Exhibit 10.5
 
 
 
 
 

 
SECURITY AGREEMENT
EXECUTION COPY

 
 
Dated as of April 23, 2012

by and among

APIO, INC., GREENLINE LOGISTICS, INC. and CAL EX TRADING COMPANY,
as the Grantors,

and

EACH OTHER GRANTOR
FROM TIME TO TIME PARTY HERETO

in favor of

GENERAL ELECTRIC CAPITAL CORPORATION,
as Collateral Agent
 
 
 

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

 

SECURITY AGREEMENT, dated as of April 23, 2012 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, this
“Agreement”), by APIO, INC., a Delaware corporation (“Apio”), GREENLINE
LOGISTICS, INC., an Ohio corporation (“GL Logistics”), and CAL EX TRADING
COMPANY, a Delaware corporation (“Cal Ex”; together with Apio, collectively, the
“Grantors”), in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation (“GE Capital”), as collateral agent (in such capacity, together with
its successors and assigns, “Collateral Agent”) for Lender (as defined below)
and each other Secured Party (as defined below).
 
W I T N E S S E T H:
 
WHEREAS, pursuant to the Loan Agreement dated as of April 23, 2012 (as the same
may be amended, restated, supplemented or otherwise modified from time to time,
the “Loan Agreement”), by and among Apio, Apio Cooling A California Limited
Partnership, GreenLine Foods, Inc. and GreenLine South Carolina Properties, LLC
(collectively, the “Borrowers”), GE Capital, as lender (together with its
successors and assigns, “Lender”) and Collateral Agent, Lender has agreed to
make extensions of credit to the Borrowers upon the terms and subject to the
conditions set forth therein;
 
WHEREAS, Landec Corporation (“Parent”) and GreenLine Holding Company (“GHC”)
have agreed to guarantee the Obligations (as defined in the Loan Agreement) of
each Borrower;
 
WHEREAS, each Grantor will derive substantial direct and indirect benefits from
the making of the extensions of credit under the Loan Agreement; and
 
WHEREAS, it is a condition precedent to the obligation of Lender to make its
extensions of credit to the Borrowers under the Loan Agreement that the Grantors
shall have executed and delivered this Agreement to Collateral Agent.
 
NOW, THEREFORE, in consideration of the premises and to induce Lender and
Collateral Agent to enter into the Loan Agreement and to induce Lender to make
its extensions of credit to the Borrowers thereunder, each Grantor hereby agrees
with Collateral Agent as follows:
 
ARTICLE I
 
DEFINED TERMS
 
Section 1.1                   Definitions.  (a) Capital terms used herein
without definition are used as defined in the Loan Agreement and Exhibit A
hereto.
 
 
 

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

 
 
(b)           The following terms have the meanings given to them in the UCC and
terms used herein without definition that are defined in the UCC have the
meanings given to them in the UCC (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):  “account”, “account
debtor”, “as-extracted collateral”, “certificated security”, “chattel paper”,
“commercial tort claim”, “commodity contract”, “deposit account”, “documents”,
“electronic chattel paper”, “equipment”, “farm products”, “fixture”, “general
intangible”, “goods”, “health-care-insurance receivable”, “instruments”,
“inventory”, “investment property”, “letter-of-credit right”, “proceeds”,
“record”, “securities account”, “security”, “supporting obligation” and
“tangible chattel paper”.
 
(c)           The following terms shall have the following meanings:
 
“Cash Collateral Account” means a deposit account or securities account subject,
in each instance, to a Control Agreement.
 
“Collateral” has the meaning specified in Section 3.1.
 
“Controlled Securities Account” means each securities account (including all
financial assets held therein and all certificates and instruments, if any,
representing or evidencing such financial assets) that is the subject of an
effective Control Agreement.
 
“Excluded Property” means, collectively, (i) any permit or license or any
Contractual Obligation entered into by any Grantor (A) that prohibits or
requires the consent of any Person other than a Borrower and its Affiliates
which has not been obtained as a condition to the creation by such Grantor of a
Lien on any right, title or interest in such permit, license or Contractual
Obligation or any Stock or Stock Equivalent related thereto or (B) to the extent
that any Requirement of Law applicable thereto prohibits the creation of a Lien
thereon, but only, with respect to the prohibition in (A) and (B), to the
extent, and for as long as, such prohibition is not terminated or rendered
unenforceable or otherwise deemed ineffective by the UCC or any other
Requirement of Law, (iii) Property owned by any Grantor that is subject to a
purchase money Lien or a Capital Lease permitted under the Credit Agreement if
the Contractual Obligation pursuant to which such Lien is granted (or in the
document providing for such Capital Lease) prohibits or requires the consent of
any Person other than a Borrower and its Affiliates which has not been obtained
as a condition to the creation of any other Lien on such equipment and (iv) any
“intent to use” Trademark applications for which a statement of use has not been
filed (but only until such statement is filed); provided, however, “Excluded
Property” shall not include any proceeds, products, substitutions or
replacements of Excluded Property (unless such proceeds, products, substitutions
or replacements would otherwise constitute Excluded Property).
 
“Guaranteed Obligations” means, collectively, the liabilities, obligations,
covenants and duties owing by any Guarantor to Collateral Agent or Lender under
the Guaranty and this Agreement.
 
 
2

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

 
 
“Guarantor” means, (i) with respect to the Guaranty, each of Parent and
GreenLine Holding Company, and (ii) with respect to this Agreement, each of Cal
Ex and GL Logistics.
 
“Guaranty” means the Guaranty of even date herewith made by the Guarantors for
the benefit of Collateral Agent and Lender.
 
“Internet Domain Name” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
Internet domain names.
 
“Intercreditor Agreement” means the Intercreditor Agreement dated as of even
date herewith between Revolver Agent and Collateral Agent.
 
“Material Intellectual Property” means Intellectual Property that is owned by or
licensed to a Grantor and material to the conduct of any Grantor’s business.
 
“Pledged Certificated Stock” means all certificated securities and any other
Stock or Stock Equivalent of any Person evidenced by a certificate, instrument
or other similar document (as defined in the UCC), in each case owned by any
Grantor, and any distribution of property made on, in respect of or in exchange
for the foregoing from time to time.  Pledged Certificated Stock excludes any
Excluded Property and any Cash Equivalents that are not held in Controlled
Securities Accounts.
 
“Pledged Collateral” means, collectively, the Pledged Stock and the Pledged Debt
Instruments.
 
“Pledged Debt Instruments” means all right, title and interest of any Grantor in
instruments evidencing any Indebtedness owed to such Grantor or other
obligations owed to such Grantor and any distribution of property made on, in
respect of or in exchange for the foregoing from time to time issued by the
obligors named therein.  Pledged Debt Instruments excludes any Cash Equivalents
that are not held in Controlled Securities Accounts.
 
“Pledged Investment Property” means any investment property of any Grantor, and
any distribution of property made on, in respect of or in exchange for the
foregoing from time to time, other than any Pledged Stock or Pledged Debt
Instruments.  Pledged Investment Property excludes any Cash Equivalents that are
not held in Controlled Securities Accounts.
 
“Pledged Stock” means all Pledged Certificated Stock and all Pledged
Uncertificated Stock.
 
