Exhibit 10.9

EXECUTION COPY

 

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SECURITY AGREEMENT

dated as of July 30, 2007

among

THE ENTITIES LISTED ON

SCHEDULE A HERETO,

as Pledgors

and

LB I GROUP INC.,

as Collateral Agent

 

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Table of Contents

 

          Page ARTICLE 1 SECURITY INTEREST

Section 1.01

   Grant of Security Interest    1

Section 1.02

   Validity and Priority of Security Interest    1

Section 1.03

   Maintenance of Status of Security Interest, Collateral and Rights    1

Section 1.04

   Evidence of Status of Security Interest    2

Section 1.05

   Pledgors Remain Obligated; Collateral Agent and Other Secured Parties Not
Obligated    2 ARTICLE 2 DISPOSITION OF COLLATERAL PROCEEDS

Section 2.01

   General    2

Section 2.02

   [RESERVED]    3

Section 2.03

   Interest on Collateral    3 ARTICLE 3 CERTAIN REPRESENTATIONS AND WARRANTIES

Section 3.01

   Accuracy of Security Agreement Questionnaire    3

Section 3.02

   Required Taxes    3

Section 3.03

   Intellectual Property    3 ARTICLE 4 CERTAIN COVENANTS

A.

   General    4

Section 4.01

   Certain Matters Relating to Preservation of Status of Security Interest    4

Section 4.02

   Ownership and Defense of Collateral    4

Section 4.03

   Requested Information; Further Assurances    5

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Section 4.04

   Collection of Collateral Obligations    5

Section 4.05

   New Pledgors    5

B.

   Receivables    5

Section 4.06

   Modification of Terms    5

Section 4.07

   Verification    6

Section 4.08

   Information    6

C.

   General Intangibles    6

Section 4.09

   Performance of Terms    6

Section 4.10

   Modification of Terms    9

Section 4.11

   Verification    9

Section 4.12

   Schedule of Certain General Intangibles    9

D.

   Inventory    9

Section 4.13

   Location of Inventory    9

E.

   Equipment and Other Goods    10

Section 4.14

   Location of Equipment and Other Goods    10

Section 4.15

   Evidence of Ownership of Equipment and Other Goods    10

F.

   Investment Property and Instruments    10

Section 4.16

   Status of Securities; Instruments Collateral    10

Section 4.17

   Certain Rights of Collateral Agent and Pledgors    11

Section 4.18

   No Amendments, etc., of Investment Property; Instruments Collateral    11

Section 4.19

   No Disposition of Investment Property Collateral; Instruments    11

Section 4.20

   No Consent to Liens    12

Section 4.21

   Jurisdictions of Securities and Commodity Intermediaries    12

Section 4.22

   Information    12

Section 4.23

   Certain Agreements of Pledgors as Issuers and Holders of Equity Interests   
12

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G.    Materiality Qualifications    13

Section 4.24

   Requirement of Material Adverse Effect    13 ARTICLE 5 EVENT OF DEFAULT

A.

   Proceeds    13

Section 5.01

   Application of Proceeds    13

B.

   Remedies    13

Section 5.02

   General    13

Section 5.03

   Collateral Proceeds    14

Section 5.04

   Inventory; Equipment and Other Goods    16

Section 5.05

   Intellectual Property    16

Section 5.06

   Restricted Offering Dispositions    16

Section 5.07

   Notice of Disposition of Collateral    16 ARTICLE 6 MISCELLANEOUS

Section 6.01

   Expenses of Each Pledgor’s Agreements and Duties    17

Section 6.02

   Collateral Agent’s Right to Perform on a Pledgor’s Behalf    17

Section 6.03

   Collateral Agent’s Right to Use Agents and to Act in Name of the Pledgors   
17

Section 6.04

   No Interference, Compensation or Expense    17

Section 6.05

   Limitation of Obligations with Respect to Collateral    17

Section 6.06

   Rights of Collateral Agent under UCC and Applicable Law    18

Section 6.07

   Waivers of Rights Inhibiting Enforcement    18

Section 6.08

   Power of Attorney    18

Section 6.09

   Nature of Pledgor’s Obligations    19

Section 6.10

   No Release of Pledgors    19

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Section 6.11

   Certain Other Waivers    20

Section 6.12

   Independent Credit Evaluation    21

Section 6.13

   Limitation on Amount of Obligations Secured    21

Section 6.14

   Continuance and Acceleration of Secured Obligations upon Certain Events    21

Section 6.15

   Recovered Payments    22

Section 6.16

   Evidence of Secured Obligations    22

Section 6.17

   Binding Nature of Certain Adjudications    22

Section 6.18

   Subordination of Rights Against the Company, Guarantors and Other Collateral.
   22

Section 6.19

   Termination of Security Interest    23

Section 6.20

   Designation of Notice    23

Section 6.21

   Extension of Payment Dates    23

Section 6.22

   GOVERNING LAW    23

Section 6.23

   LIMITATION OF LIABILITY    24

Section 6.24

   Counterparts    24

Section 6.25

   Entire Agreement    24

Section 6.26

   Successors and Assigns    24

Section 6.27

   Delivery of Opinions Authorized    24

Section 6.28

   Excluded Collateral    24 ARTICLE 7 INTERPRETATION

Section 7.01

   Definitional Provisions    25

Section 7.02

   Other Interpretative Provisions    33

Section 7.03

   Representations and Warranties    33

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Schedule A

   List of Pledgors

Schedule 1.03

   Schedule of Required Action

Schedule 3.02

   Schedule of Required Recording and Other Taxes and Recording, Filing and
Other Fees and Charges

Schedule 3.03

   Intellectual Property

Schedule 4.16(a)

   Schedule of Initial Investment Property and Instruments Collateral

Schedule 4.18

   Schedule of Restrictions

Schedule 5.07

   Notice of Disposition of Collateral

Schedule 7.01(b)-1

   Schedule of Bank Accounts

Schedule 7.01(b)-2

   Schedule of Commercial Tort Claims

Schedule 7.01(b)-3

   Schedule of Constituent Collateral

Schedule 7.01(b)-4

   Schedule of Letters of Credit

Exhibit A

   Form of Security Agreement Questionnaire

Exhibit B

   Form of Security Agreement Joinder

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SECURITY AGREEMENT

Dated as of July 30, 2007

In consideration of (i) the execution and delivery of (i) the Senior Secured
Note and Warrant Purchase Agreement, dated as of July 30, 2007 (the “Note
Purchase Agreement”), by and among Orthovita, Inc., a Pennsylvania corporation
(the “Company”), the financial institutions and other institutional lenders
listed as purchasers on the signature pages thereof (the “Purchasers”), and LB I
Group Inc., a Delaware corporation, as Collateral Agent and (ii) the purchase
of, and making the Loans under, each 10% Senior Secured Promissory Note,
executed by the Company in favor of each Purchaser, each of, the Company, and
its Subsidiaries listed on Schedule A hereto (each, a “Pledgor” and
collectively, the “Pledgors”) hereby agree with the Collateral Agent, as follows
(with certain terms used herein being defined in Article 7):

ARTICLE 1

SECURITY INTEREST

Section 1.01 Grant of Security Interest. To secure the payment, observance and
performance of the Secured Obligations, each Pledgor hereby mortgages, pledges
and assigns the Collateral to the Collateral Agent, and grants to the Collateral
Agent a valid, first priority, continuing security interest in, and a continuing
lien upon, the Collateral.

Section 1.02 Validity and Priority of Security Interest. Each Pledgor agrees
that (a) the Security Interest shall at all times be valid, first priority,
perfected and enforceable against such Pledgor and all third parties, in
accordance with the terms hereof, as security for the Secured Obligations, and
(b) the Collateral shall not at any time be subject to any Lien, other than a
Permitted Lien, that is prior to, on a parity with or junior to such Security
Interest, except that, unless an Event of Default exists, this Section 1.02
shall not apply to (i) (A) payments under Payment Rights and Ordinary
Distributions that such Pledgor is entitled to, and does, receive and retain,
and (B) withdrawals from Bank Accounts that such Pledgor is entitled to make,
and makes, pursuant to Section 2.01(a) (but this Section shall apply to any
asset that would otherwise constitute Collateral acquired with such Collateral
or its proceeds) and (ii) Collateral disposed of in a disposition that is
permitted under the Related Documents (but this Section shall apply to any asset
that would otherwise constitute Collateral acquired with such Collateral or its
proceeds).

Section 1.03 Maintenance of Status of Security Interest, Collateral and Rights.

(a) Required Action. Each Pledgor shall take all action, including the actions
specified on Schedule 1.03, that may be necessary, or that the Collateral Agent
may reasonably request, so as at all times (i) to maintain the validity,
perfection, enforceability and priority of the Security Interest in the
Collateral in conformity with the requirements of Section 1.02, (ii) to protect
and preserve the Collateral and (iii) to protect and preserve, and to enable the
exercise or enforcement of, the rights of the Collateral Agent therein and
hereunder and under the other Collateral Documents.

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(b) Authorized Action. The Collateral Agent is hereby authorized to file one or
more financing or continuation statements or amendments thereto in the name of
any Pledgor, without the signature thereof, including the filing of a financing
statement describing the Collateral as “all assets”, “all personal property of
the Pledgor now owned or hereafter acquired” or “all assets now owned or
hereafter acquired by the Pledgor or in which Pledgor otherwise has rights” or
words to that effect; provided however, that any such collateral description
shall expressly exclude, and otherwise disclaim any interest by the Collateral
Agent in and to, the Excluded Assets. A carbon, photographic or other
reproduction of this Agreement or of any financing statement filed in connection
with this Agreement shall be sufficient as a financing statement. The filing by
the Collateral Agent in good faith of a financing statement which inadvertently
covers property that is not Collateral shall nonetheless be deemed an authorized
filing, provided, however, and the Collateral Agent hereby agrees, at the
Pledgor’s request and the Collateral Agent’s expense, to amend any such filings
to correct any errors in the description of the Collateral contained therein.

Section 1.04 Evidence of Status of Security Interest. Each Pledgor shall from
time to time, upon request of the Collateral Agent, deliver to the Collateral
Agent evidence of the Security Interest, as the Collateral Agent may request.

Section 1.05 Pledgors Remain Obligated; Collateral Agent and Other Secured
Parties Not Obligated. The grant by each Pledgor to the Collateral Agent of the
Security Interest shall not (a) relieve such Pledgor of any Liability to any
Person under or in respect of any of the Collateral or (b) impose on the
Collateral Agent or the other Secured Parties any such Liability or any
Liability for any act or omission on the part of such Pledgor relative thereto.

ARTICLE 2

DISPOSITION OF COLLATERAL PROCEEDS

Section 2.01 General.

(a) Rights of Pledgors. Each Pledgor shall be entitled to (i)(A) receive and
retain all payments under Payment Rights and Ordinary Distributions, and
(B) make withdrawals from all Bank Accounts and retain such withdrawals, and
(ii) obtain originals of all Instruments, Chattel Paper, Securities, Letters of
Credit and Documents that are Collateral which shall be made available to each
Pledgor upon request for purposes of presentation, collection or renewal (any
such arrangement to be effected to the extent deemed appropriate by the
Collateral Agent against a trust receipt or like document). Each withdrawal
under clause (i)(B) and request under clause (ii) of the preceding sentence
shall constitute a Representation and Warranty by such Pledgor that no Event of
Default is continuing. No delivery of any Collateral pursuant to clause (ii) of
the preceding sentence shall terminate the Security Interest therein and each
Pledgor shall, within 18 days of its receipt of any such Collateral, either
return such Collateral or its proceeds to the Collateral Agent or such other
Person as the Collateral Agent may designate or, should the Security Interest in
any such proceeds not be perfectible by possession, take such other action as
may be required by Section 1.03(a) to continue the perfection of the Security
Interest therein. During an Event of Default, the Collateral Agent shall have
with respect to all Collateral held by or for its account all of the rights
afforded it under Article 5.

