NOTICES

Section 8.1 Sending Notices. All notices, requests and demands pursuant hereto
shall be made in accordance with Section 9.02 of the Credit Agreement.

Section 8.2 Change in Address for Notices. Each of the Grantors, the
Administrative Agent, the Collateral Agent and the Lenders may change the
address or facsimile number for service of notice upon it by a notice in writing
to the other parties.

ARTICLE IX

INTERCREDITOR AGREEMENT(S)

Section 9.1 Intercreditor Agreement(s) Govern. NOTWITHSTANDING ANYTHING HEREIN
TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT,
FOR THE BENEFIT OF THE SECURED PARTIES, PURSUANT TO THIS AGREEMENT AND THE
EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT AND THE OTHER SECURED
PARTIES HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR
AGREEMENT(S) (IF ANY). IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE
PROVISIONS OF ANY INTERCREDITOR AGREEMENT(S) AND THIS AGREEMENT, THE PROVISIONS
OF THE APPLICABLE INTERCREDITOR AGREEMENT(S) WILL GOVERN AND CONTROL.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

PERSPECTA INC. (formerly known as ULTRA SC INC.), a Nevada corporation, as the
Company By:  

/s/ H.C Charles Diao

Name:   H.C. Charles Diao Title:   President and Treasurer ENTERPRISE SERVICES
PLANO LLC, a Delaware limited liability company, as a Grantor By:  

/s/ H.C. Charles Diao

Name:   H.C. Charles Diao Title:   President and Treasurer ENTERPRISE SERVICES
LLC, a Delaware limited liability company, as a Grantor By:  

/s/ H.C. Charles Diao

Name:   H.C. Charles Diao Title:   President and Treasurer

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MUFG BANK, LTD., as Administrative Agent By:  

/s/ Yen Hua

  Name: Yen Hua   Title: Director MUFG UNION BANK, N.A., as Collateral Agent By:
 

/s/ Amedeo Morreale

  Name: Amedeo Morreale   Title: Vice President