“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person
that is not Pledged Certificated Stock, including all right, title and interest
of any Grantor as a limited or general partner in any partnership not
constituting Pledged Certificated Stock or as a member of any limited liability
company, all right, title and interest of any Grantor in, to and under any
Organizational Document of any partnership or limited liability company to which
it is a party, and any distribution of property made on, in respect of or in
exchange for the foregoing from time to time to the extent such interests are
not certificated.  Pledged Uncertificated Stock excludes any Excluded Property
and any Cash Equivalents that are not held in Controlled Securities Accounts.
 
 
3

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

 
 
“Property” has the meaning assigned to such term in the Revolver Credit
Agreement.
 
“Revolver Agent” means GE Capital, as agent under the Revolver Security
Agreement.
 
“Revolver Credit Agreement” means that certain Credit Agreement dated as of
April 23, 2012 among the Grantors, each lender from time to time a party thereto
and Revolver Agent, as amended, modified and restated from time to time in
accordance with the terms thereof.
 
“Revolver Security Agreement” means that certain Guaranty and Security Agreement
dated as of April 23, 2012 among the Grantors, each other grantor from time to
time a party thereto and Revolver Agent, as amended, modified and restated from
time to time in accordance with the terms thereof.
 
“Secured Obligations” is a collective reference to (a) the a portion of the
Obligations related to the Bridge Note and (b) the Guaranteed Obligations
related to the Bridge Note.

“Secured Party” means, collectively, Collateral Agent and Lender.
 
“Software” means (a) all computer programs, including source code and object
code versions, (b) all data, databases and compilations of data, whether machine
readable or otherwise, and (c) all documentation, training materials and
configurations related to any of the foregoing.
 
“UCC” means the Uniform Commercial Code as from time to time in effect in the
State of New York; provided, however, that, in the event that, by reason of
mandatory provisions of any applicable Requirement of Law, any of the
attachment, perfection or priority of Collateral Agent’s or any other Secured
Party’s security interest in any Collateral is governed by the Uniform
Commercial Code of a jurisdiction other than the State of New York, “UCC” shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of the definitions related to or otherwise used in
such provisions.
 
“Vehicles” means all vehicles covered by a certificate of title law of any
state.
 
 
4

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

 
 
Section 1.2                   Certain Other Terms.
 
(a)            The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.  The terms
“herein”, “hereof” and similar terms refer to this Agreement as a whole and not
to any particular Article, Section or clause in this Agreement.  References
herein to an Annex, Schedule, Article, Section or clause refer to the
appropriate Annex or Schedule to, or Article, Section or clause in this
Agreement.  Where the context requires, provisions relating to any Collateral
when used in relation to a Grantor shall refer to such Grantor’s Collateral or
any relevant part thereof.
 
(b)           Other Interpretive Provisions.
 
(i)           Defined Terms.  Unless otherwise specified herein or therein, all
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto.
 
(ii)          Certain Common Terms.  The term “including” is not limiting and
means “including without limitation.”
 
(iii)         Performance; Time.  Whenever any performance obligation hereunder
(other than a payment obligation) shall be stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day.  In the computation of periods of
time from a specified date to a later specified date, the word “from” means
“from and including”; the words “to” and “until” each mean “to but excluding”,
and the word “through” means “to and including.”  If any provision of this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
 
(iv)         Contracts.  Unless otherwise expressly provided herein, references
to agreements and other contractual instruments, including this Agreement and
the other Loan Documents, shall be deemed to include all subsequent amendments,
thereto, restatements and substitutions thereof and other modifications and
supplements thereto which are in effect from time to time, but only to the
extent such amendments and other modifications are not prohibited by the terms
of any Loan Document.
 
(v)          Laws.  References to any statute or regulation are to be construed
as including all statutory and regulatory provisions related thereto or
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
 
 
5

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

 
 
ARTICLE II
 
GUARANTY
 
Section 2.1                   Guaranty.  To induce Lender to make the Loan and
each other Secured Party to make credit available to or for the benefit of one
or more Grantors, each Guarantor hereby, jointly and severally, absolutely,
unconditionally and irrevocably guarantees, as primary obligor and not merely as
surety, the full and punctual payment when due, whether at stated maturity or
earlier, by reason of acceleration, mandatory prepayment or otherwise in
accordance with any Loan Document, of all the Obligations of each Borrower
whether existing on the date hereof or hereinafter incurred or created (the
“Guaranteed Obligations”).  This Guaranty by each Guarantor hereunder
constitutes a guaranty of payment and not of collection.
 
Section 2.2                   Limitation of Guaranty.  Any term or provision of
this Guaranty or any other Loan Document to the contrary notwithstanding, the
maximum aggregate amount for which any Guarantor shall be liable hereunder shall
not exceed the maximum amount for which such Guarantor can be liable without
rendering this Guaranty or any other Loan Document, as it relates to such
Guarantor, subject to avoidance under applicable Requirements of Law relating to
fraudulent conveyance or fraudulent transfer (including the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act and Section 548 of title 11
of the United States Code or any applicable provisions of comparable
Requirements of Law) (collectively, “Fraudulent Transfer Laws”). Any analysis of
the provisions of this Guaranty for purposes of Fraudulent Transfer Laws shall
take into account the right of contribution established in Section 2.3 and, for
purposes of such analysis, give effect to any discharge of intercompany debt as
a result of any payment made under the Guaranty.
 
Section 2.3                   Contribution.  To the extent that any Guarantor
shall be required hereunder to pay any portion of any Guaranteed Obligation
exceeding the greater of (a) the amount of the value actually received by such
Guarantor and its Subsidiaries from the Loan and other Obligations and (b) the
amount such Guarantor would otherwise have paid if such Guarantor had paid the
aggregate amount of the Guaranteed Obligations (excluding the amount thereof
repaid by a Borrower that received the benefit of the funds advanced that
constituted Guaranteed Obligations) in the same proportion as such Guarantor’s
net worth on the date enforcement is sought hereunder bears to the aggregate net
worth of all the Guarantors on such date, then such Guarantor shall be
reimbursed by such other Guarantors for the amount of such excess, pro rata,
based on the respective net worth of such other Guarantors on such date.
 
Section 2.4                   Authorization; Other Agreements.  The Secured
Parties are hereby authorized, without notice to or demand upon any Guarantor
and without discharging or otherwise affecting the obligations of any Guarantor
hereunder and without incurring any liability hereunder, from time to time, to
do each of the following:
 
 
6

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

 
 
(a)           (i)           modify, amend, supplement or otherwise change, (ii)
accelerate or otherwise change the time of payment or (iii) waive or otherwise
consent to noncompliance with, any Guaranteed Obligation or any Loan Document;
 
(b)           apply to the Guaranteed Obligations any sums by whomever paid or
however realized to any Guaranteed Obligation in such order as provided in the
Loan Documents;
 
(c)           refund at any time any payment received by any Secured Party in
respect of any Guaranteed Obligation;
 
(d)           (i) sell, exchange, enforce, waive, substitute, liquidate,
terminate, release, abandon, fail to perfect, subordinate, accept, substitute,
surrender, exchange, affect, impair or otherwise alter or release any Collateral
for any Guaranteed Obligation or any other guaranty therefor in any manner, (ii)
receive, take and hold additional Collateral to secure any Guaranteed
Obligation, (iii) add, release or substitute any one or more other Guarantors,
makers or endorsers of any Guaranteed Obligation or any part thereof and (iv)
otherwise deal in any manner with a Borrower or any other Guarantor, maker or
endorser of any Guaranteed Obligation or any part thereof; and
 
(e)           settle, release, compromise, collect or otherwise liquidate the
Guaranteed Obligations.
 