 

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(b) Rights of Collateral Agent. Subject to each Pledgor’s rights under
Section 2.01(a) and Applicable Law and except in the case of proceeds of
Collateral as to which a different disposition is expressly provided for herein
or in any other Related Document, the Collateral Agent shall be entitled to
receive and retain all proceeds of Collateral, including all Extraordinary
Distributions. Subject to its rights under Section 2.01(a), any other Related
Document and Applicable Law, each Pledgor shall, should it receive any such
proceeds, hold all such proceeds in trust for the Collateral Agent. If an Event
of Default exists, the Collateral Agent shall take all action with respect to
all Collateral held by or for its account, to enforce all rights afforded the
Collateral Agent under Article 5. The Collateral Agent is hereby irrevocably
authorized, either in the name and on behalf of any Pledgor or in the Collateral
Agent’s own name, to endorse and deposit, or cause to be deposited, for
collection, present, draw upon or under, or otherwise take action to realize
upon, all Instruments, Chattel Paper, Securities, Letters of Credit and
Documents that are Collateral for the purpose of holding and disposing of the
proceeds thereof in accordance with the terms hereof.

Section 2.02 [RESERVED]

Section 2.03 Interest on Collateral. No Collateral, including any proceeds of
property insurance, shall bear interest, except to the extent specifically
agreed to in writing by the Collateral Agent in this Agreement or in the Note
Purchase Agreement and, unless otherwise so agreed, any such interest shall be
Collateral.

ARTICLE 3

CERTAIN REPRESENTATIONS AND WARRANTIES

Each Pledgor represents and warrants as follows:

Section 3.01 Accuracy of Security Agreement Questionnaire. The Security
Agreement Questionnaire related to such Pledgor is, as of the date hereof,
complete and correct in all respects.

Section 3.02 Required Taxes. Except for those specified on Schedule 3.02Section
3.02, no recording or other Taxes or recording, filing or other fees or charges
are payable in connection with, arise out of, or are in any way related to, the
execution, delivery, performance, filing or recordation of any of the Collateral
Documents or the creation or perfection of the Security Interest.

Section 3.03 Intellectual Property. As of the date hereof, (a) Schedule 3.03
lists all Patents, Patent Licenses, Trademarks, Trademark Licenses, Copyrights
and Copyright Licenses, (b) each of such Patents, Patent Licenses, Trademarks,
Trademark Licenses, Copyrights and Copyright Licenses is subsisting, valid and
enforceable, and (c) each Pledgor is the sole and exclusive owner of the entire
right, title and interest in and to each of respective Patents, Trademarks and
Copyrights, subject to the Patent, Trademark and Copyright Licenses listed on
Schedule 3.03.

 

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ARTICLE 4

CERTAIN COVENANTS

Subject, in the case of each Section referred to therein, to the materiality
qualifications contained in the provisions of Section 4.24:

 

  A. General.

Section 4.01 Certain Matters Relating to Preservation of Status of Security
Interest. (a) Each Pledgor shall (i) remain a Person of the type specified in
its respective Security Agreement Questionnaire and (ii) will not dissolve or
merge or consolidate with, or into, any Person, except for, to the extent
permitted under the Note Purchase Agreement, mergers after which the Security
Interest complies with the requirements of Section 1.02.

(b) Change of Name, Identity, etc. Each Pledgor shall not change its
(i) organizational identification number from that specified in its Security
Agreement Questionnaire (or, if no such number is specified, adopt any such
number) or (ii) name, identity or corporate structure or jurisdiction of
incorporation, unless, in any case, (A) the Collateral Agent shall have had not
less than 30 nor more than 75 days prior written notice thereof, and
(B) thereafter (1) no Default exists, and (2) the Security Interest complies
with the requirements of Section 1.02.

(c) Chief Executive Office. Each Pledgor which is not a registered company shall
maintain its chief executive office and, if different from its chief executive
office, each office where the books and records relating to any Receivables or
General Intangibles are kept only at, and shall keep a copy of its books and
records at or in transit to, (i) a location specified therefor in its respective
Security Agreement Questionnaire or (ii) any other location provided that
(A) the Collateral Agent has received not less than 60 days prior notice of such
location, (B) such location is within one of the 50 States of the United States
or the District of Columbia and (C) (1) the Security Interest, with respect to
any Collateral at such location, or affected by the situs of such location,
conforms to the requirements of Section 1.02 and (2) the Collateral Agent shall
have received, pursuant to its request, such evidence satisfactory to it to that
effect that it may request, including acknowledgment copies of financing
statements and opinions of counsel.

(d) Trade Names. Without giving 5 days’ prior notice to the Collateral Agent,
each Pledgor shall not do business under any name, trade name or trade style not
listed on its respective Security Agreement Questionnaire.

(e) Other Financing Statements. Except with respect to Permitted Liens, each
Pledgor shall not file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to the Collateral in which the Collateral Agent is not
named as the sole secured party, unless such filing is an authorized filing made
by or on behalf of the Collateral Agent.

Section 4.02 Ownership and Defense of Collateral. Each Pledgor shall at all
times (a) have Rights to each asset that is Collateral free from any right,
title or interest of any third Person and (b) defend the Collateral against the
claims and demands of all third Persons, except that this

 

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Section 4.02 shall not apply to (i) the interest in the Collateral and the
claims and demands of a holder of a Permitted Lien, but for only so long as such
Lien is a Permitted Lien, or (ii) Collateral to which Section 1.02 does not
apply.

Section 4.03 Requested Information; Further Assurances. In addition to such
other information as shall be specifically provided for herein, each Pledgor
shall furnish to the Collateral Agent such other information with respect to the
Collateral as the Collateral Agent or any Secured Party may reasonably request
from time to time. Each Pledgor hereto further agrees from time to time to do or
cause to be done and perform such other and further acts and execute and deliver
or cause to be executed and delivered any and all such other instruments as may
be required by law or reasonably requested by the Collateral Agent to protect
and maintain the respective rights and remedies of the Secured Parties
hereunder.

Section 4.04 Collection of Collateral Obligations. Subject to the rights of the
Collateral Agent hereunder, each Pledgor shall endeavor to collect from the
Collateral Debtor of each Collateral Obligation, when due, all amounts owing
thereunder, and shall apply all amounts so collected to the outstanding balance
of such Collateral Obligation, except that, unless an Event of Default shall
exist, this Section 4.04 shall not require such Pledgor to take any action not
in accordance with sound business judgment and its customary collection
practices as in effect from time to time.

Section 4.05 New Pledgors. Pursuant to Section 7.7 of the Note Purchase
Agreement, if a Pledgor shall at any time form or acquire any new Subsidiary
which is not a Pledgor hereunder, such Pledgor shall (i) promptly deliver to the
Collateral Agent a supplement to this Agreement, substantially in the form of
Exhibit B to this Agreement, duly completed and executed, (ii) promptly cause
such Subsidiary to complete and deliver a Security Agreement Questionnaire
substantially in the form of Exhibit A to this Agreement, and (iii) promptly
deliver an opinion of local counsel, in form and substance satisfactory to the
Collateral Agent, opining that, among other things, the description of the
Collateral is adequate under all Applicable Law for the purposes of perfecting
and maintaining the perfected status of such new Subsidiary’s Collateral.

 

  B. Receivables.

Section 4.06 Modification of Terms.

(a) Each Pledgor shall not enter into any agreement providing for any deduction
from any Receivable except for agreements that (i) are made in the ordinary
course of business and (ii) do not result in a Material Adverse Effect with
respect to any Pledgor.

(b) Each Pledgor shall not rescind or cancel any obligation evidenced by any
Receivable or modify any term thereof or make any adjustment with respect
thereto, or extend or renew the same, or compromise or settle any dispute,
claim, suit or legal proceeding relating thereto, without the prior written
consent of the Collateral Agent, except that, unless an Event of Default shall
exist, such Pledgor may, with respect to any Receivable (i) extend the time of
payment thereof, (ii) in the case of a Receivable, grant a refund or credit with
respect thereto for returned, damaged or non-complying merchandise or
(iii) settle the same for an amount less than

 

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the then unpaid balance thereof to the extent that, in the case of each of the
foregoing, such action is (a) in the ordinary course of its business and in
accordance with sound business judgment and its customary collection practices
as in effect from time to time, or (b) at any time, with respect to any
Receivables of a single Account Debtor, that individually, or in the aggregate,
do not exceed $100,000 in amount.

Section 4.07 Verification. If an Event of Default exists, the Collateral Agent
shall have the right, in the name and on the stationery of any Pledgor or in
such name as the Collateral Agent may select, to verify the validity, amount or
any other matter relating to any Receivable by mail, telephone or any other
means.

Section 4.08 Information.

(a) Master Address List and Other Documents. Each Pledgor shall deliver to the
Collateral Agent, as the same may reasonably request from time to time (i) a
master address list and an open items statement of each Collateral Debtor with
respect to its Receivables and (ii) copies of invoices, proofs of delivery,
repayment histories, present status reports, and such other information relating
to the Receivables and their status as the Collateral Agent or any Secured Party
may request; provided, however, that, if no Default exists or is continuing, no
Pledgor shall be required to provide the foregoing information more than twice
during its fiscal year.

(b) Material Contracts. Each Pledgor shall (i) supply the Collateral Agent with
such information with respect to each Material Contract as the Collateral Agent
may reasonably request, (ii) upon request of the Collateral Agent, give the
Collateral Agent a list of each Material Contract entered into after the date
hereof, and (iii) deliver to the Collateral Agent complete and correct copies of
each Material Contract requested by the Collateral Agent.

C. General Intangibles.

Section 4.09 Performance of Terms.

(a) All General Intangibles Other than Intellectual Property. Each Pledgor shall
duly fulfill all obligations on its part to be fulfilled under or in connection
with all General Intangibles, other than Intellectual Property, and shall do
nothing to impair the rights of the Collateral Agent therein.

(b) Patents.

(i) Each Pledgor will not, and will not permit any licensee or sublicensee to,
take any action or omit to take any action whereby any Patent or Patent License
may become invalid or unenforceable.

(ii) Each Pledgor will notify the Collateral Agent promptly (but in any event
within five Business Days) in writing if it knows, or has reason to know,
(A) that any Patent or Patent License is or may become invalid or unenforceable,
and (B) of the institution of, or any determination or material development in,
any proceeding, wherever pending, affecting adversely any such Patent or Patent
License or its rights thereunder.

 

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(iii) Whenever a Pledgor, either by itself or through any agent, employee,
licensee or designee, shall file an application for a Patent with any
Intellectual Property Recording Office, such Pledgor shall report such filing in
writing to the Collateral Agent within five Business Days after the last day of
the month in which such filing occurs.

(iv) Each Pledgor will take all reasonable and necessary action, including in
any proceeding before any Intellectual Property Recording Office, (A) to
preserve and maintain all rights in, to and under all Patents and Patent
Licenses, (B) to make appropriate application to the appropriate Intellectual
Property Recording Office for Patents on all unpatented but patentable
inventions, and (C) to prosecute each application for a Patent and obtain the
relevant Patent.

(v) In the event that any Patent is infringed by a third party, each Pledgor
shall promptly notify the Collateral Agent in writing after it learns thereof
and shall, promptly sue for infringement, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement, and take
such other action as such Pledgor shall reasonably deem appropriate under the
circumstances to protect such Patent, unless such Pledgor shall reasonably
determine, and promptly notify the Collateral Agent in writing, that such Patent
is no longer material to its business.

(c) Trademarks.

(i) Each Pledgor (either itself or through licensees) will (A) use each
Trademark on each and every class of goods or services to which such Trademark
is applicable so as to maintain such Trademark in full force and free from any
claim of abandonment for non-use, (B) maintain the quality of goods and services
offered under such Trademark, (C) employ such Trademark with the appropriate
notice of registration, (D) not adopt or use any mark which is confusingly
similar to or a colorable imitation of such Trademark, unless such mark is
subject to the Security Interest and the Security Interest with respect to such
mark conforms to the requirements of Section 1.02, and (E) not (and will not
permit any licensee or sublicensee thereof to) take any action or omit to take
any action whereby any Trademark may become invalid.

(ii) Each Pledgor will notify the Collateral Agent immediately in writing, if it
knows, or has reason to know, (A) that any application or registration relating
to any Trademark or Trademark License may become abandoned or dedicated, and
(B) of the institution of, or any determination or material development in, any
proceeding, wherever pending, affecting adversely such Pledgor’s ownership of
any Trademark or its right to register the same or to keep and maintain the
same.

(iii) Whenever a Pledgor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Trademark with any Intellectual Property Recording Office, such Pledgor shall
report such filing in writing to the Collateral Agent within five Business Days
after the last day of the month in which such filing occurs.

 

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(iv) Each Pledgor will take all reasonable and necessary action, including in
any proceeding before any Intellectual Property Recording Office, (A) to
preserve and maintain all rights in, to and under all Trademarks and Trademark
Licenses, (B) to make appropriate application to the appropriate Intellectual
Property Recording Office to register all unregistered but registerable
Trademarks, and (C) to prosecute each application to register a Trademark and to
obtain such registration.