Section 2.5                   Guaranty Absolute and Unconditional.  Each
Guarantor hereby waives and agrees not to assert any defense, whether arising in
connection with or in respect of any of the following or otherwise, and hereby
agrees that its obligations under this Guaranty are irrevocable, absolute and
unconditional and shall not be discharged as a result of or otherwise affected
by any of the following (which may not be pleaded and evidence of which may not
be introduced in any proceeding with respect to this Guaranty, in each case
except as otherwise agreed in writing by Agent):
 
(a)           the invalidity or unenforceability of any obligation of a Borrower
or any other Guarantor under any Loan Document or any other agreement or
instrument relating thereto (including any amendment, consent or waiver
thereto), or any security for, or other guaranty of, any Guaranteed Obligation
or any part thereof, or the lack of perfection or continuing perfection or
failure of priority of any security for the Guaranteed Obligations or any part
thereof;
 
(b)           the absence of (i) any attempt to collect any Guaranteed
Obligation or any part thereof from a Borrower or any other Guarantor or other
action to enforce the same or (ii) any action to enforce any Loan Document or
any Lien thereunder;
 
(c)           the failure by any Person to take any steps to perfect and
maintain any Lien on, or to preserve any rights with respect to, any Collateral;
 
 
7

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

 
 
(d)           any workout, insolvency, bankruptcy proceeding, reorganization,
arrangement, liquidation or dissolution by or against a Borrower, any other
Guarantor or any of a Borrower’s other Subsidiaries or any procedure, agreement,
order, stipulation, election, action or omission thereunder, including any
discharge or disallowance of, or bar or stay against collecting, any Guaranteed
Obligation (or any interest thereon) in or as a result of any such proceeding;
 
(e)           any foreclosure, whether or not through judicial sale, and any
other sale or other disposition of any Collateral or any election following the
occurrence of an Event of Default by any Secured Party to proceed separately
against any Collateral in accordance with such Secured Party’s rights under any
applicable Requirement of Law; or
 
(f)           any other defense, setoff, counterclaim or any other circumstance
that might otherwise constitute a legal or equitable discharge of a Borrower,
any other Guarantor or any other Subsidiary of a Borrower, in each case other
than the payment in full of the Guaranteed Obligations.
 
Section 2.6                   Waivers.  Each Guarantor hereby unconditionally
and irrevocably waives and agrees not to assert any claim, defense, setoff or
counterclaim based on diligence, promptness, presentment, requirements for any
demand or notice hereunder including any of the following:  (a) any demand for
payment or performance and protest and notice of protest; (b) any notice of
acceptance; (c) any presentment, demand, protest or further notice or other
requirements of any kind with respect to any Guaranteed Obligation (including
any accrued but unpaid interest thereon) becoming immediately due and payable;
and (d) any other notice in respect of any Guaranteed Obligation or any part
thereof, and any defense arising by reason of any disability or other defense of
a Borrower or any other Guarantor.  Until the Obligations have been repaid in
full in cash, each Guarantor further unconditionally and irrevocably agrees not
to (x) enforce or otherwise exercise any right of subrogation or any right of
reimbursement or contribution or similar right against a Borrower or any other
Guarantor by reason of any Loan Document or any payment made thereunder or (y)
assert any claim, defense, setoff or counterclaim it may have against any other
Credit Party or set off any of its obligations to such other Credit Party
against obligations of such Credit Party to such Guarantor.  No obligation of
any Guarantor hereunder shall be discharged other than by complete performance.
 
Section 2.7                   Reliance.  Each Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of each
Borrower, each other Guarantor and any other guarantor, maker or endorser of any
Guaranteed Obligation or any part thereof, and of all other circumstances
bearing upon the risk of nonpayment of any Guaranteed Obligation or any part
thereof that diligent inquiry would reveal, and each Guarantor hereby agrees
that no Secured Party shall have any duty to advise any Guarantor of information
known to it regarding such condition or any such circumstances.  In the event
any Secured Party, in its sole discretion, undertakes at any time or from time
to time to provide any such information to any Guarantor, such Secured Party
shall be under no obligation to (a) undertake any investigation not a part of
its regular business routine, (b) disclose any information that such Secured
Party, pursuant to accepted or reasonable commercial finance or banking
practices, wishes to maintain confidential or (c) make any future disclosures of
such information or any other information to any Guarantor.
 
 
8

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

 
 
ARTICLE III
 
GRANT OF SECURITY INTEREST
 
Section 3.1                   Collateral.  For the purposes of this Agreement,
all of the following property now owned or at any time hereafter acquired by a
Grantor or in which a Grantor now has or at any time in the future may acquire
any right, title or interests is collectively referred to as the “Collateral”:
 
(a)           all accounts, chattel paper, deposit accounts, documents,
equipment, general intangibles, instruments, inventory, investment property,
letter of credit rights and any supporting obligations related to any of the
foregoing;
 
(b)           [Intentionally Omitted.];
 
(c)           all books and records pertaining to the other property described
in this Section 3.1;
 
(d)           all property of such Grantor held by any Secured Party, including
all property of every description, in the custody of or in transit to such
Secured Party for any purpose, including safekeeping, collection or pledge, for
the account of such Grantor or as to which such Grantor may have any right or
power, including but not limited to cash;
 
(e)           all other goods (including but not limited to fixtures) and
personal property of such Grantor, whether tangible or intangible and wherever
located; and
 
(f)           to the extent not otherwise included, all proceeds of the
foregoing;
 
Section 3.2                   Grant of Security Interest in Collateral.  Each
Grantor, as collateral security for the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of the Secured Obligations of such Grantor, hereby mortgages, pledges and
hypothecates to Collateral Agent for the benefit of the Secured Parties, and
grants to Collateral Agent for the benefit of the Secured Parties a Lien on and
security interest in, all of its right, title and interest in, to and under the
Collateral of such Grantor; provided, however, notwithstanding the foregoing, no
Lien or security interest is hereby granted on any Excluded Property; provided,
further, that if and when any property shall cease to be Excluded Property, a
Lien on and security in such property shall be deemed granted therein.  Each
such Grantor hereby represents and warrants that the Excluded Property, when
taken as a whole, is not material to the business operations or financial
condition of the Grantors, taken as a whole.
 
 
9

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

 
 
ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES
 
To induce Lender and Collateral Agent to enter into the Loan Documents, each
Grantor hereby represents and warrants each of the following to Collateral
Agent, Lender and the other Secured Parties:
 
Section 4.1                   Title; No Other Liens.  Except for the Lien
granted to Collateral Agent pursuant to this Agreement and the other Permitted
Liens (except for those Permitted Liens not permitted to exist on any
Collateral) under any Loan Document (including Section 4.2), such Grantor owns
each item of the Collateral free and clear of any and all Liens or claims of
others.  Such Grantor (a) is the record and beneficial owner of the Collateral
pledged by it hereunder constituting instruments or certificates and (b) has
rights in or the power to transfer each other item of Collateral in which a Lien
is granted by it hereunder, free and clear of any other Lien.
 
Section 4.2                   Perfection and Priority.  The security interest
granted pursuant to this Agreement constitutes a valid and continuing perfected
security interest in favor of Collateral Agent in all Collateral to which a
security interest may be perfected by filing a financing statement under the
UCC.
 