(v) In the event that any Trademark is infringed, misappropriated or diluted by
any Person, each Pledgor shall promptly notify the Collateral Agent in writing
after it learns thereof and shall promptly sue for infringement,
misappropriation or dilution, as appropriate, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as such Pledgor shall
reasonably deem appropriate under the circumstances to protect such Trademark,
unless such Pledgor shall reasonably determine, and promptly notify the
Collateral Agent in writing, that such Trademark is no longer material to its
business.

(d) Copyrights.

(i) Each Pledgor will not, and will not permit any licensee or sublicensee to,
take any action or omit to take any action whereby any Copyright may become
invalidated or be injected into the public domain.

(ii) Each Pledgor shall notify the Collateral Agent immediately in writing if it
knows, or has reason to know, (A) that any Copyright or Copyright License has or
may become invalid or has been or may be injected into the public domain, and
(B) of the institution of, or any determination or material development in, any
proceeding, wherever pending, affecting such Pledgor’s ownership or the validity
of any Copyright or Copyright License.

(iii) Whenever a Pledgor, either by itself or through any agent, employee,
licensee or designee, shall file an application after the Agreement Date for the
registration of any Copyright with any Intellectual Property Recording Office,
such Pledgor shall report such filing to the Collateral Agent within five
Business Days after the last day of the month in which such filing occurs.

(iv) Each Pledgor will take all reasonable and necessary steps (A) to preserve
and maintain all rights in, to and under all Copyrights and Copyright Licenses,
(B) to make appropriate application to the appropriate Intellectual Property
Recording Office to register all unregistered but registerable Copyrights, and
(C) to prosecute each application to register a Copyright and to obtain such
registration.

(v) In the event that any Copyright is infringed by any Person, each Pledgor
shall promptly notify the Collateral Agent in writing after it learns thereof
and shall promptly sue for infringement, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement, or take
such other actions as such Pledgor shall reasonably deem appropriate under the
circumstances to protect such Copyright, unless such Pledgor shall reasonably
determine, and promptly notify the Collateral Agent in writing, that such
Copyright is no longer material to its business.

 

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Section 4.10 Modification of Terms. Each Pledgor shall not rescind or cancel any
obligation due to it evidenced by any General Intangible or modify any term
thereof or make any adjustment with respect thereto, or extend or renew the
same, or compromise or settle any dispute, claim, suit or legal proceeding
relating thereto, without the prior written consent of the Collateral Agent,
except that, unless an Event of Default shall exist, such Pledgor may, with
respect to any General Intangible, but only in the ordinary course of its
business and in accordance with sound business judgment and its customary
collection practices as in effect from time to time (i) extend the time of
payment thereof, (ii) settle the same for an amount less than the then unpaid
balance thereof and (iii) amend or otherwise modify the terms thereof.

Section 4.11 Verification. If an Event of Default exists, the Collateral Agent
shall have the right, in the name and on the stationery of any Pledgor or in
such name as the Collateral Agent may select, to verify the validity, amount or
any other matter relating to any General Intangible by mail, telephone or any
other means.

Section 4.12 Schedule of Certain General Intangibles. Each Pledgor shall deliver
to the Collateral Agent as the Collateral Agent or any Secured Party as the same
may reasonably request from time to time, (a) a schedule showing, as to each
General Intangible that is a Collateral Obligation, (i) the name and address of
the Collateral Debtor, (ii) the nature of such Collateral Obligation,
(iii) whether it is (A) fixed or contingent or (B) liquidated or unliquidated
and (iv) if liquidated, the amount thereof, (b) a schedule showing the identity
(in the case of patents, by registered patent number and issue date, in the case
of patent applications, by serial number, in the case of trademarks, by
registration number and brief description of property covered, in the case of
copyrights by registration number and title or brief description of material
covered and, in the case of pending copyrights, date of application and title or
brief description of material covered) of each patent, patent application,
service mark, trademark, trademark registration and copyright issued to, applied
for or pending by such Pledgor and not previously so identified to the
Collateral Agent in writing and (c) promptly after granting or acquiring the
same, copies, not previously delivered to the Collateral Agent, of all licenses
and sub-licenses relating to any of the foregoing granted by or issued to such
Pledgor; provided, however, that, if no Default exists or is continuing, no
Pledgor shall be required to provide the foregoing information more than twice
during its fiscal year.

 

  D. Inventory.

Section 4.13 Location of Inventory. Each Pledgor shall keep its Inventory only
at, or in transit to, (a) a location specified in its respective Security
Agreement Questionnaire as a current location for Inventory or (b) any other
location provided, that (i) the Security Interest in Inventory at such location
conforms to the requirements of Section 1.02, (ii) in the case of any location
where the Inventory is within the possession or control of any third Person,
such Pledgor shall use commercially reasonable efforts to cause such third
Person to deliver to the Collateral Agent, in a writing satisfactory in all
respects thereto, a waiver whereby such Person shall have acknowledged and
agreed with the Collateral Agent, that all Inventory at any time in its
possession or control is subject to the Security Interest and is to be held for
the account of, and is

 

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only to be released or transferred upon instructions of, the Collateral Agent,
and (iii) in the case of any Inventory located on premises leased to or
mortgaged by a Pledgor, such Pledgor shall use commercially reasonable efforts
to have delivered to the Collateral Agent a waiver from each applicable lessor
or mortgagee in a form reasonably acceptable to the Collateral Agent.

 

  E. Equipment and Other Goods.

Section 4.14 Location of Equipment and Other Goods. Each Pledgor shall maintain
its Equipment and Other Goods only at, or in transit to, (a) a location
specified in its respective Security Agreement Questionnaire as a current
location for Equipment and Other Goods or (b) any other location provided that
(i) the Security Interest in Equipment and Other Goods at such location conforms
to the requirements of Section 1.02, (ii) in the case of any location where the
Equipment and Other Goods is within the possession or control of any third
Person, such Pledgor shall use commercially reasonable efforts to cause such
third Person to deliver to the Collateral Agent, in a writing satisfactory in
all respects thereto, a waiver whereby such Person shall have acknowledged and
agreed with the Collateral Agent, that all Equipment and Other Goods at any time
in its possession or control is subject to the Security Interest and (iii) in
the case of any Equipment and Other Goods located on premises leased to or
mortgaged by a Pledgor, such Pledgor shall use commercially reasonable efforts
to have delivered to the Collateral Agent, a waiver from each applicable lessor
or mortgagee in a form acceptable to the Collateral Agent in its sole and
absolute discretion.

Section 4.15 Evidence of Ownership of Equipment and Other Goods. Each Pledgor
shall, upon request by the Collateral Agent or any Secured Party from time to
time, deliver to the Collateral Agent and each Secured Party evidence of
ownership of any item of the Equipment or Other Goods, the value of which
exceeds $250,000, including certificates of title and bills of sale; provided
that during the continuance of an Event of Default, such Pledgor shall, upon
such request, deliver to the Collateral Agent and each Secured Party all
evidence of ownership of any item of the Equipment or Other Goods, including
certificates of title and bills of sale.

 

  F. Investment Property and Instruments.

Section 4.16 Status of Securities; Instruments Collateral. (a) Each Pledgor
represents, warrants and agrees that (i) so long as any Securities or
Instruments are Collateral, such Collateral is and shall at all times be
(A) duly authorized and validly issued, and, in the case of Securities that are
Equity Interests, fully paid and non-assessable and (B) (1) freely saleable
without limit, or registration or qualification, under Applicable Law, and
(2) transferable without any limitation imposed by any “stop transfer” order or
the like, (ii) as of the date hereof, the shares or other units of Equity
Interests, and the principal amounts of Indebtedness listed on Section 4.16(a)
represent the respective percentages of, in the case of such Equity Interests,
the outstanding shares or other units of such Equity Interests and, in the case
of such Indebtedness, the outstanding principal amounts of the Securities that
are Indebtedness or Instruments, that are set forth on such Schedule.

 

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(b) Each Pledgor agrees that it will take all steps necessary, including the
purchase of, in the case of Securities that are Equity Interests, additional
shares or other units of such Securities and, in the case of Securities that are
Indebtedness and Instruments, additional principal amounts of the Indebtedness
evidenced by such Securities or Instruments, in each case of the same classes or
series as those that are Collateral, so that the respective percentages that
such shares or other units of Equity Interests and such principal amount of
Indebtedness that are Collateral are of all of the outstanding shares or other
units of such Equity Interests or principal amounts of such Indebtedness shall
not at any time be less than the respective percentage set forth on Schedule
4.16(a).

Section 4.17 Certain Rights of Collateral Agent and Pledgors. (a) At any time
and from time to time, the Collateral Agent may, and is hereby authorized to,
transfer into or register in its name or the name of its nominee any or all of
the Securities and Instruments that are Collateral. Each Pledgor shall promptly
give the Collateral Agent and each Secured Party copies of all notices and other
communications received by such Pledgor with respect to any Securities and
Instruments that are Collateral registered in the name of such Pledgor.

(b) During an Event of Default (and not otherwise), the Collateral Agent, after
a notice to a Pledgor that it intends to exercise its rights under this
Section 4.17(b), may, from time to time, in its own or such Pledgor’s name,
exercise any and all rights, powers and privileges with respect to the
Securities and Instruments that are Collateral, and with the same force and
effect, as could such Pledgor.

(c) Unless and until the Collateral Agent exercises its rights under
Section 4.17(b), each Pledgor may, with respect to any of the Securities and
Instruments that are Collateral, if such Pledgor shall have given the Collateral
Agent and each Secured Party not less than five Business Days’ written notice of
the particular action to be taken, vote and give consents, ratifications and
waivers with respect thereto, except to the extent that any such would (i) be
for a purpose that would constitute or result in a Default or (ii) in the sole
judgment of the Collateral Agent, detract from the value thereof as Collateral,
and from time to time, upon request from a Pledgor, the Collateral Agent shall
deliver to such Pledgor suitable proxies so that such Pledgor may cast such
votes, consents, ratifications and waivers. Each such request from a Pledgor
shall constitute a Representation and Warranty by such Pledgor hereunder that no
Default exists or would result therefrom.

Section 4.18 No Amendments, etc., of Investment Property; Instruments
Collateral. Subject to Section 4.17(c), each Pledgor shall not make or consent
to any amendment or other modification or waiver with respect to any Investment
Property or Instruments that are Collateral or enter into or permit to exist any
restriction with respect to the transferability of or any rights under or in
respect of such Collateral other than restrictions arising under the Related
Documents or set forth on Schedule 4.18.

Section 4.19 No Disposition of Investment Property Collateral; Instruments. Each
Pledgor shall not, sell, lease, transfer or otherwise dispose of any Instruments
or Investment Property Collateral, including, if the Collateral includes any
securities accounts or commodity accounts, any financial asset or commodity
contract carried therein, or, if the Investment Property Collateral includes any
security entitlements, any financial asset subject thereto, or any

 

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interest therein, except that this Section shall not apply to any Ordinary
Distributions that such Pledgor is entitled to, and does, receive and retain
pursuant to Section 2.01(a).

Section 4.20 No Consent to Liens. Except as permitted pursuant to the Note
Purchase Agreement, each Pledgor shall not agree with any securities or
commodity intermediary that such intermediary, or suffer any agreement to exist
pursuant to which any such intermediary, may grant a Lien on any investment
property or financial asset (a) that is or is to be Collateral or (b) that is
the subject of any security entitlement that is or is to be Collateral.

Section 4.21 Jurisdictions of Securities and Commodity Intermediaries. Each
Pledgor shall not, after the date hereof, enter into any Contract with any
securities intermediary or with any commodity intermediary with respect to any
investment property or financial asset that is or is to be Collateral, unless
such Contract or another agreement specifies effectively with respect to such
Collateral that such securities intermediary’s or commodity intermediary’s
Jurisdiction shall be a Revised Article 8 State.

Section 4.22 Information.

(a) New Accounts. Each Pledgor shall give to the Collateral Agent not less than
15 days’ prior notice of the opening of each new securities account or commodity
account that itself will be Collateral, or to which in the case of a securities
account, financial assets are to be credited (or with respect to which there
will be security entitlements), or in which, in the case of a commodity account,
commodity contracts are to be carried, that are or are to be Collateral,
specifying, as appropriate, the securities intermediary or the commodity
intermediary maintaining such account, the account number and the Jurisdiction
of each such Person.