Section 4.3                   Pledged Collateral.  (a) The Pledged Stock pledged
by such Grantor hereunder (a) has been duly authorized, validly issued and is
fully paid and nonassessable (other than Pledged Stock in limited liability
companies and partnerships) and (b) constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms.
 
(b)           As of the Closing Date, all Pledged Collateral (other than Pledged
Uncertificated Stock) and all Pledged Investment Property consisting of
instruments and certificates has been delivered to Revolver Agent in accordance
with the Revolver Security Agreement.
 
(c)           Upon the occurrence and during the continuance of an Event of
Default, Collateral Agent shall be entitled to exercise all of the rights of the
Grantor granting the security interest in any Pledged Stock, and a transferee or
assignee of such Pledged Stock shall become a holder of such Pledged Stock to
the same extent as such Grantor and be entitled to participate in the management
of the issuer of such Pledged Stock and, upon the transfer of the entire
interest of such Grantor, such Grantor shall, by operation of law, cease to be a
holder of such Pledged Stock.
 
 
10

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

 
 
Section 4.4                   Instruments and Tangible Chattel Paper Formerly
Accounts.  No amount payable to such Grantor under or in connection with any
account is evidenced by any instrument or tangible chattel paper that has not
been delivered to Revolver, properly endorsed for transfer, to the extent
delivery is required by the Revolver Security Agreement.
 
Section 4.5                   Intellectual Property.  On the Closing Date, all
Material Intellectual Property owned by such Grantor is valid, in full force and
effect, subsisting, unexpired and enforceable, and no Material Intellectual
Property has been abandoned.  No breach or default of any material IP License
shall be caused by any of the following, and none of the following shall limit
or impair the ownership, use, validity or enforceability of, or any rights of
such Grantor in, any Material Intellectual Property:  (i) the consummation of
the transactions contemplated by any Loan Document or (ii) any holding,
decision, judgment or order rendered by any Governmental Authority.  There are
no pending (or, to the knowledge of such Grantor, threatened) actions,
investigations, suits, proceedings, audits, claims, demands, orders or disputes
challenging the ownership, use, validity, enforceability of, or such Grantor’s
rights in, any Material Intellectual Property of such Grantor.  To such
Grantor’s knowledge, no Person has been or is infringing, misappropriating,
diluting, violating or otherwise impairing any Intellectual Property of such
Grantor.  Such Grantor, and to such Grantor’s knowledge each other party
thereto, is not in material breach or default of any material IP License.
 
Section 4.6                   Commercial Tort Claims.  There are no commercial
tort claims of any Grantor existing on the date hereof (regardless of whether
the amount, defendant or other material facts can be determined and regardless
of whether such commercial tort claim has been asserted, threatened or has
otherwise been made known to the obligee thereof or whether litigation has been
commenced for such claims).
 
Section 4.7                   Specific Collateral.  None of the Collateral is or
is proceeds or products of as-extracted collateral, health-care-insurance
receivables or timber to be cut.
 
Section 4.8                   Enforcement.  No Permit, notice to or filing with
any Governmental Authority or any other Person or any consent from any Person is
required for the exercise by Collateral Agent of its rights (including voting
rights) provided for in this Agreement or the enforcement of remedies in respect
of the Collateral pursuant to this Agreement, including the transfer of any
Collateral, except as may be required in connection with the disposition of any
portion of the Pledged Collateral by laws affecting the offering and sale of
securities generally or any approvals that may be required to be obtained from
any bailees or landlords to collect the Collateral.
 
 
11

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

 
 
ARTICLE V
 
[INTENTIONALLY OMITTED.]
 
ARTICLE VI
 
REMEDIAL PROVISIONS
 
Section 6.1                   Code and Other Remedies.  (a) UCC
Remedies.  During the continuance of an Event of Default, Collateral Agent may
exercise, in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to any Secured Obligation, all rights and remedies of a secured party
under the UCC or any other applicable law.
 
(b)           [Intentionally Omitted.]
 
(c)           [Intentionally Omitted.]
 
(d)           Application of Proceeds.  Collateral Agent shall apply the cash
proceeds of any action taken by it pursuant to this Section 6.1, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any Collateral or in any way
relating to the Collateral or the rights of Collateral Agent and any other
Secured Party hereunder, including reasonable attorneys’ fees and disbursements,
to the payment in whole or in part of the Secured Obligations, as set forth in
the Loan Agreement, and only after such application and after the payment by
Collateral Agent of any other amount required by any Requirement of Law, need
Collateral Agent account for the surplus, if any, to any Grantor.
 
(e)           Direct Obligation.  Neither Collateral Agent nor any other Secured
Party shall be required to make any demand upon, or pursue or exhaust any right
or remedy against, any Grantor, any other Loan Party or any other Person with
respect to the payment of the Obligations or to pursue or exhaust any right or
remedy with respect to any Collateral therefor or any direct or indirect
guaranty thereof.  All of the rights and remedies of Collateral Agent and any
other Secured Party under any Loan Document shall be cumulative, may be
exercised individually or concurrently and not exclusive of any other rights or
remedies provided by any Requirement of Law.  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 Collateral Agent or any
other Secured Party, any valuation, stay, appraisement, extension, redemption or
similar laws and any and all rights or defenses it may have as a surety, now or
hereafter existing, arising out of the exercise by them of any rights
hereunder.  If any notice of a proposed sale or other disposition of any
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.
 
 
12

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

 
 
(f)           Commercially Reasonable.  To the extent that applicable
Requirements of Law impose duties on Collateral Agent to exercise remedies in a
commercially reasonable manner, each Grantor acknowledges and agrees that it is
not commercially unreasonable for Collateral Agent to do any of the following:
 
(i)           fail to incur significant costs, expenses or other Liabilities
reasonably deemed as such by Collateral Agent to prepare any Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition;
 
(ii)          fail to obtain Permits, or other consents, for access to any
Collateral to sell or for the collection or sale of any Collateral, or, if not
required by other Requirements of Law, fail to obtain Permits or other consents
for the collection or disposition of any Collateral;
 
(iii)         fail to exercise remedies against account debtors or other Persons
obligated on any Collateral or to remove Liens on any Collateral or to remove
any adverse claims against any Collateral;
 
(iv)         advertise dispositions of any Collateral through publications or
media of general circulation, whether or not such Collateral is of a specialized
nature, or to contact other Persons, whether or not in the same business as any
Grantor, for expressions of interest in acquiring any such Collateral;
 
(v)          exercise collection remedies against account debtors and other
Persons obligated on any Collateral, directly or through the use of collection
agencies or other collection specialists, hire one or more professional
auctioneers to assist in the disposition of any Collateral, whether or not such
Collateral is of a specialized nature, or, to the extent deemed appropriate by
Collateral Agent, obtain the services of other brokers, investment bankers,
consultants and other professionals to assist Collateral Agent in the collection
or disposition of any Collateral, or utilize 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 to
dispose of any Collateral;
 
(vi)         dispose of assets in wholesale rather than retail markets;
 
(vii)        disclaim disposition warranties, such as title, possession or quiet
enjoyment; or
 
(viii)       purchase insurance or credit enhancements to insure Collateral
Agent against risks of loss, collection or disposition of any Collateral or to
provide to Collateral Agent a guaranteed return from the collection or
disposition of any Collateral.
 