(b) Change of Jurisdiction. Each Pledgor shall give to the Collateral Agent
prompt notice, but in any event within 60 days thereof, of any change of the
Jurisdiction of a securities intermediary or a commodity intermediary
maintaining a securities account or commodity account that itself is Collateral,
or to which investment property or financial assets are credited (or with
respect to which there are security entitlements), or in which commodity
contracts are carried, that are Collateral, specifying such new Jurisdiction.

Section 4.23 Certain Agreements of Pledgors as Issuers and Holders of Equity
Interests.

(a) In the case of each Pledgor which is an issuer of Investment Property
Collateral, such Pledgor agrees to be bound by the terms of this Agreement
relating to the Investment Property Collateral issued by it and will comply with
such terms insofar as such terms are applicable to it.

(b) In the case of each Pledgor which is a partner, shareholder or member, as
the case may be, in a partnership, limited liability company or other entity,
such Pledgor hereby consents to the extent required by the applicable
Organizational Document to the pledge by each other Pledgor, pursuant to the
terms hereof, of the Securities in such partnership, limited liability company
or other entity and, upon the occurrence and during the continuance of an Event
of Default, to the transfer of such Securities to any Collateral Agent or its
nominee and to the substitution of any Collateral Agent or its nominee as a
substituted partner, shareholder or

 

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member in such partnership, limited liability company or other entity with all
the rights, powers and duties of a general partner, limited partner, shareholder
or member, as the case may be.

 

  G. Materiality Qualifications.

Section 4.24 Requirement of Material Adverse Effect. Unless an Event of Default
shall exist, Section 4.04, Section 4.06, Section 4.09 and Section 4.10 shall not
apply in any circumstances where noncompliance, together with all other
noncompliances with this Agreement will not have a Material Adverse Effect on,
in the case of Section 4.04, the Collateral Obligations taken as a whole, in the
case of Section 4.06, on the Receivables taken as a whole, and, in the case of
Section 4.09 and Section 4.10, on General Intangibles taken as a whole.

ARTICLE 5

EVENT OF DEFAULT

During an Event of Default, and in each such case:

 

  A. Proceeds.

Section 5.01 Application of Proceeds. All cash proceeds received by the
Collateral Agent upon any sale of, collection of, or other realization upon, all
or any part of the Collateral and all cash held by the Collateral Agent as
Collateral shall, subject to the Collateral Agent’s right to continue to hold
the same as cash Collateral, be applied as follows:

First: To the payment of all out-of-pocket costs and expenses incurred in
connection with the sale of or other realization upon Collateral, including
attorneys’ fees and disbursements;

Second: To the payment of the Secured Obligations owing to the Collateral Agent
in such order as the Collateral Agent may elect (with the Pledgors remaining
liable for any deficiency);

Third: To the payment of the other Secured Obligations in such order as required
by the terms of the Note Purchase Agreement (with the Pledgors remaining liable
for any deficiency); and

Fourth: To the extent of the balance (if any) of such proceeds, to the payment
of the Pledgors, subject to Applicable Law and to any duty to pay such balance
to the holder of any subordinated Lien in the Collateral.

 

  B. Remedies.

Section 5.02 General.

(a) Use of Premises and Intellectual Property. Upon the occurrence of any event
described in Section 10.1 of the Note Purchase Agreement, the Collateral Agent
may (i) enter any Pledgor’s premises and, until the Collateral Agent completes
the enforcement of its rights in

 

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the Collateral, take exclusive possession of such premises or place custodians
in exclusive control thereof, remain on such premises and use the same and the
Equipment for the purpose of (A) completing any work in process, preparing
Collateral for disposition and disposing thereof and (B) collecting Collateral
Obligations, and (ii) in the exercise of its rights under this Agreement, use
any Pledgor’s Intellectual Property to the extent of the rights of such Pledgor
therein, and each Pledgor hereby grants a license to the Collateral Agent for
such purpose, subject to the consent, if required, of any licensor, franchisor
or other third Person.

(b) Directors, Officers and Employees. The Collateral Agent may retain any
Pledgor’s directors, officers and employees, in each case upon such terms as the
Collateral Agent and any such Person may agree, notwithstanding the provisions
of any employment, confidentiality or non-disclosure agreement between any such
Person and such Pledgor and such Pledgor hereby waives its rights under any such
agreement and consents to each such retention.

(c) Power of Sale. The Collateral Agent (i) may sell the Collateral in one or
more parcels at public or private sale, at any of its offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as it may deem commercially reasonable, (ii) shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given, and (iii) may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

(d) Foreclosure. The Collateral Agent, instead of exercising the power of sale
conferred upon it by Section 5.02(c) and Applicable Law, may proceed by a suit
or suits at law or in equity to foreclose the Security Interest and sell the
Collateral, or any portion thereof, under a judgment or a decree of a court or
courts of competent jurisdiction.

(e) Receiver. The Collateral Agent may obtain the appointment of a receiver of
the Collateral and each Pledgor consents to and waives any right to notice of
such appointment.

(f) Bank Accounts. The Collateral Agent, with respect to all Bank Accounts, and
each Bank Account Bank, with respect to the Bank Account maintained with that
Bank Account Bank, may do either or both of the following: (i) refuse to permit
further withdrawals and transfers (including withdrawals and transfers of cash,
securities, instruments and other property) from such accounts and (ii) exercise
all other rights hereunder with respect thereto and with respect to the property
that is credited to such accounts that the Collateral Agent could exercise with
respect to other Collateral, including, in the case of each Bank Account Bank,
rights, including those under Section 5.03(c), that such Bank Account Bank would
have with respect to a Bank Account maintained with it if such Bank Account Bank
were the Collateral Agent. In exercising such rights, each such Bank Account
Bank shall be entitled to all of the rights of the Collateral Agent under the
Collateral Documents.

Section 5.03 Collateral Proceeds.

(a) Collections by Pledgors. The Collateral Agent may, by notice to a Pledgor,
direct it to, and thereupon such Pledgor shall, receive all proceeds of
Collateral in trust for the Collateral Agent, not commingle the same with any
other property or funds of such Pledgor and,

 

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unless the Collateral Agent shall have otherwise instructed such Pledgor,
deliver or cause to be delivered all such proceeds in the exact form received,
together with any necessary endorsements, to the Collateral Agent or to such
Person or Persons as the Collateral Agent may designate.

(b) Notification. The Collateral Agent may notify, or request a Pledgor to
notify, in writing or otherwise, (i) each Collateral Debtor to make payment
directly to the Collateral Agent and (ii) each Lockbox Bank and each other
Person maintaining any similar arrangement to hold or otherwise dispose of all
amounts then or thereafter credited to, deposited in or made subject to the
applicable Lockbox Account or other arrangement as the Collateral Agent may
direct. If, notwithstanding the giving of any notice, any such Person shall make
payments to such Pledgor, such Pledgor shall hold all such payments it receives
in trust for the Collateral Agent, without commingling the same with other funds
or property of such Pledgor or any other Person, and shall deliver the same to
the Collateral Agent immediately upon receipt by such Pledgor in the identical
form received, together with any necessary endorsements.

(c) Collateral Agent’s Rights with Respect to Proceeds and Other Collateral. All
payments and other deliveries received by or for the account of the Collateral
Agent from time to time pursuant to Section 5.03(a) or (b), together with the
proceeds of all other Collateral from time to time held by or for the account of
the Collateral Agent (whether as a result of the exercise by the Collateral
Agent its rights under Section 5.02(c) or (d), or pursuant to a Lockbox
Agreement or otherwise) and all Bank Accounts (including all amounts credited
from time to time thereto and all cash, securities, instruments and other
property represented by such credits) may, at the election of the Collateral
Agent, (i) be or continue to be held by the Collateral Agent, or any Person
designated by the Collateral Agent to receive or hold the same, as Collateral,
(ii) be applied as provided in Section 5.01 or (iii) be disposed of as provided
in Section 5.02(c) and (d) and Section 5.06.

(d) Enforcement by Collateral Agent. The Collateral Agent may, without notice to
the Pledgors and at such time or times as the Collateral Agent in its sole
discretion may determine, exercise any or all of a Pledgor’s rights in, to and
under, or in any way connected with or related to, any or all of the Collateral,
including (i) demanding and enforcing payment and performance of, and exercising
any or all of such Pledgor’s rights and remedies with respect to the collection,
enforcement or prosecution of, any or all of the Collateral Obligations, in each
case by legal proceedings or otherwise, (ii) settling, adjusting, compromising,
extending, renewing, discharging and releasing any or all of, and any legal
proceedings brought to collect or enforce any or all of, the Collateral
Obligations, (iii) preparing, filing and signing the name of such Pledgor on
(A) any proof of claim or similar document to be filed in any bankruptcy or
similar proceeding involving any Collateral Debtor and (B) any notice of lien,
assignment or satisfaction of lien, or similar document in connection with any
Collateral Obligation, and (iv) using the information recorded on or contained
in any data processing equipment and computer hardware and software relating to
the Collateral Obligations to which such Pledgor has access.

(e) Adjustments. The Collateral Agent may settle or adjust disputes and claims
directly with Collateral Debtors for amounts and on terms that the Collateral
Agent considers advisable and in all such cases only the net amounts received by
the Collateral Agent in payment of such amounts, after deduction of
out-of-pocket costs and expenses of collection, including

 

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reasonable attorney’s fees, shall be subject to the other provisions of this
Agreement. Each Pledgor shall have no further right under Section 4.06,
Section 4.10 or otherwise to make any such settlements or adjustments or to
accept any returns of merchandise.

Section 5.04 Inventory; Equipment and Other Goods.

(a) Entry. The Collateral Agent may enter upon any premises in which any
Inventory or Equipment or Other Goods may be located and take, or place
custodians in, exclusive, physical possession of any or all thereof and maintain
such possession on such premises or move the same or any part thereof to such
other place or places as the Collateral Agent shall choose.

(b) Assembly. Upon the request of the Collateral Agent, each Pledgor shall
assemble the Inventory, Equipment and the Other Goods and maintain or deliver it
into the possession of the Collateral Agent or of any other Person designated by
the Collateral Agent at such place or places as the Collateral Agent or such
other Person may designate and as are reasonably convenient to both the
Collateral Agent or such other Person and such Pledgor.

(c) Warehousing. The Collateral Agent may cause any or all of the Inventory and
the Equipment and the Other Goods to be placed in a public or field warehouse.

Section 5.05 Intellectual Property. The Collateral Agent may exercise any or all
of any Pledgor’s rights in, to and under, or in any way connected with or
related to, any or all Intellectual Property, including (a) pursuing any or all
pending Intellectual Property applications and (b) on a worldwide or such other
basis as the Collateral Agent may determine, granting or issuing exclusive and
non-exclusive licenses relating to any or all of the Intellectual Property.

Section 5.06 Restricted Offering Dispositions.

In connection with any sale of any of the Securities and Instruments that are
Collateral, the Collateral Agent may, at its election, comply with any
limitation or restriction (including any restrictions on the number of
prospective bidders and purchasers or any requirement that they have certain
qualifications or that they represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Securities and Investments) as it may be advised by counsel is
necessary in order to avoid any violation of Applicable Law or to obtain any
Governmental Approval, and such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall any Secured Party be liable nor accountable to any Pledgor for any
discount allowed by reason of the fact that such Securities and Instruments are
sold in compliance with any such limitation or restriction. A private sale of
which notice shall have been published in accordance with applicable “no action”
letters published by the SEC, and that otherwise complies with such letters,
shall be deemed to constitute a “public disposition” within the meaning of
Section 9-610(c)(1) of the UCC.

Section 5.07 Notice of Disposition of Collateral. Any notice to the Pledgors of
disposition of Collateral may be in the form of Schedule 5.07. All notices given
hereunder shall be given in accordance with the Note Purchase Agreement.

 

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ARTICLE 6

MISCELLANEOUS

Section 6.01 Expenses of Each Pledgor’s Agreements and Duties. Subject to the
terms of the Note Purchase Agreement, the terms, conditions, covenants and
agreements to be observed or performed by each Pledgor under the Collateral
Documents shall be observed or performed by it at its sole cost and expense.

Section 6.02 Collateral Agent’s Right to Perform on a Pledgor’s Behalf. If a
Pledgor shall fail to observe or perform any of the terms, conditions, covenants
and agreements to be observed or performed by it under the Collateral Documents,
the Collateral Agent may (but shall not be obligated to) do the same or cause it
to be done or performed or observed, either in its name or in the name and on
behalf of such Pledgor, and such Pledgor hereby authorizes the Collateral Agent
so to do.

Section 6.03 Collateral Agent’s Right to Use Agents and to Act in Name of the
Pledgors. The Collateral Agent may exercise its rights and remedies under the
Collateral Documents through an agent or other designee and, in the exercise
thereof, the Collateral Agent or any such other Person may act in its own name
or in the name and on behalf of any Pledgor.

Section 6.04 No Interference, Compensation or Expense. The Collateral Agent may
exercise its rights and remedies under the Collateral Documents (a) without
resistance or interference by the Pledgors, (b) without payment of any rent,
license fee or compensation of any kind to the Pledgors and (c) for the account,
and at the expense, of the Pledgors.

Section 6.05 Limitation of Obligations with Respect to Collateral. (a) Neither
the Collateral Agent nor any other Secured Party shall have any obligation to
protect or preserve any Collateral or to preserve rights pertaining thereto
other than the obligation to use reasonable care in the custody and preservation
of any Collateral in its actual possession. The Collateral Agent shall be deemed
to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property.
The Collateral Agent shall be relieved of all responsibility for any Collateral
in its possession upon surrendering it, or tendering surrender of it, to the
Pledgors.

(b) Nothing contained in the Collateral Documents shall be construed as
requiring or obligating the Collateral Agent or any other Secured Party, and
neither the Collateral Agent nor any other Secured Party shall be required or
obligated, to (i) make any demand, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or to present or file any claim or
notice or take any action, with respect to any Collateral Obligation or any
other Collateral or the monies due or to become due thereunder or in connection
therewith, (ii) ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders, offers or other matters relating to any
Collateral, whether or not the Collateral Agent or any other Secured Party has
or is deemed to have knowledge or notice thereof, (iii) take any necessary steps
to preserve rights against any prior parties with respect to any Collateral or
(iv) notify the Pledgors of any decline in the value of any Collateral.

 

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Section 6.06 Rights of Collateral Agent under UCC and Applicable Law. The
Collateral Agent shall have, with respect to the Collateral, in addition to all
of its rights and remedies under the Collateral Documents, (a) the rights and
remedies of a secured party under the UCC, whether or not the UCC would
otherwise apply to the Collateral in question, and (b) the rights and remedies
of a secured party under all other Applicable Law.

Section 6.07 Waivers of Rights Inhibiting Enforcement. Each Pledgor waives
(a) any claim that, as to any part of the Collateral, a public sale, should the
Collateral Agent elect so to proceed, is, in and of itself, not a commercially
reasonable method of sale for such Collateral, (b) the right to assert in any
action or proceeding between it and the Collateral Agent any offsets or
counterclaims that it may have, (c) except as otherwise provided in any of the
Collateral Documents, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR
JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR
DISPOSITION OF ANY OF THE COLLATERAL INCLUDING ANY AND ALL PRIOR NOTICE AND
HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT SUCH
PLEDGOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED
STATES OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND
TERMS OF SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF THE
COLLATERAL AGENT’S RIGHTS HEREUNDER, (d) all rights (i) of redemption,
appraisement, valuation, stay and extension or moratorium and (ii) to the
marshalling of assets and (e) all other rights the exercise of which would,
directly or indirectly, prevent, delay or inhibit the enforcement of any of the
rights or remedies under the Collateral Documents or the absolute sale of the
Collateral, now or hereafter in force under any Applicable Law, and each
Pledgor, for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waive the benefit of all such laws and rights.

Section 6.08 Power of Attorney. (a) In addition to the other powers granted the
Collateral Agent by each Pledgor under the Collateral Documents, each Pledgor
hereby appoints the Collateral Agent, and any other Person that the Collateral
Agent may designate, as such Pledgor’s attorney-in-fact to act, in the name,
place and stead of such Pledgor in any way in which such Pledgor itself could
do, with respect to each of the following: (i) endorsing such Pledgor’s name on
(A) any checks, notes, acceptances, money orders, drafts or other forms of
payment, (B) any proxies, documents, instruments, notices, freight bills, bills
of lading or other documents or agreements relating to the Collateral,
(C) schedules and assignments of Collateral Obligations and (D) notices of
assignment, financing statements and other public records; (ii) claiming for,
adjusting, and instituting legal proceedings to collect, any amounts payable
under insurance, and applicable loss payable endorsements, required to be
maintained under any of the Collateral Documents; (iii) taking any actions or
exercising any rights, powers or privileges that such Pledgor is entitled to
take or exercise and that, under the terms of any of the Collateral Documents,
the Collateral Agent is authorized to take or exercise; (iv) doing or causing to
be done any or all things necessary or, in the determination of the Collateral
Agent, desirable to observe or perform the terms, conditions, covenants and
agreements to be observed or performed by such Pledgor under the Collateral
Documents and otherwise to carry out the provisions of the Collateral Documents;
and (v) during an Event of Default, notifying the post office authorities to
change the address for delivery of such Pledgor’s mail to an address designated
by the Collateral Agent, and receiving, opening and disposing of all mail
addressed to such Pledgor (with all mail

 

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not constituting, evidencing or relating to the Collateral to be forwarded by
the Collateral Agent to such Pledgor). Each Pledgor hereby ratifies and approves
all acts of the attorney.

(b) To induce any third Person to act under this Section 6.08, each Pledgor
hereby agrees that any third Person receiving a duly executed copy or facsimile
of this Agreement may act under this Section 6.08, and that the termination of
this Section 6.08 shall be ineffective as to such third Person unless and until
actual notice or knowledge of such termination shall have been received by such
third Person, and such Pledgor, on behalf of itself and its successors and
assigns, hereby agrees to indemnify and hold harmless any such third Person from
and against any and all claims that may arise against such third Person by
reason of such third Person having relied on the provisions of this
Section 6.08.

Section 6.09 Nature of Pledgor’s Obligations. Each Pledgor’s grant of the
Security Interest as security for the Secured Obligations (a) is absolute and
unconditional, (b) is unlimited in amount except as provided in Section 6.13,
(c) shall be a continuing security interest securing all present and future
Secured Obligations and all promissory notes and other documentation given in
extension or renewal or substitution for any of the Secured Obligations and
(d) shall be irrevocable.

Section 6.10 No Release of Pledgors. The Security Interest shall not be limited
or terminated, nor shall the Secured Obligations secured thereby be reduced or
limited, nor shall any Pledgor be discharged of any of its Obligations under the
Collateral Documents, for any reason whatsoever (other than, subject to
Section 6.13, 6.15 and 6.19, the payment, observance and performance of the
Secured Obligations), including (and whether or not the same shall have occurred
or failed to occur once or more than once and whether or not such Pledgor shall
have received notice thereof):

(a)(i) any increase in the principal amount of, or interest rate applicable to,
(ii) any extension of the time of payment, observance or performance of,
(iii) any other amendment or modification of any of the other terms and
provisions of, (iv) any release, composition or settlement (whether by way of
acceptance of a plan of reorganization or otherwise) of, (v) any subordination
(whether present or future or contractual or otherwise) of, or (vi) any
discharge, disallowance, invalidity, illegality, voidness or other
unenforceability of, the Secured Obligations;

(b) (i) any failure to obtain, (ii) any release, composition or settlement of,
(iii) any amendment or modification of any of the terms and provisions of,
(iv) any subordination of, or (v) any discharge, disallowance, invalidity,
illegality, voidness or other unenforceability of, any guaranties of the Secured
Obligations;

(c) (i) any failure to obtain or any release of, (ii) any failure to protect or
preserve, (iii) any release, compromise, settlement or extension of the time of
payment of any obligations constituting, (iv) any failure to perfect or maintain
the perfection or priority of any Lien upon, (v) any subordination of any Lien
upon, or (vi) any discharge, disallowance, invalidity, illegality, voidness or
other unenforceability of any Lien or intended Lien upon, any collateral now or
hereafter securing the Secured Obligations or any guaranties thereof;

 

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(d) any exercise of, or any election not or failure to exercise, delay in the
exercise of, waiver of, or forbearance or other indulgence with respect to, any
right, remedy or power available to the Collateral Agent or any other Secured
Party, including (i) any election not or failure to exercise any right of
setoff, recoupment or counterclaim, (ii) any election of remedies effected by
the Secured Parties, including the foreclosure upon any real estate constituting
collateral, whether or not such election affects the right to obtain a
deficiency judgment, and (iii) any election by the Secured Parties in any
proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) of
such Code; and

(e) Any other act or failure to act or any other event or circumstance that
(i) varies the risk of any Pledgor hereunder or (ii) but for the provision
hereof, would, as a matter of statute or rule of Law or equity, operate to limit
or terminate the Security Interest or to reduce or limit the Secured Obligations
secured thereby or to discharge any Pledgor from any of its Obligations under
the Collateral Documents.

Section 6.11 Certain Other Waivers. Each Pledgor waives:

(a) any requirement, and any right to require, that any right or power be
exercised or any action be taken against the Company, any Guarantor or any
collateral for the Secured Obligations;

(b) all defenses to, and all setoffs, counterclaims and claims of recoupment
against, the Secured Obligations that may at any time be available to the
Company or any Guarantor;

(c) (i) notice of acceptance of and intention to rely on the Collateral
Documents, (ii) notice of the making or renewal of any Loans or other extensions
of credit under the Note Purchase Agreement and of the incurrence or renewal of
any other Secured Obligations, (iii) notice of any of the matters referred to in
Section 6.10 and (iv) all other notices that may be required by Applicable Law
or otherwise to preserve any rights against each Pledgor under the Collateral
Documents, including any notice of default, demand, dishonor, presentment and
protest;

(d) diligence;

(e) any defense based upon, arising out of or in any way related to (i) any
claim that any sale or other disposition of any collateral for the Secured
Obligations was not conducted in a commercially reasonable fashion or that a
public sale, should the Collateral Agent have elected to so proceed, was, in and
of itself, not a commercially reasonable method of sale, (ii) any claim that any
election of remedies by the Secured Parties, including the exercise by the
Collateral Agent or any other Secured Party of any rights against any
collateral, impaired, reduced, released or otherwise extinguished any right that
such Pledgor might otherwise have had against the Company or any Guarantor or
against any collateral, including any right of subrogation, exoneration,
reimbursement or contribution or right to obtain a deficiency judgment,
(iii) any claim based upon, arising out of or in any way related to any of the
matters referred to in Section 6.10 and (iv) any claim that the Collateral
Documents should be strictly construed against the Secured Parties; and

 

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(f) ALL OTHER DEFENSES UNDER APPLICABLE LAW THAT WOULD, BUT FOR THIS CLAUSE (f),
BE AVAILABLE TO ANY PLEDGOR AS (i) A DEFENSE AGAINST THE ENFORCEMENT OF THE
SECURITY INTEREST, (ii) A REDUCTION OR LIMITATION OF THE SECURED OBLIGATIONS
SECURED THEREBY OR (iii) A DEFENSE AGAINST ITS OBLIGATIONS UNDER THE COLLATERAL
DOCUMENTS.

Section 6.12 Independent Credit Evaluation. Each Pledgor has independently, and
without reliance on any information supplied by the Secured Parties, taken, and
will continue to take, whatever steps it deems necessary to evaluate the
financial condition and affairs of the Company, and neither the Collateral Agent
nor any other Secured Party shall have any duty to advise such Pledgor of
information at any time known to it regarding such financial condition or
affairs.

Section 6.13 Limitation on Amount of Obligations Secured. It is the intention of
each Pledgor and the Collateral Agent that the Secured Obligations secured by
the Security Interest and the obligations of such Pledgor under the Collateral
Documents shall be in, but not in excess of, the maximum amount permitted by
Applicable Law. To that end, but only to the extent that the Security Interest
would otherwise be void, voidable or otherwise unenforceable, the amount of the
Secured Obligations secured by the Security Interest shall be limited to the
maximum amount that would not make the Security Interest void, voidable or
otherwise unenforceable. This Section 6.13 is intended to preserve the rights of
the Collateral Agent under the Collateral Documents to the maximum extent
permitted by Applicable Law, and neither a Pledgor nor any other Person shall
have any right under this Section 6.13 that it would not otherwise have under
Applicable Law.