 
13

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

 
 
Each Grantor acknowledges that the purpose of this Section 6.1 is to provide a
non-exhaustive list of actions or omissions that are commercially reasonable
when exercising remedies against any Collateral and that other actions or
omissions by the Secured Parties shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 6.1.  Without
limitation upon the foregoing, nothing contained in this Section 6.1 shall be
construed to grant any rights to any Grantor or to impose any duties on
Collateral Agent that would not have been granted or imposed by this Agreement
or by applicable Requirements of Law in the absence of this Section 6.1.
 
(g)           IP Licenses.  For the purpose of enabling Collateral Agent to
exercise rights and remedies under this Section 6.1 (including in order to take
possession of, collect, receive, assemble, process, appropriate, remove, realize
upon, sell, assign, convey, transfer or grant options to purchase any
Collateral) at such time as Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to Collateral
Agent, for the benefit of the Secured Parties, (i) an irrevocable, nonexclusive,
worldwide license (exercisable without payment of royalty or other compensation
to such Grantor), including in such license the right to sublicense, use and
practice any Intellectual Property now owned or hereafter acquired by such
Grantor and access to all media in which any of the licensed items may be
recorded or stored and to all Software and programs used for the compilation or
printout thereof and (ii) an irrevocable license (without payment of rent or
other compensation to such Grantor) to use, operate and occupy all real Property
owned, operated, leased, subleased or otherwise occupied by such Grantor.
 
Section 6.2                   Accounts and Payments in Respect of General
Intangibles.  (a) If required by Collateral Agent at any time during the
continuance of an Event of Default, any payment of accounts or payment in
respect of general intangibles, when collected by any Grantor, shall be promptly
(and, in any event, within two Business Days) deposited by such Grantor in the
exact form received, duly indorsed by such Grantor to Collateral Agent, in a
Cash Collateral Account, subject to withdrawal by Collateral Agent as provided
in Section 6.4.  Until so turned over, such payment shall be held by such
Grantor in trust for Collateral Agent, segregated from other funds of such
Grantor.  Each such deposit of proceeds of accounts and payments in respect of
general intangibles shall be accompanied by a report identifying in reasonable
detail the nature and source of the payments included in the deposit.
 
(b)           [Intentionally Omitted.]
 
(c)           Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each account and each payment in respect of general
intangibles to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto.  No Secured Party shall have any obligation or
liability under any agreement giving rise to an account or a payment in respect
of a general intangible by reason of or arising out of any Loan Document or the
receipt by any Secured Party of any payment relating thereto, nor shall any
Secured Party be obligated in any manner to perform any obligation of any
Grantor under or pursuant to any agreement giving rise to an account or a
payment in respect of a general intangible, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts that may have been assigned to it or to which it may be
entitled at any time or times.
 
 
14

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

 
 
Section 6.3                   [Intentionally Omitted.]
 
Section 6.4                   Proceeds to be Turned over to and Held by
Collateral Agent.  Unless otherwise expressly provided in the Loan Agreement or
this Agreement, all proceeds of any Collateral received by any Grantor hereunder
in cash or Cash Equivalents shall be held by such Grantor in trust for
Collateral Agent and the other Secured Parties, segregated from other funds of
such Grantor, and shall, promptly upon receipt by any Grantor, be turned over to
Collateral Agent in the exact form received (with any necessary
endorsement).  All such proceeds of Collateral and any other proceeds of any
Collateral received by Collateral Agent in cash or Cash Equivalents shall be
held by Collateral Agent in a Cash Collateral Account.  All proceeds being held
by Collateral Agent in a Cash Collateral Account (or by such Grantor in trust
for Collateral Agent) shall continue to be held as collateral security for the
Secured Obligations and shall not constitute payment thereof until applied as
provided in the Loan Agreement.
 
Section 6.5                   Sale of Pledged Collateral.  (a) Each Grantor
recognizes that Collateral Agent may be unable to effect a public sale of any
Pledged Collateral by reason of certain prohibitions contained in the Securities
Act and applicable state or foreign securities laws or otherwise or may
determine that a public sale is impracticable, not desirable or not commercially
reasonable and, accordingly, may resort to one or more private sales thereof to
a restricted group of purchasers that shall be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof.  Each Grantor acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner.  Collateral Agent shall be under no
obligation to delay a sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register such securities for public
sale under the Securities Act or under applicable state securities laws even if
such issuer would agree to do so.
 
(b)           Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of any
portion of the Pledged Collateral pursuant to  Section 6.1 and this Section 6.5
valid and binding and in compliance with all applicable Requirements of
Law.  Each Grantor further agrees that a breach of any covenant contained herein
will cause irreparable injury to Collateral Agent and other Secured Parties,
that Collateral Agent and the other Secured Parties have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every
covenant contained herein shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defense
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Loan Agreement.  Each
Grantor waives any and all rights of contribution or subrogation upon the sale
or disposition of all or any portion of the Pledged Collateral by Collateral
Agent.
 
 
15

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

 
 
Section 6.6                   Deficiency.  Each Grantor shall remain liable for
any deficiency if the proceeds of any sale or other disposition of any
Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorney employed by Collateral Agent or any other Secured
Party to collect such deficiency.
 
ARTICLE VII
 
COLLATERAL AGENT
 
Section 7.1                   Collateral Agent’s Appointment as
Attorney-in-Fact.  (a) Each Grantor hereby irrevocably constitutes and appoints
Collateral Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its own name, for
the purpose of carrying out the terms of the Loan Documents, to take any
appropriate action and to execute any document or instrument that may be
necessary or desirable to accomplish the purposes of the Loan Documents, and,
without limiting the generality of the foregoing, each Grantor hereby gives
Collateral Agent the power and right, on behalf of such Grantor, without notice
to or assent by such Grantor, to do any of the following when an Event of
Default shall be continuing:
 
(i)           in the name of such Grantor, in its own name or otherwise, take
possession of and indorse and collect any check, draft, note, acceptance or
other instrument for the payment of moneys due under any account or general
intangible or with respect to any other Collateral and file any claim or take
any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by Collateral Agent for the purpose of collecting any such moneys
due under any account or general intangible or with respect to any other
Collateral whenever payable;
 
(ii)          in the case of any Intellectual Property owned by or licensed to
the Grantors, execute, deliver and have recorded any document that Collateral
Agent may request to evidence, effect, publicize or record Collateral Agent’s
security interest in such Intellectual Property and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby;
 
(iii)         pay or discharge taxes and Liens levied or placed on or threatened
against any Collateral, effect any repair or pay any insurance called for by the
terms of the Loan Agreement (including all or any part of the premiums therefor
and the costs thereof);
 
 
16

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

 
 
(iv)         execute, in connection with any sale provided for in Section 6.1 or
6.5, any document to effect or otherwise necessary or appropriate in relation to
evidence the sale of any Collateral; or
 