Section 6.14 Continuance and Acceleration of Secured Obligations upon Certain
Events. If:

(a) any Event of Default that the Note Purchase Agreement states is to result in
the automatic acceleration of any Secured Obligations shall occur;

(b) any injunction, stay or the like that enjoins any acceleration, or demand
for the payment, observance or performance, of any Secured Obligations that
would otherwise be required or permitted under the Related Documents shall
become effective; or

(c) any Secured Obligations shall be or be determined to be or become
discharged, disallowed, invalid, illegal, void or otherwise unenforceable
(whether by operation of any present or future law or by order of any court or
governmental agency);

(d) then (i) such Secured Obligations shall, for all purposes of the Collateral
Documents, be deemed (A) in the case of clause (c), to continue to be
outstanding and in full force and effect notwithstanding the unenforceability
thereof and (B) if such is not already the case, to have thereupon become
immediately due and payable and to have commenced bearing interest at the
Default Rate and (ii) the Collateral Agent may, with respect to such Secured
Obligations, exercise all of the rights and remedies under the Collateral
Documents that would be available to it during an Event of Default.

 

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Section 6.15 Recovered Payments. The Secured Obligations shall be deemed not to
have been paid, observed or performed, and each Pledgor’s obligations under the
Collateral Documents in respect thereof shall continue and not be discharged, to
the extent that any payment, observance or performance thereof by the Company or
any Guarantor, or out of the proceeds of any other collateral, is recovered from
or paid over by or for the account of any Secured Party for any reason,
including as a preference or fraudulent transfer or by virtue of any
subordination (whether present or future or contractual or otherwise) of the
Secured Obligations, whether such recovery or payment over is effected by any
judgment, decree or order of any court or governmental agency, by any plan of
reorganization or by settlement or compromise by any Secured Party (whether or
not consented to by the Company, a Pledgor or any Guarantor) of any claim for
any such recovery or payment over. Each Pledgor hereby expressly waives the
benefit of any applicable statute of limitations and agrees that it shall be
obligated hereunder with respect to any Secured Obligations whenever such a
recovery or payment over thereof occurs.

Section 6.16 Evidence of Secured Obligations. The records of each Secured Party
shall be conclusive evidence of the Secured Obligations owing to it and of all
payments, observances and performances in respect thereof.

Section 6.17 Binding Nature of Certain Adjudications. Each Pledgor shall be
conclusively bound by the adjudication in any action or proceeding, legal or
otherwise, involving any controversy arising under, in connection with, or in
any way related to, any of the Secured Obligations, and by a judgment, award or
decree entered therein.

Section 6.18 Subordination of Rights Against the Company, Guarantors and Other
Collateral.

(a) Release of “Claims” Against the Company Resulting from the Collateral
Documents. Each Pledgor hereby releases the Company from all “claims” (as
defined in section 101(4) of the Bankruptcy Code) that such Pledgor might
otherwise have against the Company, including any such claims to which such
Pledgor may be entitled as a result of any right of subrogation, exoneration or
reimbursement.

(b) Subordination of Other Rights. All rights that each Pledgor may at any time
have against the Company, any Guarantor or any other collateral for the Secured
Obligations (including rights of subrogation, exoneration, reimbursement and
contribution and whether arising under Applicable Law or otherwise) are hereby
expressly subordinated to the prior payment, observance and performance in full
of the Secured Obligations. Each Pledgor shall not enforce any of the rights, or
attempt to obtain payment or performance of any of the obligations, subordinated
pursuant to this Section 6.18(b) until the Secured Obligations have been paid,
observed and performed in full, except that such prohibition shall not apply to
routine acts, such as the giving of notices and the filing of continuation
statements, necessary to preserve any such rights. If any amount shall be paid
to or recovered by such Pledgor (whether directly or by way of setoff,
recoupment or counterclaim) on account of any right or obligation subordinated
pursuant to this Section 6.18(b), such amount shall be held in trust by such
Pledgor for the benefit of the Secured Parties, not commingled with any of such
Pledgor’s other funds and forthwith paid over to the Collateral Agent, in the
exact form received, together with any necessary endorsements, to be applied and
credited against, or held as security for, the Secured Obligations.

 

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Section 6.19 Termination of Security Interest. (a) The Security Interest in
(i) Collateral that each Pledgor is entitled to, and does, receive and retain,
or withdraw, pursuant to Section 2.01(a) and (ii) Collateral disposed of by such
Pledgor in a disposition to which a Section of this Agreement, by its express
terms, does not apply shall terminate, and such item of Collateral shall be
released therefrom, immediately upon such receipt, withdrawal or disposition,
without any further action by the Collateral Agent; provided, however, that such
release shall not apply to any other Collateral, including the proceeds of the
item of Collateral so disposed of.

(b) The Security Interest and all of each Pledgor’s obligations under Article 1,
Article 4 and Article 5 shall terminate upon the latest of (a) the repayment, to
the extent due, and, to the extent not due, the satisfaction or securing, in a
manner acceptable to the Collateral Agent, of the Secured Obligations, (b) the
termination of the Commitments, (c) the execution and delivery to the Collateral
Agent of a release, in form and substance satisfactory to it, of all Related
Document Related Claims that the Pledgors may have against the Indemnitees under
the facts existing at such time, whether or not known or knowable, and (d) the
discharge, dismissal with prejudice, settlement, release or other termination of
any other Related Document Related Claims that may be pending or threatened
against the Indemnitees.

Section 6.20 Designation of Notice. No notice shall be effective under
Section 4.01(a), (b), (c) or (d) unless it is specifically designated, in the
case of a notice under Section 4.01(a), “Notice of Proposed Merger”, in the case
of a notice under Section 4.01(b) “Notice of Change of Organizational
Identification Number, Name, Identity or Corporate Structure”, in the case of a
notice under Section 4.01(c), “Notice of Change of Executive Office and Books
and Records” and, in the case of a notice under Section 4.01(d), “Notice of New
Trade Name, Trade Style or Invoice”.

Section 6.21 Extension of Payment Dates. Whenever any payment to any Secured
Party under the Collateral Documents would otherwise be due (except by reason of
acceleration) on a day that is not a Business Day, such payment shall instead be
due on the next succeeding Business Day. If the date any payment under the
Collateral Documents is due is extended (whether by operation of any Collateral
Document, Applicable Law or otherwise), such payment shall bear interest for
such extended time at the rate of interest applicable hereunder.

Section 6.22 GOVERNING LAW. THIS AGREEMENT SHALL, PURSUANT TO NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1401, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

 

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Section 6.23 LIMITATION OF LIABILITY. NEITHER THE COLLATERAL AGENT NOR ANY OTHER
PRINCIPAL SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND EACH PLEDGOR HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE FOR:

ANY LOSS OR DAMAGE SUSTAINED BY SUCH PLEDGOR, OR ANY LOSS, DAMAGE, DEPRECIATION
OR OTHER DIMINUTION IN THE VALUE OF ANY COLLATERAL, THAT MAY OCCUR AS A RESULT
OF, IN CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, (i) ANY ACT OR FAILURE
TO ACT REFERRED TO IN SECTION 6.10 OR (ii) ANY EXERCISE OF ANY RIGHT OR REMEDY
UNDER THE COLLATERAL DOCUMENTS, EXCEPT, IN THE CASE OF CLAUSE (ii), FOR ANY SUCH
LOSS, DAMAGE, DEPRECIATION OR DIMINUTION TO THE EXTENT THAT THE SAME IS
DETERMINED BY A JUDGMENT OF A COURT THAT IS BINDING ON SUCH PLEDGOR AND SUCH
PRINCIPAL, FINAL AND NOT SUBJECT TO REVIEW ON APPEAL, TO BE THE RESULT OF ACTS
OR OMISSIONS ON THE PART OF SUCH PRINCIPAL CONSTITUTING (x) WILLFUL MISCONDUCT,
(y) KNOWING VIOLATIONS OF LAW OR (z) SUCH PERSON’S FAILURE TO OBSERVE ANY OTHER
STANDARD APPLICABLE TO IT UNDER ANY OF THE OTHER PROVISIONS OF THE COLLATERAL
DOCUMENTS OR, BUT ONLY TO THE EXTENT NOT WAIVABLE THEREUNDER, APPLICABLE LAW.

Section 6.24 Counterparts. Each Collateral Document may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto were upon the same instrument.

Section 6.25 Entire Agreement. This Agreement embodies the entire agreement
among the Pledgors, the Collateral Agent and the Secured Parties relating to the
subject matter hereof and supersedes all prior agreements, representations and
understandings, if any, relating to the subject matter hereof.

Section 6.26 Successors and Assigns. All of the provisions of each Collateral
Document shall be binding upon and inure to the benefit of the Pledgors, the
Collateral Agent and the other Secured Parties and their respective successors
and assigns.

Section 6.27 Delivery of Opinions Authorized. Each Pledgor hereby acknowledges
and agrees that each Person that has rendered or may render an opinion, report
or similar communication, including legal opinions and accountant’s reports, to
any Person in connection with the Collateral Documents, has been and is hereby
authorized and directed to so deliver such opinion, report or communication.

Section 6.28 Excluded Collateral. Notwithstanding anything in this Agreement to
the contrary, consistent with the Note Purchase Agreement, the parties hereto
affirm and confirm that the Collateral does not include any Excluded Asset and
neither the Collateral Agent nor any Secured Party has any rights therein or
thereto.

 

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ARTICLE 7

INTERPRETATION

Section 7.01 Definitional Provisions.

(a) Certain Terms Defined by Reference. (i) Except where the context clearly
indicates a different meaning, all terms defined in Article 1, 2A, 5, 8 or 9 of
the UCC, as in effect on the date of this Agreement, are used herein with the
meanings therein ascribed to them; such terms include “account”, “chattel
paper”, “commercial tort claim”, “commodity account”, “commodity contract”,
“control”, “deposit account”, “document”, “equipment”, “financial asset”,
“general intangibles”, “goods”, “instrument”, “inventory”, “investment
property”, “leasehold interest”, “lessor’s residual interest”, “letter of
credit”, “letter-of-credit right”, “money”, “payment intangible”, “proceeds”,
“promissory note”, “registered organization”, “securities account”, “security”,
“security entitlement” and “security interest”. In addition, the terms
“account”, “collateral” and “security interest”, when capitalized, have the
meanings specified in subsection (b) below and the term “deposit account”
includes an account evidenced by a certificate of deposit.

(ii) Except in the case of “Agreement”, “Collateral”, “Intellectual Property”
and “Security Interest” and as otherwise specified herein, all terms defined in
the Note Purchase Agreement are used herein with the meanings therein ascribed
to them.

(b) Other Defined Terms. For purposes of this Agreement:

“Account” means an account.

“Account Receivable” means an Account to the extent it represents a right to
payment of a monetary obligation, whether or not earned by performance (i) for
property that has been, or is to be sold, leased, licensed, assigned, or
otherwise disposed of, or (ii) for services rendered, or to be rendered.

“Account Debtor” means a Person obligated on an Account.

“Account Proceeds” means proceeds of an Account other than an Account
representing the sale or other disposition of Equipment pursuant to Section 7.05
of the Note Purchase Agreement.

“Agreement” means this Security Agreement, including all schedules, annexes and
exhibits hereto.

“Agreement Date” means July 30, 2007.

“Bank Account” means (i) a deposit, custody, or other account (whether, in any
case, time or demand or interest or non-interest bearing and whether maintained
at a branch or office located within or without the United States) of each
Pledgor listed on Schedule 7.01(b)-1, (ii) all amounts from time to time
credited to such account, (iii) all cash, financial assets and

 

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other investment property, instruments, documents, chattel paper, general
intangibles, accounts and other property from time to time credited to such
account or representing investments and reinvestments of amounts from time to
time credited to such account and (iv) all interest, principal payments,
dividends and other distributions payable on or with respect to, and all
proceeds of, (A) all property so credited or representing such investments and
reinvestments and (B) such account.

“Bank Account Bank” means a Person with whom a Bank Account that is Collateral
is maintained.

“Chattel Paper” means chattel paper.