(v)          (A) direct any party liable for any payment under any Collateral to
make payment of any moneys due or to become due thereunder directly to
Collateral Agent or as Collateral Agent shall direct, (B) ask or demand for, and
collect and receive payment of and receipt for, any moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any
Collateral, (C) sign and indorse any invoice, freight or express bill, bill of
lading, storage or warehouse receipt, draft against debtors, assignment,
verification, notice and other document in connection with any Collateral, (D)
commence and prosecute any suit, action or proceeding at law or in equity in any
court of competent jurisdiction to collect any Collateral and to enforce any
other right in respect of any Collateral, (E) defend any actions, suits,
proceedings, audits, claims, demands, orders or disputes brought against such
Grantor with respect to any Collateral, (F) settle, compromise or adjust any
such actions, suits, proceedings, audits, claims, demands, orders or disputes
and, in connection therewith, give such discharges or releases as Collateral
Agent may deem appropriate, (G) assign any Intellectual Property owned by the
Grantors or any IP Licenses of the Grantors throughout the world on such terms
and conditions and in such manner as Collateral Agent shall in its sole
discretion determine, including the execution and filing of any document
necessary to effectuate or record such assignment and (H) generally, sell,
assign, convey, transfer or grant a Lien on, make any Contractual Obligation
with respect to and otherwise deal with, any Collateral as fully and completely
as though Collateral Agent were the absolute owner thereof for all purposes and
do, at Collateral Agent’s option, at any time or from time to time, all acts and
things that Collateral Agent deems necessary to protect, preserve or realize
upon any Collateral and the Secured Parties’ security interests therein and to
effect the intent of the Loan Documents, all as fully and effectively as such
Grantor might do.
 
(vi)         If any Grantor fails to perform or comply with any Contractual
Obligation contained herein, Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such Contractual Obligation.
 
(b)           The expenses of Collateral Agent incurred in connection with
actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate of the lesser of 12% per annum or the highest rate permitted
by law, from the date of payment by Collateral Agent to the date reimbursed by
the relevant Grantor, shall be payable by such Grantor to Collateral Agent on
demand.
 
(c)           Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue of this Section 7.1.  All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security
interests created hereby are released.
 
 
17

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

 
 
Section 7.2                   Authorization to File Financing Statements.  Each
Grantor authorizes Collateral Agent, at any time and from time to time, to file
or record financing statements, amendments thereto, and other filing or
recording documents or instruments with respect to any Collateral in such form
and in such offices as Collateral Agent reasonably determines appropriate to
perfect the security interests of Collateral Agent under this Agreement, and
such financing statements and amendments may described the Collateral covered
thereby as “all assets of the debtor”.  A photographic or other reproduction of
this Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any
jurisdiction.  Such Grantor also hereby ratifies its authorization for
Collateral Agent to have filed any initial financing statement or amendment
thereto under the UCC (or other similar laws) in effect in any jurisdiction if
filed prior to the date hereof.
 
Section 7.3                   Authority of Collateral Agent.  Each Grantor
acknowledges that the rights and responsibilities of Collateral Agent under this
Agreement with respect to any action taken by Collateral Agent or the exercise
or non-exercise by Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between Collateral Agent and the other Secured
Parties, be governed by the Loan Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
Collateral Agent and the Grantors, Collateral Agent shall be conclusively
presumed to be acting as Collateral Agent for the Secured Parties with full and
valid authority so to act or refrain from acting, and no Grantor shall be under
any obligation or entitlement to make any inquiry respecting such authority.
 
Section 7.4                   Duty; Obligations and Liabilities.  (a) Duty of
Collateral Agent.  Collateral Agent’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession shall
be to deal with it in the same manner as Collateral Agent deals with similar
property for its own account.  The powers conferred on Collateral Agent
hereunder are solely to protect Collateral Agent’s interest in the Collateral
and shall not impose any duty upon Collateral Agent to exercise any such
powers.  Collateral Agent shall be accountable only for amounts that it receives
as a result of the exercise of such powers shall not be responsible to any
Grantor for any act or failure to act hereunder, except for its own gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction.  In addition, Collateral Agent shall not be liable or responsible
for any loss or damage to any Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehousemen, carrier,
forwarding agency, consignee or other bailee if such Person has been selected by
Collateral Agent in good faith.
 
 
18

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

 
 
(b)           Obligations and Liabilities with respect to Collateral.  No
Secured Party shall be liable for failure to demand, collect or realize upon any
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to any
Collateral.  The powers conferred on Collateral Agent hereunder shall not impose
any duty upon any other Secured Party to exercise any such powers.  The other
Secured Parties shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers, and neither they nor any of their
respective officers, directors, employees or Collateral Agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.
 
ARTICLE VIII
 
MISCELLANEOUS
 
Section 8.1                   Reinstatement.  Each Grantor agrees that, if any
payment made by any Loan Party or other Person and applied to the Secured
Obligations is at any time annulled, avoided, set aside, rescinded, invalidated,
declared to be fraudulent or preferential or otherwise required to be refunded
or repaid, or the proceeds of any Collateral are required to be returned by any
Secured Party to such Loan Party, its estate, trustee, receiver or any other
party, including any Grantor, under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
any Lien or other Collateral securing such liability shall be and remain in full
force and effect, as fully as if such payment had never been made.  If, prior to
any of the foregoing, any Lien or other Collateral securing such Grantor’s
liability hereunder shall have been released or terminated by virtue of the
foregoing, such Lien, other Collateral or provision shall be reinstated in full
force and effect and such prior release, termination, cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect the
obligations of any such Grantor in respect of any Lien or other Collateral
securing such obligation or the amount of such payment.
 
Section 8.2                   Release of Collateral.  Upon the earlier to occur
of (a) repayment in full of all obligations under the Bridge Note, provided that
no Event of Default has occurred and is continuing, and (b) repayment in full of
all obligations under Revolver Credit Agreement, termination of all commitments
thereunder and the release of the Collateral pursuant to Section 8.10(b)(iii) of
the Revolver Credit Agreement, the Collateral shall be released from the Lien
created hereby and this Agreement and all obligations (other than those
expressly stated to survive such termination) of Collateral Agent and each
Grantor hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors without affecting any collateral or rights and remedies
of Collateral Agent under any other Loan Document.  Each Grantor is hereby
authorized to file UCC amendments at such time evidencing the termination of the
Liens on the Collateral so released pursuant to this Section so long as such
Collateral does include the Real Estate Collateral or the Equipment Facility
Collateral.  At the request of any Grantor following any such termination,
Collateral Agent shall deliver to such Grantor any Collateral of such Grantor
held by Collateral Agent hereunder and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
 
 
19

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

 
 
Section 8.3                   Independent Obligations.  The obligations of each
Grantor hereunder are independent of and separate from the Secured Obligations
and the Guaranteed Obligations.  If any Secured Obligation or Guaranteed
Obligation is not paid when due, or upon any Event of Default, Collateral Agent
may, at its sole election, proceed directly and at once, without notice, against
any Grantor and any Collateral to collect and recover the full amount of any
Secured Obligation or Guaranteed Obligation then due, without first proceeding
against any other Grantor, any other Loan Party or any other Collateral and
without first joining any other Grantor or any other Loan Party in any
proceeding.
 
Section 8.4                   No Waiver by Course of Conduct.  No Secured Party
shall by any act (except by a written instrument pursuant to Section 8.5),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default.  No
failure to exercise, nor any delay in exercising, on the part of any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that such Secured Party would otherwise have on any future
occasion.
 
Section 8.5                   Amendments in Writing.  None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in writing signed by Grantors and the Collateral Agent.
 
Section 8.6                   [Intentionally Omitted.]
 
Section 8.7                   Notices.  All notices, requests and demands to or
upon Collateral Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 11.03 of the Loan Agreement; provided, however, that any
such notice, request or demand to or upon any Grantor shall be addressed to the
Borrowers’ notice address set forth in Annex I to the Loan Agreement.
 