“Collateral” means each Pledgor’s Rights, WHETHER SUCH RIGHTS ARE NOW OR
HEREAFTER EXISTING, in each of the following items of property, other than
Excluded Assets, whether, in the case of any item (a) NOW OR HEREAFTER EXISTING,
(b) SUCH PLEDGOR NOW OR HEREAFTER HAS RIGHTS THEREIN, (c) IT IS NOW
CONTEMPLATED, ANTICIPATED OR FORESEEABLE THAT SUCH ITEM WOULD BE COLLATERAL, and
(d) it is subject to Article 8 or 9 of the UCC or is Collateral by reason of one
or more than one of the following clauses, AND WHEREVER THE SAME MAY BE LOCATED:

(i) all Receivables;

(ii) all General Intangibles;

(iii) all Inventory;

(iv) all Equipment;

(v) all Other Goods;

(vi) all Instruments;

(vii) all Investment Property Collateral;

(viii) all Chattel Paper;

(ix) all Documents;

(x) all (A) Letters of Credit and (B) Letter-of-Credit Rights;

(xi) all Commercial Tort Claims;

(xii) all Material Contracts;

(xiii) all Bank Accounts;

(xiv) all Lockbox Accounts;

 

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(xv) all rights (contractual and otherwise and whether constituting accounts,
general intangibles or investment property or financial assets) constituting,
arising under, connected with, or in any way related to, any or all Collateral;

(xvi) all rights and interest that relates to, or in connection with, the
Assigned Interest (as such term is defined therein) under the RST I Royalty
Repurchase Purchase and Sale Agreement, dated July 30, 2007, among Royalty
Securitization Trust I and the Company;

(xvii) all books, records, ledgercards, files, correspondence, computer
programs, tapes, disks and related data processing software (owned by each
Pledgor or in which it has an interest) that at any time evidence or contain
information relating to any Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon;

(xviii) all goods and other property, whether or not delivered, (A) the sale,
lease or furnishing of which gives or purports to give rise to any Receivable,
including all merchandise returned or rejected by or repossessed from customers,
or (B) securing any Receivable, including all of each Pledgor’s rights as an
unpaid vendor or lienor, including stoppage in transit, replevin and reclamation
with respect to such goods and other properties;

(xix) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents or instruments evidencing or
pertaining to any Collateral;

(xx) all supporting obligations and other Liens on real or personal property,
leases and other agreements and property that in any way secure or relate to any
Collateral, or are acquired for the purpose of securing and enforcing any item
thereof;

(xxi) all claims (including the right to sue or otherwise recover on such
claims) (A) to items referred to in the definition of Collateral, (B) under
warranties relating to any Collateral and (C) against third parties for
(1)(aa) loss, destruction, requisition, confiscation, condemnation, seizure,
forfeiture or infringement of, or damage to, any Collateral, (bb) payments due
or to become due under leases, rentals and hires of any Collateral, (cc)
proceeds payable under or unearned premiums with respect to policies of
insurance relating to any Collateral and (2) breach of any Contract constituting
Collateral; and

(xxii) all products and proceeds of Collateral in whatever form;

provided, that, if, under Applicable Law, the attachment of the Security
Interest in any Contract would require the consent of any party thereto, other
than a Pledgor, or would give any such other party the right to terminate its
obligations thereunder, such Contract shall (so long as such consent has not
been obtained) be deemed not to be Collateral, if, and only if, such other party
has notified each applicable Pledgor in writing that such other party intends to
assert its rights under such Contract that result from such attachment, and such
Pledgor has given the Collateral Agent a copy of such notice and of such
Contract; provided further, that in the absence of any

 

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such notice, such Contract shall continue to constitute Collateral, subject to
Applicable Law; and provided, finally, that the first proviso shall not affect,
limit, restrict or impair the grant by such Pledgor of, or the attachment of the
Security Interest in, any property with respect to which such required consent
would be ineffective under Applicable Law.

The inclusion of “proceeds” of Collateral in the definition of “Collateral”
shall not be deemed a consent by the Collateral Agent to any sale or other
disposition of any Collateral not otherwise specifically permitted by the terms
hereof.

“Collateral Agent” means LB I Group Inc., acting both on its own behalf as
Collateral Agent and as the agent for and representative (within the meaning of
Section 9-102(a)(72)(E) of the UCC) of the other Secured Parties.

“Collateral Debtor” means a Person (including an issuer of any share of capital
stock or other unit of ownership interest constituting Investment Property
Collateral) obligated on, bound by, or subject to, a Collateral Obligation.

“Collateral Documents” means (i) this Agreement and (ii) all other agreements,
documents and instruments related to, arising out of, or in any way connected
with, (A) this Agreement, (B) any other agreement, document or instrument
referred to in this clause (ii), or (C) any of the transactions contemplated by
this Agreement or any such other agreement, document or instrument, in each case
whether now or hereafter executed.

“Collateral Obligation” means a Liability that is Collateral and includes any
such obligation constituting or arising under any Receivable, General
Intangible, Bank Account, Material Contract, Instrument, Investment Property
Collateral or Letter-of-Credit Rights and all supporting obligations.

“Commercial Tort Claim” means a commercial tort claim listed on Schedule
7.01(b)-2.

“Commodity Account” means (i)(A) each commodity account listed on Schedule
4.16(a) and (B) each commodity account, whether or not listed on Schedule
4.16(a), under the control of the Collateral Agent, (ii) each commodity account
that is a successor to (A) a commodity account referred to in clause (i) or
(B) a Commodity Account which is such by virtue of this clause (ii) and
(iii) all cash, financial assets, instruments, documents, chattel paper, general
intangibles, accounts and other property from time to time credited to a
Commodity Account.

“Commodity Contract” means (i) a commodity contract listed on Schedule 4.16(a),
and (ii) a commodity contract, whether or not listed on Schedule 4.16(a), of the
same class or series and payable by one of the same Persons as those listed on
Schedule 4.16(a) under the control of the Collateral Agent.

“Constituent Collateral” means in the case of Collateral that is Investment
Property, Collateral that consists of commodity accounts, commodity contracts,
securities, securities accounts and security entitlements that are identified as
Constituent Collateral on Schedule 7.01(b)-3.

 

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“Contract” means (i) any agreement (whether bi-lateral or uni-lateral or
executory or non-executory and whether a Person entitled to rights thereunder is
so entitled directly or as a third-party beneficiary), including an indenture,
lease or license, (ii) any deed or other instrument of conveyance, (iii) any
certificate of incorporation or charter and (iv) any bylaw.

“Control Agreement” means, as applied to any Investment Property, Bank Account
or Letter-of-Credit Right, a Contract, in form and substance acceptable to the
Collateral Agent in its sole and absolute discretion, pursuant to which the
Collateral Agent is granted control over such Investment Property.

“Copyrights” means (i) (A) all copyrights now existing or hereafter created or
acquired, (B) all registrations and recordings thereof and (C) all applications
in connection therewith pending, at the time in question, in any Intellectual
Property Recording Office, including the Copyrights listed on Schedule 3.03 and
(ii) all reissues, divisions, continuations, continuations-in-part, extensions
and renewals of each Copyright, including Copyrights which are such by virtue of
this clause (ii).

“Copyright Licenses” means all Contracts naming a Pledgor as licensor or
licensee and granting any right under any Copyright.

“Documents” means documents.

“Equipment” means all equipment.

“Equity Interests” means, with respect to any Person, shares of capital stock of
(or other ownership or profit interests in) such Person, warrants, options or
other rights for the purchase or other acquisition from such Person of shares of
capital stock of (or other ownership or profit interests in) such Person,
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting.

“Extraordinary Distributions” means (in each case whether or not in cash) all
dividends, interest, principal payments and other distributions and other
payments (including cash and securities payable in connection with calls,
conversions, redemptions and the like) on or in respect of, and all proceeds
(including cash and securities receivable in connection with tender or other
offers) of, Investment Property Collateral other than Ordinary Distributions.

“General Intangibles” means all general intangibles.

“Instrument” means (i)(A) each instrument listed on Schedule 4.16(a) and
(B) each instrument acquired by a Pledgor pursuant to its obligations under
Section 4.16(b), (ii) each instrument, whether or not listed on Schedule
4.16(a), of the same class or series and payable by one of the same makers or
drawers as those listed on Schedule 4.16(a), in the possession of (A) the
Collateral Agent, or (B) a Person acting on behalf of the Collateral Agent or
who has acknowledged that it holds such instrument for the Collateral Agent, and
(iii) each instrument whether or not listed on Schedule 4.16(a), of the same
class or series and payable by one of the same makers or drawers as those listed
on Schedule 4.16(a), delivered to or for the account of such Pledgor by the
Collateral Agent or any such Person for a purpose contemplated by
Section 9-312(g) of the UCC.

 

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“Intellectual Property” means (i) (A) Patents and Patent Licenses,
(B) Trademarks and Trademark Licenses, and (C) Copyrights and Copyright
Licenses, in each case whether registered, unregistered or pending registration
and whatever the Intellectual Property Recording Office at which the same may be
registered or pending, (ii) all reissues, continuations, continuations-in-part
and extensions of any Intellectual Property referred to in clause (i) or this
clause (ii), and (iii) all rights relating to all Intellectual Property which is
such by virtue of clause (i), (ii) or this clause (iii), including rights under
applications wherever pending and licenses relating thereto.

“Intellectual Property Recording Office” means, as appropriate, the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency of the United States, any state thereof, or any other
country or political subdivision thereof.

“Inventory” means all inventory.

“Investment Property” means all investment property.

“Investment Property Collateral” means: (i) (A) all Securities; (B) all
Securities Accounts; (C) all Security Entitlements; (D) all Commodity Accounts;
(E) all Commodity Contracts; (F) all Investment Property; (ii) all replacements
and substitutions for any Investment Property Collateral that is (whether by
virtue of clause (i) or this clause (ii)) Investment Property Collateral; and
(iii) the certificates, if any, representing any of the foregoing.

“Jurisdiction” means, in the case of a securities intermediary, its jurisdiction
determined in accordance with Section 8-110(e), and, in the case of a commodity
intermediary, its jurisdiction determined in accordance with Section 9-305(b),
of the UCC.

“Letter of Credit” means a letter of credit listed on Schedule 7.01(b)-4.

“Letter-of-Credit Right” means a letter-of-credit right under a letter of credit
listed on Schedule 7.01(b)-4.

“Liability” of any Person means (in each case, whether with full or limited
recourse) any indebtedness, liability, obligation, covenant or duty of or
binding upon, or any term or condition to be observed by or binding upon, such
Person or any of its assets, of any kind, nature or description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, whether arising under Contract, Applicable Law, or
otherwise, whether now existing or hereafter arising, and whether for the
payment of money or the performance or non-performance of any act.

“Lockbox Account” means a deposit account maintained pursuant to a Lockbox
Agreement.

 

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“Lockbox Agreement” means an agreement in a form acceptable to the Collateral
Agent in its sole and absolute discretion.

“Lockbox Bank” means the party to a Lockbox Agreement that manages the operation
of the Lockbox Account that is the subject of such agreement.

“Material Contract” means any agreement that the Company would be required to
file with the SEC in accordance with its obligations as a public company under
the Exchange Act or under the Securities Act, including without limitation, any
agreements required to be filed as exhibits to registration statements or
reports pursuant to Item 601 of Regulation S-K.

“Note Purchase Agreement” means that certain Senior Secured Note and Warrant
Purchase Agreement, dated as of July 30, 2007, among the Company, the Purchasers
listed on the signature pages thereof and the Collateral Agent.

“Ordinary Distributions” means cash dividends to the extent paid out of retained
earnings, and interest paid in cash, in each case with respect to Investment
Property Collateral, except to the extent that any such dividend is made in
connection with partial or total liquidation or a reduction of capital, or any
such interest is penalty interest, or, in each case, to the extent the same is
not in the ordinary course.

“Other Goods” means all goods other than Inventory and Equipment.

“Patents” means (i) (A) all patents and patentable inventions, now existing or
hereafter acquired or invented, (B) all registrations and recordings thereof and
(C) all applications in connection therewith pending, at the time in question,
in any Intellectual Property Recording Office, including the Patents listed on
Schedule 3.03 and (ii) all reissues, divisions, continuations,
continuations-in-part, extensions and renewals of each Patent, including Patents
which are such by virtue of this clause (ii).

“Patent Licenses” means all Contracts naming any Pledgor as licensor or licensee
and granting any right to use any Patent.

“Payment Intangible” means a payment intangible.

“Payment Right” means all rights to the payment of money under, but only in each
case to the extent the same constitutes Collateral, (i) Accounts, (ii) Payment
Intangibles, and (iii) Letter-of-Credit Rights.

“Pledgor” has the meaning set forth in the recitals hereto.

“Receivable” means an Account.

“Related Documents” means, collectively, this Agreement, the Note Purchase
Agreement, the Notes, the Warrants, the Subsidiary Guaranty, the Collateral
Documents, the GECC Payoff Letter and all other documents, instruments and
agreements entered into in connection with this Agreement, all as amended or
extended from time to time.