Section 8.8                   Successors and Assigns.  This Agreement shall be
binding upon the successors and assigns of each Grantor and shall inure to the
benefit of each Secured Party and their successors and assigns; provided,
however, that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of Collateral
Agent.
 
Section 8.9                   Counterparts.  This Agreement may be executed in
any number of counterparts and by different parties 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.  Signature
pages may be detached from multiple separate counterparts and attached to a
single counterpart.  Delivery of an executed signature page of this Agreement by
facsimile transmission or by Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.
 
 
20

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

 
 
Section 8.10                 Severability.  Any provision of this Agreement
being held illegal, invalid or unenforceable in any jurisdiction shall not
affect any part of such provision not held illegal, invalid or unenforceable,
any other provision of this Agreement or any part of such provision in any other
jurisdiction.
 
Section 8.11                 Governing Law.  This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
 
Section 8.12                 Prior Lien; Intercreditor Agreement.  Collateral
Agent acknowledges and agrees that Revolver Agent has a prior first priority
Lien on all Collateral other than the Real Estate Collateral.  To the extent
that any provision herein is contrary to the terms and provisions of the
Intercreditor Agreement, the terms and provisions of the Intercreditor Agreement
shall control unless the Intercreditor Agreement has been terminated in
accordance with the terms thereof.
 
Section 8.13                 Waiver of Jury Trial.  EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT
TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO
(WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A)
CERTIFIES THAT NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12.
 
[Signature Pages Follow]
 
 
21

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

 
 
IN WITNESS WHEREOF, each of the undersigned has caused this Security Agreement
to be duly executed and delivered as of the date first above written.
 

 
APIO, INC., a Delaware corporation,
as a Grantor
 
           
By:
/s/ Gregory S. Skinner       Name: Gregory S. Skinner       Title: Vice
President  

 
 

 
CAL EX TRADING COMPANY, a Delaware corporation,
as a Grantor
 
           
By:
/s/ Gregory S. Skinner       Name: Gregory S. Skinner       Title: Vice
President  

 

[Signature Page to Security Agreement]
 
 
 

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

 
 

 
GREEN LOGISTICS, INC., an Ohio corporation,
as a Grantor
 
           
By:
/s/ Gregory S. Skinner       Name: Gregory S. Skinner       Title: Treasurer  

[Signature Page to Security Agreement]
 
 
 

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

 

ACCEPTED AND AGREED
as of the date first above written:

 
GENERAL ELECTRIC CAPITAL CORPORATION,
as Collateral Agent

By: /s/ Richard S.
Hulit                                                               
Name: Richard S. Hulit
Title: Transaction and Syndication Manager
 

[Signature Page to Security Agreement]
 
 
 

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

 

EXHIBIT A TO SECURITY AGREEMENT
 
“Affiliate” means, with respect to any Person, each officer, director, general
partner or joint-venturer of such Person and any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person; provided, however, that no Secured Party shall be an Affiliate of any
Loan Party or of any Subsidiary of any Loan Party solely by reason of the
provisions of the Loan Documents.  For purposes of this definition, “control”
means the possession of either (a) the power to vote, or the beneficial
ownership of, ten percent (10%) or more of the voting Stock of such Person
(either directly or through the ownership of Stock Equivalents) or (b) the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
 
“Capital Lease” means, with respect to any Person, any lease of, or other
arrangement conveying the right to use, any Property by such Person as lessee
that has been or should be accounted for as a capital lease on a balance sheet
of such Person prepared in accordance with GAAP.
 
“Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or
directly, unconditionally and fully guaranteed or insured by the United States
federal government or (ii) issued by any agency of the United States federal
government the obligations of which are fully backed by the full faith and
credit of the United States federal government, (b) any readily-marketable
direct obligations issued by any other agency of the United States federal
government, any state of the United States or any political subdivision of any
such state or any public instrumentality thereof, in each case having a rating
of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial
paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person
organized under the laws of any state of the United States, (d) any
Dollar-denominated time deposit, insured certificate of deposit, overnight bank
deposit or bankers’ acceptance issued or accepted by (i) Lender or (ii) any
commercial bank that is (A) organized under the laws of the United States, any
state thereof or the District of Columbia, (B) “adequately capitalized” (as
defined in the regulations of its primary federal banking regulators) and (C)
has Tier 1 capital (as defined in such regulations) in excess of $250,000,000
and (e) shares of any United States money market fund that (i) has substantially
all of its assets invested continuously in the types of investments referred to
in clause (a), (b), (c) or (d) with maturities as set forth in the proviso
below, (ii) has net assets in excess of $500,000,000 and (iii) has obtained from
either S&P or Moody’s the highest rating obtainable for money market funds in
the United States; provided, however, that the maturities of all obligations
specified in any of clause (a), (b), (c) or (d) shall not exceed 365 days.
 
“Contingent Obligation” means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person, with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto.
 
“Contractual Obligations” means, as to any Person, any provision of any security
(whether in the nature of Stock, Stock Equivalents or otherwise) issued by such
Person or of any agreement, undertaking, contract, indenture, mortgage, deed of
trust or other instrument, document or agreement (other than a Loan Document) to
which such Person is a party or by which it or any of its Property is bound or
to which any of its Property is subject.
 
 
 

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

 
 
“Control Agreement” means, with respect to any deposit account, securities
account, commodity account, securities entitlement or commodity contract, an
agreement, in form and substance satisfactory to Revolver Agent, among Revolver
Agent, the financial institution or other Person at which such account is
maintained or with which such entitlement or contract is carried and the Loan
Party maintaining such account, effective to grant “control” (within the meaning
of Articles 8 and 9 under the applicable UCC) over such account to Revolver
Agent.
 
“Copyrights” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to copyrights and
all mask work, database and design rights, whether or not registered or
published, all registrations and recordations thereof and all applications in
connection therewith.
 
“Governmental Authority” means any nation, sovereign or government, any state or
other political subdivision thereof, any agency, authority or instrumentality
thereof and any entity or authority exercising executive, legislative, taxing,
judicial, regulatory or administrative functions of or pertaining to government,
including any central bank, stock exchange, regulatory body, arbitrator, public
sector entity, supra-national entity (including the European Union and the
European Central Bank) and any self-regulatory organization (including the
National Association of Insurance Commissioners).
 
“Indebtedness” of any Person means, without duplication: (a) all indebtedness
for borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of Property or services (other than trade payables
entered into in the Ordinary Course of Business); (c) the face amount of all
letters of credit issued for the account of such Person and without duplication,
all drafts drawn thereunder and all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments issued
by such Person; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of Property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to Property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such Property); (f) all Capital Lease Obligations; (g) the principal
balance outstanding under any synthetic lease, off-balance sheet loan or similar
off balance sheet financing product; (h) all indebtedness referred to in clauses
(a) through (g) secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
Property (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
indebtedness; and (i) all Contingent Obligations described in clause (a) of the
definition thereof in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (i).
 
“Intellectual Property” means all rights, title and interests in or relating to
intellectual property and industrial property arising under any Requirement of
Law and all IP Ancillary Rights relating thereto, including all Copyrights,
Patents, Trademarks, Internet Domain Names, Trade Secrets and IP Licenses.
 
 
2

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

 
 
“Internet Domain Name” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
internet domain names.
 
“IP Ancillary Rights” means, with respect to any Intellectual Property, as
applicable, all foreign counterparts to, and all divisionals, reversions,
continuations, continuations-in-part, reissues, reexaminations, renewals and
extensions of, such Intellectual Property and all income, royalties, proceeds
and Liabilities at any time due or payable or asserted under or with respect to
any of the foregoing or otherwise with respect to such Intellectual Property,
including all rights to sue or recover at law or in equity for any past, present
or future infringement, misappropriation, dilution, violation or other
impairment thereof, and, in each case, all rights to obtain any other IP
Ancillary Right.
 
“IP License” means all Contractual Obligations (and all related IP Ancillary
Rights), whether written or oral, granting any right, title and interest in or
relating to any Intellectual Property.
 
“Liabilities” means all claims, actions, suits, judgments, damages, losses,
liability, obligations, responsibilities, fines, penalties, sanctions, costs,
fees, taxes, commissions, charges, disbursements and expenses (including those
incurred upon any appeal or in connection with the preparation for and/or
response to any subpoena or request for document production relating thereto),
in each case of any kind or nature (including interest accrued thereon or as a
result thereto and fees, charges and disbursements of financial, legal and other
advisors and consultants), whether joint or several, whether or not indirect,
contingent, consequential, actual, punitive, treble or otherwise.
 
“Patents” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to letters patent
and applications therefor.
 
“Permits” means, with respect to any Person, any permit, approval,
authorization, license, registration, certificate, concession, grant, franchise,
variance or permission from, and any other Contractual Obligations with, any
Governmental Authority, in each case whether or not having the force of law and
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
 
“Permitted Liens” means
 
(a)           any Lien existing on the Property of a Loan Party or a Subsidiary
of a Loan Party on the Closing Date and set forth in Schedule 5.1 to the
Revolver Credit Agreement securing Indebtedness outstanding on such date,
including replacement Liens on the Property currently subject to such Liens
securing Indebtedness;
 
(b)           any Lien created under any Loan Document;
 
(c)           Liens for taxes, fees, assessments or other governmental charges
which are not past due or remain payable without penalty, or Liens for Contested
Taxes;
 
(d)           carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s or other similar Liens arising in the Ordinary Course of Business
(including the interest of the suppliers of a Loan Party’s Inventory as
addressed by the PACA Reserve) which are not past due or remain payable without
penalty or which are being contested in good faith and by appropriate
proceedings diligently prosecuted, which proceedings have the effect of
preventing the forfeiture or sale of the Property subject thereto and for which
adequate reserves in accordance with GAAP are being maintained;
 
 
3

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

 
 
(e)           Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the Ordinary Course of Business in connection with
workers’ compensation, unemployment insurance and other social security
legislation or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeals bonds, bids, leases, governmental contract,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money) or to
secure liability to insurance carriers;
 
(f)           Liens consisting of judgment or judicial attachment liens (other
than for payment of taxes, assessments or other governmental charges), provided
that the enforcement of such Liens is effectively stayed and all such Liens
secure claims in the aggregate at any time outstanding for the Loan Parties and
their Subsidiaries not exceeding $350,000;
 
(g)           easements, rights-of-way, covenants, zoning and other
restrictions, minor defects or other irregularities in title, and other similar
encumbrances incurred in the Ordinary Course of Business which, either
individually or in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the Property subject
thereto or interfere in any material respect with the ordinary conduct of the
businesses of any Loan Party or any Subsidiary of any Loan Party;
 
(h)           Liens on any Property acquired or held by any Loan Party or any
Subsidiary of any Loan Party securing Indebtedness incurred or assumed for the
purpose of financing (or refinancing) all or any part of the cost of acquiring
such Property and permitted under Section 5.5(d) of the Revolver Credit
Agreement; provided that (i) any such Lien attaches to such Property
concurrently with or within 20 days after the acquisition thereof, (ii) such
Lien attaches solely to the Property so acquired in such transaction and the
proceeds thereof, and (iii) the principal amount of the debt secured thereby
does not exceed one hundred percent (100%) of the cost of such Property;
 
(i)           Liens securing Capital Lease Obligations permitted under
Section 5.5(d) of the Revolver Credit Agreement;
 
(j)           any interest or title of a lessor or sublessor under any lease
permitted by the Revolver Credit Agreement;
 
(k)           Liens arising from the filing of precautionary uniform commercial
code financing statements with respect to any lease permitted by the Revolver
Credit Agreement;
 
(l)           non-exclusive licenses and sublicenses granted by a Loan Party and
leases or subleases (by a Loan Party as lessor or sublessor) to third parties in
the Ordinary Course of Business not interfering with the business of the Loan
Parties or any of their Subsidiaries;
 
 
4

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

 
 
(m)           Liens in favor of collecting banks arising by operation of law
under Section 4-210 of the Uniform Commercial Code or, with respect to
collecting banks located in the State of New York, under 4-208 of the Uniform
Commercial Code;
 
(n)           Liens (including the right of set-off) in favor of a bank or other
depository institution arising as a matter of law encumbering deposits;
 
(o)           Liens in favor of customs and revenue authorities arising as a
matter of law which secure payment of customs duties in connection with the
importation of goods in the Ordinary Course of Business; and
 
(p)           any Lien created under the Equipment Facility Documents or the
Revolving Facility Documents.
 
“Person” means any individual, partnership, corporation (including a business
trust and a public benefit corporation), joint stock company, estate,
association, firm, enterprise, trust, limited liability company, unincorporated
association, joint venture and any other entity or Governmental Authority.
 
“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, and whether tangible or intangible.
 
“Requirement of Law” means, with respect to any Person, the common law and any
federal, state, local, foreign, multinational or international laws, statutes,
codes, treaties, standards, rules and regulations, guidelines, ordinances,
orders, judgments, writs, injunctions, decrees (including administrative or
judicial precedents or authorities) and the interpretation or administration
thereof by, and other determinations, directives, requirements or requests of,
any  Governmental Authority, in each case whether or not having the force of law
and that are applicable to or binding upon such Person or any of its Property or
to which such Person or any of its Property is subject.
 
“Stock” means all shares of capital stock (whether denominated as common stock
or preferred stock), equity interests, beneficial, partnership or membership
interests, joint venture interests, participations or other ownership or profit
interests in or equivalents (regardless of how designated) of or in a Person
(other than an individual), whether voting or non-voting.
 
“Stock Equivalents” means all securities convertible into or exchangeable for
Stock or any other Stock Equivalent and all warrants, options or other rights to
purchase, subscribe for or otherwise acquire any Stock or any other Stock
Equivalent, whether or not presently convertible, exchangeable or exercisable.
 
“Subsidiary” means, with respect to any Person, any corporation, partnership,
joint venture, limited liability company, association or other entity, the
management of which is, directly or indirectly, controlled by, or of which an
aggregate of more than fifty percent (50%) of the voting Stock is, at the time,
owned or controlled directly or indirectly by, such Person or one or more
Subsidiaries of such Person.
 
“Trade Secrets” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to trade
secrets.
 
 
5

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

 
 
“Trademark” means all rights, title and interests (and all related IP Ancillary
Rights) arising under any Requirement of Law in or relating to trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos and other source or business
identifiers and, in each case, all goodwill associated therewith, all
registrations and recordations thereof and all applications in connection
therewith.
 
 
 
6