 

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“Related Document Related Claim” means any claim or dispute (whether arising
under Applicable Law, under contract or otherwise, and, in the case of any
proceeding relating to any such claim or dispute, whether civil, criminal,
administrative or otherwise) in any way arising out of, related to, or connected
with, the Related Documents, the relationships established thereunder or any
actions or conduct thereunder or with respect thereto, whether such claim or
dispute arises or is asserted before or after the date of this Agreement or
before or after the date on which all Obligations have been paid or satisfied in
full.

“Representation and Warranty” means each representation or warranty made
pursuant to or under (i) Article 2, Article 3 or any other provision of this
Agreement, (ii) any of the other Collateral Documents or (iii) any amendment to,
or waiver of rights under, this Agreement or any of the other Collateral
Documents, WHETHER OR NOT, IN THE CASE OF ANY REPRESENTATION OR WARRANTY
REFERRED TO IN CLAUSE (i), (ii) OR (iii) OF THIS DEFINITION (EXCEPT, IN EACH
CASE, TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED), THE INFORMATION THAT IS THE
SUBJECT MATTER THEREOF IS WITHIN THE KNOWLEDGE OF THE RELEVANT PLEDGOR.

“Revised Article 8 State” means one of the States of the United States in which
UCC, Revised Article 8, Investment Securities (with Conforming and Miscellaneous
Amendments to Articles 1, 3, 4, 5, 9 and 10) 1994 Official Text has been adopted
and is in effect.

“Rights”, as applied to Collateral, means each Pledgor’s rights in that
Collateral, WHATEVER THE NATURE OF THOSE RIGHTS and, in any event, INCLUDING
SUCH PLEDGOR’S POWER TO TRANSFER RIGHTS IN SUCH COLLATERAL TO THE COLLATERAL
AGENT.

“Secured Obligations” means all advances to, and debts, liabilities,
obligations, representation, warranties, covenants and duties of, any Pledgor
arising under any Related Document or otherwise with respect to any Loans,
whether direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against any
Pledgor or any Affiliate thereof of any proceeding under any Bankruptcy Laws
naming such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding.

“Secured Parties” means all Persons that are, or at any time were, the
Collateral Agent, a Purchaser or any other Indemnitee.

“Securities” means, collectively one or more Security each Pledgor has Rights
in.

“Securities Account” means (i) (A) each securities account listed on Schedule
4.16(a) and (B) each securities account, whether or not listed on Schedule
4.16(a), under the control of the Collateral Agent, (ii) each securities account
that is a successor to (A) a securities account referred to in clause (i) or
(B) a Securities Account which is such by virtue of this clause (ii) and
(iii) all cash, financial assets, instruments, documents, chattel paper, general
intangibles, accounts and other property from time to time credited to a
Securities Account.

 

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“Security” means (i)(A) each security listed on Schedule 4.16(a) and (B) each
security acquired by a Pledgor pursuant to its obligations under
Section 4.16(b), (ii) each security, whether or not listed on Schedule 4.16(a),
of the same class or series and issued by one of the same issuers as those
listed on Schedule 4.16(a), in the possession of (A) the Collateral Agent, or
(B) a Person acting on behalf of the Collateral Agent or who has acknowledged
that it holds such security for the Collateral Agent, and (iii) each security,
whether or not listed on Schedule 4.16(a), of the same class or series and
issued by one of the same issuers as those listed on Schedule 4.16(a), delivered
to or for the account of such Pledgor by the Collateral Agent or any such Person
for a purpose contemplated by Section 9-312(g) of the UCC.

“Security Agreement Questionnaire” means the Security Agreement Questionnaire in
the form attached hereto as Exhibit B executed and delivered by each Pledgor to
the Collateral Agent in connection with this Agreement.

“Security Entitlement” means (i) (A) each security entitlement to a specified
financial asset credited to (1) securities account listed on Schedule 4.16(a) or
(2) each securities account (a “successor securities account”) that is a
successor to (aa) a securities account referred to in clause (1) or (bb) any
other successor securities account (including one that is such by virtue of this
clause (2)), and (B) each security entitlement, whether or not so credited,
under the control of the Collateral Agent and (ii) all financial assets that are
the subject of each Securities Entitlement, including financial assets acquired
by a Pledgor pursuant to its obligations under Section 4.16(b) of the Agreement.

“Security Interest” means the mortgages, pledges and assignments to the
Collateral Agent of, the continuing security interest of the Collateral Agent
in, and the continuing lien of the Collateral Agent upon, the Collateral
intended to be effected by the terms of this Agreement or any of the other
Collateral Documents.

“Trademarks” means (i) (A) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, now existing or hereafter
adopted or acquired, (B) the goodwill associated therewith, (C) all
registrations and recordings thereof, and (D) all applications in connection
therewith pending, at the time in question, in any Intellectual Property
Recording Office, including the Trademarks listed on Schedule 3.03 and (ii) all
reissues, divisions, continuations, continuations-in-part, extensions and
renewals of each Trademark, including Trademarks which are such by virtue of
this clause (ii).

“Trademark Licenses” means all Contracts naming any Pledgor as licensor or
licensee and granting any right to use any Trademark.

Section 7.02 Other Interpretative Provisions.

If any conflict or inconsistency exists between this Agreement and the Note
Purchase Agreement, the Note Purchase Agreement shall govern.

Section 7.03 Representations and Warranties. All Representations and Warranties
shall be deemed made (a) in the case of any Representation and Warranty
contained in this Agreement at the time of its initial execution and delivery,
at and as of the date hereof, (b) in the case of any

 

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Representation and Warranty contained in this Agreement or any other document at
the time any Loan is made, at and as of such time and (c) in the case of any
particular Representation and Warranty, wherever contained, at such other time
or times as such Representation and Warranty is made or deemed made in
accordance with the provisions of this Agreement or the document pursuant to,
under or in connection with which such Representation and Warranty is made or
deemed made.

[Signature Pages Follow]

 

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

 

PLEDGORS: ORTHOVITA, INC., as the Company By:   /s/ Antony Koblish Name:  
Antony Koblish Title:   President and CEO VITA LICENSING, INC. By:   /s/ Antony
Koblish Name:   Antony Koblish Title:   President ORTHOVITA INTERNATIONAL
SERVICES, INC. By:   /s/ Antony Koblish Name:   Antony Koblish Title:  
President VITA SPECIAL PURPOSE CORP. By:   /s/ Antony Koblish Name:   Antony
Koblish Title:   President

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PARTISYN CORP. By:   /s/ Antony Koblish Name:   Antony Koblish Title:  
President LB I GROUP INC., as Collateral Agent By:   /s/ Jeffrey A. Ferrell
Name:   Jeffrey A. Ferrell

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SCHEDULE A

List of Pledgors

 

1. Partisyn Corp., a Delaware corporation;

 

2. Orthovita International Services, Inc., a Pennsylvania corporation;

 

3. Vita Licensing, Inc., a Delaware corporation; and

 

4. Vita Special Purpose Corp., a Delaware corporation.

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EXHIBIT B

FORM OF

SECURITY AGREEMENT JOINDER

This SECURITY AGREEMENT JOINDER, dated as of                     , 20     (this
“Agreement”), is made by [Insert Name of New Pledgor], a [Insert State of
Organization] [corporation, limited partnership or limited liability company]
(the “New Pledgor”), in favor of LB I Group Inc., as Collateral Agent (the
“Secured Party”) for the benefit of the Purchasers (as defined in the Security
Agreement referred to below).

RECITALS:

(1) WHEREAS, Orthovita, Inc., a Pennsylvania corporation (the “Borrower”) has
entered into that certain Senior Secured Note and Warrant Purchase Agreement,
dated as of July 30, 2007 (as the same may be amended, modified, supplemented or
restated from time to time, the “Note Purchase Agreement”), with the Collateral
Agent and certain other Purchasers (as defined therein), pursuant to which the
Purchasers have agreed to furnish debt financing to the Borrower by way of the
purchase of (i) the Borrower’s senior secured notes and (ii) warrants to
purchase the Borrower’s Common Stock.

(2) WHEREAS, the Borrower and certain other Pledgors (each, together with the
Borrower, collectively, the “Pledgors” and individually, each a “Pledgor”)
entered into one or more security agreements (as the same may from time to time
be amended, restated or otherwise modified, the “Security Agreement”), pursuant
to which the Pledgors granted to the Collateral Agent for the benefit of the
Purchasers, a security interest in and pledge of substantially all of their
assets.

(3) WHEREAS, the New Pledgor is a Subsidiary (as defined in the Note Purchase
Agreements), of [a Pledgor] and desires to become a party to the Security
Agreement pursuant to Section 4.05 of the Security Agreement and to become a
“Pledgor” thereunder.

(4) WHEREAS, this Agreement is given and is intended to provide additional
security for the Obligations (as defined in the Note Purchase Agreement).

(5) Capitalized terms used but not defined herein have the meanings given to
such terms in the Security Agreement.

AGREEMENT:

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the New Pledgor
hereby agrees as follows:

Section 1. Assumption and Joinder.

(a) The New Pledgor hereby expressly assumes, and hereby agrees to perform and
observe, each and every one of the covenants, rights, promises, agreements,
terms, conditions, obligations, appointments, duties and liabilities of a
“Pledgor” under the Security Agreement and all of the other Related Documents
(as defined in the Note Purchase Agreements) applicable to it as a Pledgor under
the Security Agreement. In connection with the foregoing, the New Pledgor hereby
grants to the Collateral Agent for the benefit of the Purchasers a security
interest in, and hereby pledges to the Collateral Agent, for the benefit of the
Purchasers, all of the Collateral of the New Pledgor on the terms and conditions
set forth in the Security Agreement.

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(b) All references to the term Pledgor in the Security Agreement or in any
document or instrument executed and delivered or furnished, or to be executed
and delivered or furnished, in connection therewith shall be deemed to be a
reference to, and shall include, the New Pledgor.

Section 2. Representations and Warranties. The New Pledgor hereby represents and
warrants to the Collateral Agent and the Purchasers as follows:

(a) The New Pledgor has the requisite [corporate, partnership or company] power
and authority to enter into this Agreement and to perform its obligations
hereunder and under the Security Agreement and any other Related Document to
which it is a party. The execution, delivery and performance of this Agreement
by the New Pledgor and the performance of its obligations under this Agreement,
the Security Agreement, and any other Related Document have been duly authorized
by the [Board of Directors of the New Pledgor] and no other [corporate,
partnership or company] proceedings on the part of the New Pledgor are necessary
to authorize the execution, delivery or performance of this Agreement, the
transactions contemplated hereby or the performance of its obligations under
this Agreement, the Security Agreement or any other Related Document. This
Agreement has been duly executed and delivered by the New Pledgor. This
Agreement, the Security Agreement and each Related Document constitutes the
legal, valid and binding obligation of the New Pledgor enforceable against it in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally and by general principles of equity, whether such
enforceability is considered in a proceeding at law or in equity.

(b) The representations and warranties set forth in the Security Agreement are
true and correct in all material respects on and as of the date hereof as such
representations and warranties apply to the New Pledgor (except to the extent
that any such representations and warranties expressly relate to an earlier
date) with the same force and effect as if made on the date hereof.

Section 3. Security Agreement Questionnaire. Attached hereto is a copy of a
fully completed Security Agreement Questionnaire executed by the New Pledgor in
substantially the form of Exhibit A attached to the Security Agreement. The
information contained in the Security Agreement Questionnaire delivered by the
New Pledgor is true and correct in all material respects.

Section 4. Further Assurances. At any time and from time to time, upon the
Collateral Agent’s request and at the sole expense of the New Pledgor, the New
Pledgor will promptly and duly execute and deliver any and all further
instruments and documents and take such further action as the Collateral Agent
reasonably deems necessary to effect the purposes of this Agreement.

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Section 5. Binding Effect. This Agreement shall be binding upon the New Pledgor
and shall inure to the benefit of the Collateral Agent and the other Purchasers
and their respective successors and assigns.

Section 6. Governing Law. This Agreement and the rights of the parties hereunder
shall be construed and interpreted in accordance with the laws of the State of
New York.

Section 7. JURY TRIAL WAIVER. THE NEW PLEDGOR HEREBY IRREVOCABLY WAIVES ALL
RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

Section 8. Miscellaneous. Delivery of an executed signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
copy of this Agreement.

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

 

[                    ] By:       Name:   Title: