Exhibit 10.2

 

EXECUTION COPY

 

 

 

PLEDGE AND SECURITY AGREEMENT

 

made by

 

POWER-ONE, INC.

 

and

 

EACH OTHER PLEDGOR HEREUNDER

 

in favor of

 

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent

 

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Dated as of June 17, 2008

 

 

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

SECTION 1.

Certain Definitions

1

 

 

 

SECTION 2.

Pledge of Security

7

 

 

 

SECTION 3.

Security for Obligations

8

 

 

 

SECTION 4.

Delivery of Pledged Equity

9

 

 

 

SECTION 5.

Representations and Warranties

9

 

 

 

SECTION 6.

Covenants

11

 

 

 

SECTION 7.

Further Assurances

14

 

 

 

SECTION 8.

Voting Rights; Dividends; Etc.

15

 

 

 

SECTION 9.

Collateral Agent Appointed Attorney-in-Fact

16

 

 

 

SECTION 10.

Collateral Agent May Perform; No Assumption

17

 

 

 

SECTION 11.

Standard of Care

18

 

 

 

SECTION 12.

Insurance Matters

21

 

 

 

SECTION 13.

Remedies

21

 

 

 

SECTION 14.

Application of Proceeds

23

 

 

 

SECTION 15.

Indemnity and Expenses

23

 

 

 

SECTION 16.

Set-Off

23

 

 

 

SECTION 17.

Continuing Security Interest; Assigns

24

 

 

 

SECTION 18.

Additional Pledgors

24

 

 

 

SECTION 19.

Amendments; Etc.

24

 

 

 

SECTION 20.

Notices

24

 

 

 

SECTION 21.

Failure or Indulgence Not Waiver; Remedies Cumulative

25

 

 

 

SECTION 22.

Severability

25

 

 

 

SECTION 23.

Headings

25

 

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SECTION 24.

Governing Law; Terms

25

 

 

 

SECTION 25.

Consent to Jurisdiction and Service of Process

25

 

 

 

SECTION 26.

Waiver of Jury Trial

26

 

 

 

SECTION 27.

Acknowledgments

26

 

 

 

SECTION 28.

Counterparts

26

 

 

 

SECTION 29.

Suretyship Waivers by Pledgors, etc.

26

 

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SECURITY AGREEMENT

 

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is dated as of June 17,
2008 and entered into by and among POWER-ONE, INC., a Delaware corporation
(“Company”), each of THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of Company
(each of such undersigned Subsidiaries being a “Subsidiary Pledgor” and
collectively “Subsidiary Pledgors,”) and each Additional Pledgor that may become
a party hereto after the date hereof in accordance with Section 18 hereof (each
of Company, Subsidiary Pledgors and each Additional Pledgor being a “Pledgor”
and collectively “Pledgors”), in favor of THE BANK OF NEW YORK TRUST COMPANY,
N.A., a national banking association (in such capacity, together with its
successors and assigns, herein called “Collateral Agent”).

 

PRELIMINARY STATEMENTS

 

A.            Company and Collateral Agent are parties to an Indenture dated the
date hereof (said indenture, as it may hereafter be amended, supplemented,
amended and restated or otherwise modified from time to time, being the
“Indenture”, the terms defined therein and not otherwise defined herein being
used herein as therein defined; the Indenture, together with this Agreement and
the other Security Documents, being collectively the “Indenture Documents”). 
The Indenture Documents evidence and govern the issuance of debt securities (the
“Securities”) by the Company in the original principal amount of up to Eighty
Million Dollars ($80,000,000).

 

B.            As a condition to the purchase of the Securities pursuant to the
Purchase Agreement, the Company and each other Pledgor party hereto is required
to grant the security interests and undertake the obligations  contemplated by
this Agreement.

 

C.            Each Pledgor is the legal and beneficial owner of certain shares
of stock, partnership interests, interests in joint ventures, limited liability
company interests and other equity interests (“Equity Interests”) in one or more
Persons and/or certain other assets and property described herein.

 

NOW, THEREFORE, in consideration of the agreements set forth herein and for
other good and valuable consideration, each Pledgor hereby agrees with
Collateral Agent (and acknowledges that such Pledgor’s agreement to fulfill its
obligations hereunder is a material and essential part of the consideration and
inducement of Collateral Agent and the purchases of the Securities) as follows:

 

SECTION 1.              Certain Definitions.

 

(A)           THE FOLLOWING TERMS USED IN THIS AGREEMENT SHALL HAVE THE
FOLLOWING MEANINGS:

 

“Account Collateral” means each Pledgor’s right, title and interest, whether now
existing or hereafter acquired or arising, in, to and under, each Deposit
Account and Securities Account (including any successor accounts to any such
accounts) and all amounts, investments

 

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and any other property (including, but not limited to, checks, securities,
financial assets, investment property, security entitlements and instruments) at
any time deposited in or credited to any such account and all security
entitlements with respect thereto, including all income or gain earned thereon
and any proceeds thereof.

 

“Account Control Agreement” means, in respect of a Deposit Account, a Deposit
Account Control Agreement, and in respect of a Securities Account, a Securities
Account Control Agreement.

 

“Bankruptcy Code” means Title 11 of the United States Code, as now or hereafter
in effect.

 

“Cash Equivalents” means any of the following, to the extent owned by a Pledgor
free and clear of all Liens other than Liens created under the Indenture
Documents and having a maturity of not greater than 360 days from the date of
acquisition thereof: (a) readily marketable direct obligations of the Government
of the United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the Government of the
United States, (b) insured certificates of deposit of or time deposits with any
commercial bank that is a member of the Federal Reserve System, issues (or the
parent of which issues) commercial paper rated as described in clause (c) below,
is organized under the laws of the United States or any State thereof and has
combined capital and surplus of at least $1,000,000,000, (c) commercial paper in
an aggregate amount of no more than $20,000,000 per issuer outstanding at any
time, issued by any corporation organized under the laws of any State of the
United States and rated at least “Prime-1” (or the then equivalent grade) by
Moody’s or “A-1” (or the then equivalent grade) by S&P or (d) Investments,
classified in accordance with GAAP as current assets of any Pledgor, in money
market funds that are registered under the Investment Company Act of 1940, as
amended, that are administered by financial institutions that have the highest
rating obtainable from either Moody’s or S&P and the portfolios of which are
limited solely to Investments of the character, quality and maturity described
in clauses (a), (b) and (c) of this definition including, without limitation,
any such fund for which any Secured Party or an Affiliate of a Secured Party
serves as an investment advisor, administrator, shareholder servicing agent,
custodian or sub-custodian, notwithstanding that (A) such Secured Party or
Affiliate of a Secured Party charges and collects fees and expenses from such
funds for services rendered (provided that such charges, fees and expenses are
on terms consistent with terms negotiated at arm’s length) and (B) such Secured
Party charges and collects fees and expenses for services rendered, pursuant to
this Agreement.

 

“Contractual Obligation”, as applied to any Person, means any provision of any
security issued by that Person or of any material indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its properties is bound or to which it or
any of its properties is subject.

 

“Copyrights” means all items under copyright in various published and
unpublished works of authorship including, without limitation, computer
programs, computer data bases, other computer software layouts, trade dress,
drawings, designs, writings, and formulas.

 

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“Copyright Registrations” means all copyright registrations issued to any
Pledgor and applications for copyright registration that have been or may
hereafter be issued or applied for thereon in the United States and any state
thereof and in foreign countries.

 

“Copyright Rights” means all common law and other rights in and to the
Copyrights in the United States and any state thereof and in foreign countries
including all copyright licenses (but with respect to such copyright licenses,
only to the extent permitted by such licensing arrangements), the right (but not
the obligation) to renew and extend Copyright Registrations and any such rights
and to register works protectable by copyright and the right (but not the
obligation) to sue in the name of any Pledgor or in the name of Collateral Agent
for past, present and future infringements of the Copyrights and any such
rights.

 

“Counterpart” means a counterpart to this Agreement entered into by the Company
or a subsidiary of Company pursuant to Section 18 hereof.

 

“Deposit Account Control Agreement” means, in respect of a Deposit Account, a
Deposit Account Control Agreement, in a form reasonably acceptable to Collateral
Agent, by and among the applicable Pledgor, Collateral Agent and a depositary
institution, granting Collateral Agent Control over such Deposit Account.

 

“Designated Italian Merger” means a merger or consolidation of Power-One Italy
Holdings S.p.A. with and into Power-One Italy S.p.A., provided that upon the
effectiveness of such merger or consolidation, Company shall pledge all of the
outstanding Equity Interests of the surviving or resulting Person (subject to
the proviso to Section 2(a)), securing the payment of the Secured Obligations,
and within five Business Days after such merger or consolidation, such pledge
shall constitute a perfected (to the extent such concept or an analogous concept
is applicable under the relevant laws) security interest in such Equity
Interests prior to all other Liens.

 

“Domestic Subsidiary” means any direct or indirect Subsidiary of Company that is
incorporated or organized under the laws of the United States of America, any
state thereof or in the District of Columbia.

 

“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.

 

“Foreign Subsidiary” means any direct or indirect Subsidiary of Company that is
not a Domestic Subsidiary.

 

“Grant” means a Grant of Trademark Security Interest, substantially in the form
of Exhibit I annexed hereto, and a Grant of Patent Security Interest,
substantially in the form of

 

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Exhibit II annexed hereto, and a Grant of Copyright Security Interest,
substantially in the form of Exhibit III annexed hereto.

 

“Intellectual Property Collateral” means, with respect to any Pledgor all right,
title and interest (including rights acquired pursuant to a license or otherwise
but only to the extent permitted by agreements governing such license or other
use) in and to all

 

(I)            COPYRIGHTS, COPYRIGHT REGISTRATIONS AND COPYRIGHT RIGHTS,
INCLUDING, WITHOUT LIMITATION, EACH OF THE COPYRIGHTS, RIGHTS, TITLES AND
INTERESTS IN AND TO THE COPYRIGHTS, ALL DERIVATIVE WORKS AND OTHER WORKS
PROTECTABLE BY COPYRIGHT, WHICH ARE PRESENTLY, OR IN THE FUTURE MAY BE, OWNED,
CREATED (AS A WORK FOR HIRE FOR THE BENEFIT OF SUCH PLEDGOR), AUTHORED (AS A
WORK FOR HIRE FOR THE BENEFIT OF SUCH PLEDGOR), OR ACQUIRED BY SUCH PLEDGOR, IN
WHOLE OR IN PART, AND ALL COPYRIGHT RIGHTS WITH RESPECT THERETO AND ALL
COPYRIGHT REGISTRATIONS THEREFOR, HERETOFORE OR HEREAFTER GRANTED OR APPLIED
FOR, AND ALL RENEWALS AND EXTENSIONS THEREOF, THROUGHOUT THE WORLD;

 

(II)           PATENTS;

 

(III)          TRADEMARKS, TRADEMARK REGISTRATIONS, THE TRADEMARK RIGHTS AND
GOODWILL OF SUCH PLEDGOR’S BUSINESS SYMBOLIZED BY THE TRADEMARKS AND ASSOCIATED
THEREWITH;

 

(IV)          ALL TRADE SECRETS, TRADE SECRET RIGHTS, KNOW-HOW, CUSTOMER LISTS,
PROCESSES OF PRODUCTION, IDEAS, CONFIDENTIAL BUSINESS INFORMATION, TECHNIQUES,
PROCESSES, FORMULAS, AND ALL OTHER PROPRIETARY INFORMATION;

 

(V)           ALL PROCEEDS THEREOF (SUCH AS, BY WAY OF EXAMPLE AND NOT BY
LIMITATION, LICENSE ROYALTIES AND PROCEEDS OF INFRINGEMENT SUITS).

 

“Investment” means, with respect to any Person, (a) any purchase or other
acquisition by such Person of (i) any Equity Interest issued by, (ii) a
beneficial interest in any Equity Interest issued by, or (iii) any other equity
ownership interest in, any other Person, (b) any purchase by such Person of all
or substantially all of the assets of a business conducted by another Person or
all or substantially all of the assets constituting the business of a division,
branch or other unit operation of any other Person, (c) any loan, advance (other
than deposits with financial institutions available for withdrawal on demand,
prepaid expenses, accounts receivable and similar items made or incurred in the
ordinary course of business as presently conducted), or capital contribution by
such Person to any other Person, including all Indebtedness of any other Person
to such Person arising from a sale of property by such Person other than in the
ordinary course of its business, (d) any guarantee obligation incurred by such
Person in respect of any obligation of another and (e) any purchase, or entry
into, of any derivative instrument or other contract by such Person providing
for the economic or risk equivalent of all or any part of any investment in
another Person of the type referred to in clause (a), (b), (c) or (d) above.

 

“IP Filing Office” means either the United States Patent and Trademark Office
(USPTO or PTO) or the United States Copyright Office, as applicable.

 

“IP Supplement” means an IP Supplement, substantially in the form of Exhibit IV
annexed hereto.

 

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“Lien” means any lien, mortgage, pledge, assignment, security interest, charge
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.

 

“Patents” means all patents and patent applications and rights and interests in
patents and patent applications under any domestic or foreign law that are
presently, or in the future may be, owned or held by a Pledgor and all patents
and patent applications and rights, title and interests in patents and patent
applications under any domestic or foreign law that are presently, or in the
future may be, owned by such Pledgor in whole or in part, all rights (but not
obligations) corresponding thereto to sue for past, present and future
infringements and all re-issues, divisions, continuations, renewals, extensions
and continuations-in-part thereof.

 

“Permitted Dispositions” means (A) dispositions in the ordinary course of
business of inventory, (B) dispositions of obsolete or worn out property
(including obsolete or valueless intellectual property), whether now owned or
hereafter acquired, in the ordinary course of business, and dispositions of
property (including intellectual property) that are reasonably determined by the
Board of Directors of the disposing Pledgor (or, in the case of any disposition
or series of related dispositions in an amount not in excess of $100,000,
reasonably determined by the disposing Pledgor) in good faith to be of no
practical use to the business of Company and its Subsidiaries, which
dispositions do not, in the aggregate, materially adversely affect the value of
the Pledged Collateral taken as a whole, in an aggregate amount not in excess of
$2,000,000 over the term of this Agreement, (C) dispositions of cash or Cash
Equivalents not otherwise prohibited herein,  (D) dispositions to any Pledgor
not otherwise prohibited by the Indenture Documents, (E) dispositions of
property to the extent such transaction constitutes a Permitted Investment, and
(F) dispositions of equipment to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment.

 

“Permitted Investments” means (i)  Investments by Company that are not through
or in any Subsidiary or other Person and that are (x) reasonably determined by
Company to be strategic in nature and to have a valid business purpose or (y) in
the ordinary course of business, (ii) Investments in cash and Cash Equivalents,
(iii) Investments in any Pledgor (including, for the avoidance of doubt, any
newly formed Domestic or Foreign Subsidiary (first tier or otherwise) that has
become a Domestic or Foreign Subsidiary Pledgor hereunder), (iv) Investments in
any Subsidiary of a Pledgor that are in existence as of the Issue Date,
(v) Investments in the ordinary course of business in any newly formed
wholly-owned Foreign Subsidiary of a newly formed first tier Domestic or Foreign
Subsidiary that has become a Domestic or Foreign Subsidiary Pledgor hereunder
where Company has in good faith reasonably determined that the creation of the
newly formed wholly-owned Foreign Subsidiary and the Investment each have a
valid business purpose and do not materially impair the value of the Pledged
Collateral taken as a whole, (vi) Investments (including debt obligations and
Equity Interests) received in connection with the bankruptcy or reorganization
of suppliers and customers or in settlement of delinquent obligations of, or
other disputes with, customers and suppliers arising in the ordinary course of
business or upon the foreclosure with respect to any secured Investment or other
transfer of title with respect to any secured Investment, and (vii) Investments
by a Pledgor in equipment, fixed assets, real property or improvements, or
replacements or substitutions therefor or additions thereto (excluding normal
replacements and maintenance which are properly charged to current

 

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operations as operating expenses in accordance with GAAP), that have been or
should be, in accordance with GAAP, reflected as additions to property, plant or
equipment on a Consolidated balance sheet of such Pledgor or have a useful life
of more than one year, (viii) lease, utility and other similar deposits in the
ordinary course of business, (ix) hedging or other derivative obligations
otherwise permitted to be incurred under the Indebtedness covenants under the
Indenture and incurred in the ordinary course of business for a valid business
purpose, (x) receivables owing to Company or any Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; provided, however, that such trade terms
may include such concessionary trade terms as Company or any such Subsidiary
deems commercially reasonable under the circumstances, (xi) Investments that are
advances paid to third-party contract manufacturers in the ordinary course of
business to purchase specialized equipment required to produce specialized
products for Company or its Subsidiaries, (xii) Investments made by Company or a
Subsidiary for consideration consisting only of common Equity Interests of
Company, (xiii) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Subsidiary or in satisfaction of judgments, (xiv) any other Investment where
Company has in good faith reasonably determined that the Investment has a valid
business purpose and does not materially impair the value of the Pledged
Collateral taken as a whole if, upon the consummation of the Investment, the
resulting Investment has been pledged for the benefit of the Secured Parties on
a basis consistent with this Agreement and (xv) any other Investments not
specified above that do not in the aggregate, since the Issue Date, exceed
$1,000,000 (for purposes of calculating which, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent
increases or decreases in the value of such Investment).

 

“Permitted Securities” means (i) any security issued under any Company or
Subsidiary employee, officer and/or director stock or option plan reflected in
the financial statements contained in Company’s March 30, 2008 Form 10-Q, or
under any Company or Subsidiary employee, officer and/or director stock or
option plan adopted in the ordinary course of business after the date hereof, in
each case whether directly or upon exercise of any option or other security
issued thereunder and (ii) warrants for shares of Company’s common stock or
securities issued in connection with the exercise thereof.

 

“Pledged Collateral” has the meaning provided therefor in Section 2.

 

“Secured Parties” means, collectively, the Trustee, Collateral Agent and each
Holder.

 

“Securities Account Control Agreement” means, in respect of a Securities
Account, a Securities Account Control Agreement, in a form reasonably acceptable
to Collateral Agent, by and among the applicable Pledgor, Collateral Agent and a
Securities Intermediary, granting Collateral Agent Control over such Securities
Account.

 

“Trademarks” means all trademarks, service marks, designs, logos, indicia,
tradenames, trade dress, corporate names, company names, business names,
fictitious business names, trade styles and/or other source and/or business
identifiers and applications pertaining thereto, owned by a Pledgor, or
hereafter adopted and used, in its business.

 

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“Trademark Registrations” means all registrations that have been or may
hereafter be issued or applied for thereon in the United States and any state
thereof and in foreign countries (including, without limitation, the
registrations and applications set forth on Schedule VII annexed hereto).

 

“Trademark Rights” means all common law and other rights (but in no event any of
the obligations) in and to the Trademarks in the United States and any state
thereof and in foreign countries.

 

“UCC” means the Uniform Commercial Code, as it exists on that date of the
Agreement or as it may hereafter be amended in the State of New York.

 

(B)           THE FOLLOWING TERMS ARE USED HEREIN AS DEFINED IN THE UCC:
ACCOUNTS, CERTIFICATED SECURITY, CHATTEL PAPER, COMMERCIAL TORT CLAIMS, CONTROL,
DEPOSIT ACCOUNT, DOCUMENTS, EQUIPMENT, FARM PRODUCTS, GOODS, INSTRUMENTS,
INVENTORY, LETTER OF CREDIT RIGHTS, SECURITIES ACCOUNT, SECURITIES INTERMEDIARY
AND SUPPORTING OBLIGATIONS.

 

SECTION 2.              Pledge of Security.  Each Pledgor hereby appoints
Collateral Agent to act as collateral agent hereunder and pledges and assigns to
Collateral Agent, for the ratable benefit of the Secured Parties, and hereby
grants to Collateral Agent, for the ratable benefit of the Secured Parties, a
security interest in, all of such Pledgor’s right, title and interest in and to
the following (the “Pledged Collateral”):

 

(A)

 

(I)           ALL OF THE EQUITY INTERESTS NOW OR HEREAFTER OWNED BY SUCH PLEDGOR
IN EACH DOMESTIC SUBSIDIARY THAT IS OR SUBSEQUENTLY BECOMES A FIRST TIER
SUBSIDIARY OF COMPANY;

 

(II)          ALL OF THE EQUITY INTERESTS NOW OR HEREAFTER OWNED BY SUCH PLEDGOR
IN EACH FOREIGN SUBSIDIARY OF COMPANY LISTED ON SCHEDULE I;

 

in each case, whether such Equity Interests are classified as investment
property or general intangibles under the UCC, and shall include all securities
convertible into, and rights, warrants, options and other rights to purchase or
otherwise acquire, any Equity Interest, and shall include those owned on the
date hereof and described in Schedule I for such Pledgor, the certificates or
other instruments representing any of the foregoing and any interest of such
Pledgor, and all such interests hereafter acquired by Pledgors (or any of them)
and in the entries on the books of any Securities Intermediary pertaining
thereto (the “Pledged Equity”), and all distributions, dividends, and other
property received, receivable or otherwise distributed in respect of or in
exchange therefore;

 

provided, that, if the issuer of any such Pledged Equity is a controlled foreign
corporation (as such term is defined in Section 957(a) of the Internal Revenue
Code of 1986, as amended), the Pledged Equity shall not include any Equity
Interests of such issuer to the extent that creation of a security interest by
Pledgor in such Equity Interests could reasonably be expected to result in
material adverse tax consequences to Company, it being acknowledged and agreed
that the creation of a security interest in Equity Interests possessing up to
66% of the voting power of all

 

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classes of Equity Interests of such issuer entitled to vote will not result in
such adverse tax consequences;

 

(B)           THE ASSETS AND PROPERTY DESCRIBED IN SCHEDULE II FOR SUCH PLEDGOR,
WHETHER NOW OWNED OR HEREAFTER ACQUIRED BY SUCH PLEDGOR AND HOWSOEVER ITS
INTEREST THEREIN MAY ARISE OR APPEAR (WHETHER BY OWNERSHIP, SECURITY INTEREST,
CLAIM OR OTHERWISE) (THE “PLEDGED ASSETS”);

 

(C)           ALL BOOKS, RECORDS, LEDGER CARDS, FILES, CORRESPONDENCE, COMPUTER
PROGRAMS, TAPES, DISKS AND RELATED DATA PROCESSING SOFTWARE THAT AT ANY TIME
EVIDENCE OR CONTAIN INFORMATION RELATING TO ANY OF THE PLEDGED COLLATERAL OR ARE
OTHERWISE NECESSARY OR HELPFUL IN THE COLLECTION THEREOF OR REALIZATION
THEREUPON; AND

 

(D)           TO THE EXTENT NOT COVERED BY CLAUSES (A) AND (B) ABOVE, ALL
PROCEEDS OF ANY OR ALL OF THE FOREGOING PLEDGED COLLATERAL.  FOR PURPOSES OF
THIS AGREEMENT, THE TERM “PROCEEDS” MEANS ALL “PROCEEDS” AS SUCH TERM IS DEFINED
IN SECTION 9-102(A)(64) OF THE UCC AND, IN ANY EVENT, SHALL INCLUDE, WITHOUT
LIMITATION, ALL DIVIDENDS OR OTHER INCOME FROM SUCH PLEDGED COLLATERAL,
COLLECTIONS THEREON OR DISTRIBUTIONS OR PAYMENTS WITH RESPECT THERETO, WHATEVER
IS RECEIVABLE OR RECEIVED WHEN PLEDGED COLLATERAL OR PROCEEDS ARE SOLD,
EXCHANGED, COLLECTED OR OTHERWISE DISPOSED OF, WHETHER SUCH DISPOSITION IS
VOLUNTARY OR INVOLUNTARY, AND INCLUDES, WITHOUT LIMITATION, PROCEEDS OF ANY
INDEMNITY OR GUARANTY PAYABLE TO PLEDGORS OR COLLATERAL AGENT FROM TIME TO TIME
WITH RESPECT TO ANY OF THE PLEDGED COLLATERAL.

 

SECTION 3.              Security for Obligations.  This Agreement secures, and
the Pledged Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
redemption, conversion, repurchase, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a)),
of all obligations and liabilities of every nature of Company now or hereafter
existing under or arising out of or in connection with this Agreement or any of
the Indenture Documents, together with all extensions or renewals thereof,
whether for principal, interest (including without limitation interest that, but
for the filing of a petition in bankruptcy with respect to any Pledgor, would
accrue on such obligations, whether or not a claim is allowed against such
Pledgor for such interest in the related bankruptcy proceeding), fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Collateral Agent as a
preference, fraudulent transfer or otherwise; all other loans and future
advances made by Collateral Agent to any Pledgor and all other debts,
obligations and liabilities of each Pledgor or every kind and character now or
hereafter existing in favor of Collateral Agent, whether direct or indirect,
primary or secondary, joint or several, fixed or contingent, secured or
unsecured, and whether originally payable to Collateral Agent or to a third
party and subsequently acquired by Collateral Agent, it being contemplated that
any Pledgor may hereafter become indebted to Collateral Agent for such further
debts, obligations and liabilities; and all obligations of every nature of
Pledgors now or hereafter existing under this Agreement (all such obligations of
Pledgors being the “Secured Obligations”).

 

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SECTION 4.              Delivery of Pledged Equity.  In the case of Pledged
Equity consisting of Certificated Securities or Instruments, all such
Certificated Securities or Instruments representing or evidencing such Pledged
Equity shall be delivered to and held by or on behalf of Collateral Agent in a
segregated account pursuant hereto and shall be in suitable form for transfer by
delivery or, as applicable, shall be accompanied by the applicable Pledgor’s
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Collateral
Agent.  Upon the occurrence and during the continuation of an Event of Default,
Collateral Agent shall have the right, without notice to Pledgors, to transfer
to or to register in the name of Collateral Agent or any of its nominees any or
all of the Pledged Equity.

 

SECTION 5.              Representations and Warranties.  Each Pledgor represents
and warrants as follows:

 

(A)           ORGANIZATION AND POWERS.  SUCH PLEDGOR IS DULY ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING (SOLELY IN THE CASE OF AN ENTITY INCORPORATED OR
ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE THEREOF OR
IN ANY OTHER JURISDICTION IN WHICH AN ENTITY MAY BE IN GOOD STANDING) AND HAS
ALL REQUISITE POWER AND AUTHORITY TO OWN AND OPERATE ITS PROPERTIES, TO CARRY ON
ITS BUSINESS AS NOW CONDUCTED AND PROPOSED TO BE CONDUCTED AND TO ENTER INTO
THIS AGREEMENT AND CARRY OUT THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(B)           GOOD STANDING.  SUCH PLEDGOR IS QUALIFIED TO DO BUSINESS AND IN
GOOD STANDING (SOLELY IN THE CASE OF AN ENTITY INCORPORATED OR ORGANIZED UNDER
THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE THEREOF OR IN ANY OTHER
JURISDICTION IN WHICH AN ENTITY MAY BE IN GOOD STANDING) WHEREVER NECESSARY TO
CARRY ON ITS PRESENT BUSINESS AND OPERATIONS, EXCEPT IN JURISDICTIONS IN WHICH
THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING HAS NOT HAD AND WILL NOT HAVE
A MATERIAL ADVERSE EFFECT ON THE BUSINESS, OPERATIONS, PROPERTIES, ASSETS OR
CONDITION (FINANCIAL OR OTHERWISE) OF SUCH PLEDGOR AND ITS SUBSIDIARIES, TAKEN
AS A WHOLE.

 

(C)           BINDING OBLIGATION.  THIS AGREEMENT IS THE LEGALLY VALID AND
BINDING OBLIGATION OF SUCH PLEDGOR, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH
ITS TERMS, EXCEPT AS ENFORCEMENT MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM OR SIMILAR LAWS OR EQUITABLE PRINCIPLES RELATING TO
OR LIMITING CREDITORS’ RIGHTS GENERALLY.

 

(D)           DUE AUTHORIZATION, ETC. OF PLEDGED COLLATERAL.  ALL OF THE PLEDGED
EQUITY DESCRIBED IN SCHEDULE I FOR SUCH PLEDGOR HAS BEEN DULY AUTHORIZED AND
VALIDLY ISSUED AND IS FULLY PAID AND NON-ASSESSABLE AND REPRESENTS  ALL OF THE
PLEDGED EQUITY OWNED BY SUCH PLEDGOR.

 

(E)           DESCRIPTION OF PLEDGED COLLATERAL.  THE PLEDGED EQUITY CONSTITUTES
ALL OF THE ISSUED AND OUTSTANDING EQUITY INTERESTS IN EACH ISSUER THEREOF
(SUBJECT TO THE PROVISO TO SECTION 2(A)), AND THERE ARE NO OUTSTANDING WARRANTS,
OPTIONS OR OTHER RIGHTS TO PURCHASE, OR OTHER AGREEMENTS OUTSTANDING WITH
RESPECT TO, OR PROPERTY THAT IS NOW OR HEREAFTER CONVERTIBLE INTO, OR THAT
REQUIRES THE ISSUANCE OR SALE OF, ANY SECURITIES, OR RIGHTS OR INTEREST IN ANY
SECURITIES, OF ANY OF THE ISSUERS OF ANY OF THE PLEDGED EQUITY OR ANY OF THE
PROPERTIES OR ASSETS OF ANY OF SUCH ISSUERS.

 

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(F)            OWNERSHIP OF PLEDGED COLLATERAL.  SUCH PLEDGOR IS THE LEGAL,
RECORD AND BENEFICIAL OWNER OF THE PLEDGED COLLATERAL AND ITS INTERESTS IN THE
PLEDGED COLLATERAL ARE FREE AND CLEAR OF ANY LIEN EXCEPT FOR THE SECURITY
INTEREST CREATED BY THIS AGREEMENT.

 

(G)           GOVERNMENTAL AUTHORIZATIONS.  NO AUTHORIZATION, APPROVAL OR OTHER
ACTION BY, AND NO NOTICE TO OR FILING WITH, ANY GOVERNMENTAL AUTHORITY OR
REGULATORY BODY IS REQUIRED FOR EITHER (I) THE PLEDGE BY SUCH PLEDGOR OF THE
PLEDGED COLLATERAL PURSUANT TO THIS AGREEMENT AND THE GRANT BY SUCH PLEDGOR OF
THE SECURITY INTEREST GRANTED HEREBY, (II) THE EXECUTION, DELIVERY OR
PERFORMANCE OF THIS AGREEMENT BY SUCH PLEDGOR, OR (III) THE EXERCISE BY
COLLATERAL AGENT OF THE VOTING OR OTHER RIGHTS, OR THE REMEDIES IN RESPECT OF
THE PLEDGED COLLATERAL, PROVIDED FOR IN THIS AGREEMENT (EXCEPT AS MAY BE
REQUIRED IN CONNECTION WITH A DISPOSITION OF PLEDGED COLLATERAL BY LAWS
AFFECTING THE OFFERING AND SALE OF SECURITIES GENERALLY).

 

(H)           PERFECTION.  UPON (I) THE FILING OF UCC FINANCING STATEMENTS
NAMING SUCH PLEDGOR AS “DEBTOR,” NAMING COLLATERAL AGENT AS “SECURED PARTY” AND
DESCRIBING THE PLEDGED COLLATERAL IN THE FILING OFFICES SET FORTH ON
SCHEDULE III, (II) IN THE CASE OF PLEDGED COLLATERAL CONSISTING OF CERTIFICATED
SECURITIES OR EVIDENCED BY INSTRUMENTS, IN ADDITION TO FILING SUCH FINANCING
STATEMENTS, DELIVERY OF THE CERTIFICATES REPRESENTING SUCH CERTIFICATED
SECURITIES AND DELIVERY OF SUCH INSTRUMENTS TO COLLATERAL AGENT, IN EACH CASE
DULY ENDORSED OR ACCOMPANIED BY DULY EXECUTED INSTRUMENTS OF ASSIGNMENT OR
TRANSFER IN BLANK (AND IN THE CASE OF PLEDGED COLLATERAL ISSUED BY A FOREIGN
ISSUER, ANY ACTIONS REQUIRED UNDER FOREIGN LAW TO PERFECT (TO THE EXTENT SUCH
CONCEPT OR AN ANALOGOUS CONCEPT IS APPLICABLE UNDER THE RELEVANT LAWS) A
SECURITY INTEREST IN SUCH PLEDGED COLLATERAL), (III) IN THE CASE OF THE
INTELLECTUAL PROPERTY COLLATERAL, IN ADDITION TO THE FILING OF SUCH UCC
FINANCING STATEMENTS, THE RECORDATION OF A GRANT WITH THE APPLICABLE IP FILING
OFFICE, AND (IV) IN THE CASE OF PLEDGED COLLATERAL CONSISTING OF ACCOUNT
COLLATERAL WITH RESPECT TO A DEPOSIT ACCOUNT OR SECURITIES ACCOUNT, THE
EFFECTIVENESS OF AN ACCOUNT CONTROL AGREEMENT IN RESPECT OF SUCH DEPOSIT ACCOUNT
OR SECURITIES ACCOUNT, THE SECURITY INTERESTS IN THE PLEDGED COLLATERAL, GRANTED
TO COLLATERAL AGENT, WILL CONSTITUTE PERFECTED (TO THE EXTENT SUCH CONCEPT OR AN
ANALOGOUS CONCEPT IS APPLICABLE UNDER THE RELEVANT LAWS) SECURITY INTERESTS IN
THE PLEDGED COLLATERAL PRIOR TO ALL OTHER LIENS (EXCEPT FOR PERMITTED LIENS OF
THE TYPES DESCRIBED IN CLAUSES (I), (II), (III), (IV), (VI), (VII),
(VIII) (SOLELY WITH RESPECT TO THE EXTENSION, RENEWAL OR REFINANCING OF
INDEBTEDNESS SECURED BY LIENS OF THE TYPE DESCRIBED IN CLAUSE (VI) THEREOF),
(IX) AND (XII) OF THE DEFINITION OF PERMITTED LIENS), SECURING THE PAYMENT OF
THE SECURED OBLIGATIONS.

 

(I)            OFFICE LOCATIONS; TYPE AND JURISDICTION OF ORGANIZATION.  SUCH
PLEDGOR’S NAME AS IT APPEARS IN OFFICIAL FILINGS IN ITS JURISDICTION OF
ORGANIZATION, TYPE OF ORGANIZATION (I.E. CORPORATION, LIMITED LIABILITY COMPANY,
ETC.), JURISDICTION OF ORGANIZATION, PRINCIPAL PLACE OF BUSINESS, CHIEF
EXECUTIVE OFFICE, OFFICE WHERE SUCH PLEDGOR KEEPS ITS RECORDS REGARDING THE
PLEDGED COLLATERAL, AND ORGANIZATION NUMBER PROVIDED BY THE APPLICABLE
GOVERNMENT AUTHORITY OF THE JURISDICTION OF ORGANIZATION ARE SET FORTH ON
SCHEDULE IV ANNEXED HERETO OR THE APPLICABLE COUNTERPART.

 

(J)            NAMES.  NO PLEDGOR (OR PREDECESSOR BY MERGER OR OTHERWISE OF SUCH
PLEDGOR) HAS, WITHIN THE FIVE-YEAR PERIOD PRECEDING THE DATE HEREOF, OR, IN THE
CASE OF AN ADDITIONAL PLEDGOR, THE DATE OF THE APPLICABLE COUNTERPART, HAD A
DIFFERENT NAME FROM THE NAME

 

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OF SUCH PLEDGOR LISTED ON THE SIGNATURE PAGES HEREOF, EXCEPT THE NAMES SET FORTH
ON SCHEDULE IV ANNEXED HERETO OR THE APPLICABLE COUNTERPART.

 

(K)           MARGIN REGULATIONS.  THE PLEDGE OF THE PLEDGED COLLATERAL PURSUANT
TO THIS AGREEMENT DOES NOT VIOLATE REGULATION T, U OR X OF THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

 

(L)            ACCOUNT COLLATERAL.  THE VALUE OF CASH AND OTHER PROPERTY IN ALL
DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS CONSTITUTING PLEDGED COLLATERAL, THAT
ARE NOT SUBJECT TO EFFECTIVE ACCOUNT CONTROL AGREEMENTS, DOES NOT, IN THE
AGGREGATE, EXCEED $1,000,000.

 

(M)          OTHER INFORMATION.  ALL INFORMATION HERETOFORE, HEREIN OR HEREAFTER
SUPPLIED TO COLLATERAL AGENT BY OR ON BEHALF OF SUCH PLEDGOR WITH RESPECT TO THE
PLEDGED COLLATERAL IS ACCURATE AND COMPLETE IN ALL MATERIAL RESPECTS.

 

(N)           ACCOUNT DEBTORS.  NONE OF THE ACCOUNT DEBTORS OR OTHER PERSONS
OBLIGATED ON ANY OF THE PORTIONS OF THE PLEDGED ASSETS CONSISTING OF ACCOUNTS
RECEIVABLE IS A GOVERNMENTAL AUTHORITY COVERED BY THE FEDERAL ASSIGNMENT OF
CLAIMS ACT OR LIKE FEDERAL, STATE OR LOCAL STATUTE OR RULE IN RESPECT OF SUCH
PLEDGED COLLATERAL.

 

The representations and warranties as to the information set forth in Schedules
referred to herein are made, as to each Pledgor as of the date hereof (or, in
the case of the representation and warranty set forth in clause (l) above, shall
be made on and as of June 30, 2008) and, as to each Additional Pledgor, as of
the date of the applicable Counterpart, that, in the case of a Pledge Amendment,
such representations and warranties are made as of the date of such Pledge
Amendment.

 

Company shall cause its legal counsel to deliver a legal opinion regarding
certain of the representations and warranties set forth in this Section 5 and
such other matters as may be reasonably requested by Collateral Agent.

 

SECTION 6.              Covenants.  Each Pledgor shall:

 

(A)           NOT, EXCEPT AS EXPRESSLY PERMITTED BY THE INDENTURE DOCUMENTS AND
WITHOUT PREJUDICE TO CLAUSE (Y) BELOW, (I) SELL, ASSIGN (BY OPERATION OF LAW OR
OTHERWISE) OR OTHERWISE DISPOSE OF, OR GRANT ANY OPTION WITH RESPECT TO, ANY OF
THE PLEDGED COLLATERAL, EXCEPT FOR PERMITTED DISPOSITIONS, (II) CREATE OR SUFFER
TO EXIST ANY LIEN (OTHER THAN, FOR THE AVOIDANCE OF DOUBT, PERMITTED LIENS) UPON
OR WITH RESPECT TO ANY OF THE PLEDGED COLLATERAL, EXCEPT FOR THE SECURITY
INTEREST UNDER THIS AGREEMENT OR ANY OTHER INDENTURE DOCUMENT, OR (III) PERMIT
ANY ISSUER OF PLEDGED EQUITY TO MERGE OR CONSOLIDATE WITH ANOTHER PERSON (EXCEPT
(X) WITH A PLEDGOR IN A MERGER OR CONSOLIDATION IN WHICH THE SURVIVING OR
RESULTING PERSON IS A PLEDGOR AND (Y) THE DESIGNATED ITALIAN MERGER) UNLESS UPON
THE EFFECTIVENESS OF SUCH MERGER OR CONSOLIDATION, THE SURVIVING OR RESULTING
PERSON (IF OTHER THAN A PLEDGOR) BECOMES A PLEDGOR HEREUNDER AND ALL OF THE
OUTSTANDING EQUITY INTERESTS OF THE SURVIVING OR RESULTING PERSON (SUBJECT TO
THE PROVISO TO SECTION 2(A)) BECOME PLEDGED HEREUNDER AND NO CASH, SECURITIES OR
OTHER PROPERTY IS DISTRIBUTED IN RESPECT OF THE OUTSTANDING SHARES OF ANY OTHER
CONSTITUENT PERSON;

 

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(B)           DO OR CAUSE TO BE DONE, AND CAUSE EACH ISSUER OF PLEDGED EQUITY TO
DO OR CAUSE TO BE DONE, ALL THINGS NECESSARY TO PRESERVE AND KEEP IN FULL FORCE
AND EFFECT ITS RESPECTIVE CORPORATE EXISTENCE IN ACCORDANCE WITH ITS
ORGANIZATIONAL DOCUMENTS (AS THE SAME MAY BE AMENDED FROM TIME TO TIME);

 

(C)           (I) CAUSE EACH ISSUER OF PLEDGED EQUITY NOT TO ISSUE EQUITY
INTERESTS (EXCEPT PERMITTED SECURITIES) IN ADDITION TO OR IN SUBSTITUTION FOR
THE PLEDGED EQUITY ISSUED BY SUCH ISSUER, EXCEPT TO COMPANY OR ANY OTHER
PLEDGOR, (II) SUBJECT TO THE PROVISO TO SECTION 2(A), PLEDGE HEREUNDER,
IMMEDIATELY UPON ITS ACQUISITION (DIRECTLY OR INDIRECTLY) THEREOF, ANY AND ALL
ADDITIONAL EQUITY INTERESTS OF EACH ISSUER OF PLEDGED EQUITY, AND (III) SUBJECT
TO THE PROVISO TO SECTION 2(A), PLEDGE HEREUNDER, IMMEDIATELY UPON ITS
ACQUISITION (DIRECTLY OR INDIRECTLY) THEREOF, ANY AND ALL EQUITY INTERESTS OF
ANY PERSON THAT, AFTER THE DATE OF THIS AGREEMENT, BECOMES, AS A RESULT OF ANY
OCCURRENCE, A DIRECT DOMESTIC SUBSIDIARY OR A FIRST TIER FOREIGN SUBSIDIARY OF
COMPANY;

 

(D)           AT ITS EXPENSE (I) PERFORM AND COMPLY IN ALL MATERIAL RESPECTS
WITH ALL TERMS AND PROVISIONS OF ANY AGREEMENT RELATED TO THE PLEDGED COLLATERAL
REQUIRED TO BE PERFORMED OR COMPLIED WITH BY IT, (II) MAINTAIN ITS AGREEMENTS IN
ALL SUCH AGREEMENTS IN FULL FORCE AND EFFECT, AND (III) ENFORCE ITS RIGHTS UNDER
ALL SUCH AGREEMENTS IN ACCORDANCE WITH THEIR TERMS;

 

(E)           GIVE COLLATERAL AGENT AT LEAST 30 DAYS’ PRIOR WRITTEN NOTICE OF
ANY (I) CHANGE IN SUCH PLEDGOR’S NAME, IDENTITY OR CORPORATE STRUCTURE AND
(II) REINCORPORATION, REORGANIZATION OR OTHER ACTION THAT RESULTS IN A CHANGE OF
THE JURISDICTION OR ORGANIZATION OF SUCH PLEDGOR;

 

(F)            PROMPTLY DELIVER TO COLLATERAL AGENT ALL WRITTEN NOTICES RECEIVED
BY IT WITH RESPECT TO THE PLEDGED COLLATERAL;

 

(G)           PAY PROMPTLY WHEN DUE ALL TAXES, ASSESSMENTS AND GOVERNMENTAL
CHARGES OR LEVIES IMPOSED UPON, AND ALL CLAIMS AGAINST, THE PLEDGED COLLATERAL,
EXCEPT TO THE EXTENT THE VALIDITY THEREOF IS BEING CONTESTED IN GOOD FAITH AND
WITH RESPECT TO WHICH RESERVES IN CONFORMITY WITH GAAP HAVE BEEN PROVIDED ON THE
BOOKS OF THE APPLICABLE PLEDGOR; PROVIDED THAT SUCH PLEDGOR SHALL IN ANY EVENT
PAY SUCH TAXES, ASSESSMENTS, CHARGES, LEVIES OR CLAIMS NOT LATER THAN FIVE DAYS
PRIOR TO THE DATE OF ANY PROPOSED SALE UNDER ANY JUDGEMENT, WRIT OR WARRANT OF
ATTACHMENT ENTERED OR FILED AGAINST SUCH PLEDGOR OR ANY OF THE PLEDGED
COLLATERAL AS A RESULT OF THE FAILURE TO MAKE SUCH PAYMENT;

 

(H)           KEEP ADEQUATE RECORDS CONCERNING THE PLEDGED COLLATERAL AND PERMIT
COLLATERAL AGENT OR ITS REPRESENTATIVES OR DESIGNEES FROM TIME TO TIME UPON
REASONABLE NOTICE WITHIN NORMAL BUSINESS HOURS TO EXAMINE AND MAKE COPIES OF AND
ABSTRACTS FROM SUCH RECORDS;

 

(I)            AT ITS EXPENSE, DEFEND COLLATERAL AGENT’S RIGHT, TITLE AND
SECURITY INTEREST IN AND TO THE PLEDGED COLLATERAL AGAINST THE CLAIMS OF ANY
PERSON;

 

(J)            AT ITS EXPENSE, AT ANY TIME AND FROM TIME TO TIME, PROMPTLY
EXECUTE AND DELIVER ALL FURTHER INSTRUMENTS, FINANCING STATEMENTS, CONTINUATION
STATEMENTS AND DOCUMENTS AND TAKE ALL FURTHER ACTION THAT MAY BE NECESSARY OR
DESIRABLE OR THAT COLLATERAL AGENT MAY REASONABLY REQUEST IN ORDER TO
(I) PERFECT AND PROTECT THE SECURITY INTERESTS CREATED OR PURPORTED TO BE
CREATED

 

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HEREBY, (II) ENABLE COLLATERAL AGENT TO EXERCISE AND ENFORCE ITS RIGHTS AND
REMEDIES HEREUNDER IN RESPECT OF THE PLEDGED COLLATERAL OR (III) OTHERWISE
EFFECT THE PURPOSES OF THIS AGREEMENT;

 

(K)           NOT MAKE OR CONSENT TO ANY AMENDMENT OR OTHER MODIFICATION OR
WAIVER WITH RESPECT TO ANY AGREEMENT CONCERNING THE PLEDGED COLLATERAL AS
PERMITTED BY THE INDENTURE DOCUMENTS AND THIS AGREEMENT; NOT TAKE ANY ACTION
THAT COULD, OR FAIL TO TAKE ANY ACTION WHICH FAILURE COULD, REASONABLY BE
EXPECTED TO RESULT IN ANY ONE OR MORE OF THE REPRESENTATIONS AND WARRANTIES SET
FORTH IN SECTION 5 OF THIS AGREEMENT BEING INCORRECT OR INACCURATE IN ANY
MATERIAL RESPECT WHEN MADE;

 

(L)            IN THE CASE OF COMPANY, NOT HAVE OR PERMIT TO EXIST ANY
FIRST-TIER DOMESTIC SUBSIDIARY THAT IS NOT A PLEDGOR HEREUNDER WITHOUT THE PRIOR
WRITTEN CONSENT OF COLLATERAL AGENT (PROVIDED, HOWEVER, IN THE CASE OF A
DOMESTIC SUBSIDIARY THAT IS DIRECTLY OR INDIRECTLY ACQUIRED OR FORMED BY COMPANY
AFTER THE ISSUE DATE, THIS COVENANT SHALL NOT BE BREACHED FOR A PERIOD OF FIVE
BUSINESS DAYS AFTER SUCH ACQUISITION OR FORMATION THEREOF, PROVIDED THAT WITHIN
SUCH PERIOD SUCH ACQUIRED OR FORMED DOMESTIC SUBSIDIARY SHALL BECOME AN
ADDITIONAL PLEDGOR IN ACCORDANCE WITH SECTION 18, AND SCHEDULE II SHALL BE
UPDATED TO REFLECT SUCH DOMESTIC SUBSIDIARY AS A PLEDGOR);

 

(M)          NOT TAKE ANY ACTION WHICH WOULD, OR FAIL TO TAKE ANY ACTION WHICH
FAILURE WOULD, IN ANY MANNER IMPAIR THE ENFORCEABILITY OF COLLATERAL AGENT’S
SECURITY INTEREST IN ANY PLEDGED COLLATERAL;

 

(N)           KEEP THE PLEDGED COLLATERAL IN GOOD ORDER AND REPAIR AND NOT USE
THE SAME IN VIOLATION OF LAW OR ANY POLICY OF INSURANCE THEREON;

 

(O)           PERMIT COLLATERAL AGENT, OR ITS DESIGNEE, TO INSPECT THE PLEDGED
COLLATERAL AT ANY REASONABLE TIME, WHEREVER LOCATED;

 

(P)           NOT, FROM AND AFTER JUNE 30, 2008, PERMIT THE VALUE OF ALL CASH
AND OTHER ASSETS MAINTAINED IN ALL DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS
CONSTITUTING PLEDGED COLLATERAL, THAT ARE NOT SUBJECT TO EFFECTIVE ACCOUNT
CONTROL AGREEMENTS, TO EXCEED, IN THE AGGREGATE, $1,000,000;

 

(Q)           NOT GRANT CONTROL OVER ANY DEPOSIT ACCOUNT OR SECURITIES ACCOUNT
CONSTITUTING PLEDGED COLLATERAL TO ANY PERSON OTHER THAN COLLATERAL AGENT;

 

(R)            PROMPTLY NOTIFY COLLATERAL AGENT IN WRITING OF, AND UPDATE
SCHEDULE II SO AS TO LIST WITH SPECIFICITY, ALL COMMERCIAL TORT CLAIMS AT ANY
TIME HELD OR ACQUIRED BY SUCH PLEDGOR (EXCEPT FOR SUCH COMMERCIAL TORT CLAIMS IN
AMOUNTS AS DO NOT, IN THE AGGREGATE, EXCEED $1,000,000), IN EACH CASE INCLUDING
A SUMMARY DESCRIPTION OF SUCH CLAIM, AND GRANT TO COLLATERAL AGENT IN WRITING A
SECURITY INTEREST THEREIN AND IN THE PROCEEDS THEREOF, ALL UPON THE TERMS OF
THIS AGREEMENT, WITH SUCH WRITING TO BE IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO COLLATERAL AGENT;

 

(S)           [INTENTIONALLY OMITTED];

 

(T)            [INTENTIONALLY OMITTED];

 

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(U)           [INTENTIONALLY OMITTED];

 

(V)           CONDUCT ALL TRANSACTIONS WITH ANY OF ITS AFFILIATES ON TERMS THAT
ARE FAIR AND REASONABLE AND NO LESS FAVORABLE TO SUCH PLEDGOR THAN IT WOULD
OBTAIN IN A COMPARABLE ARM’S LENGTH TRANSACTION WITH A PERSON NOT AN AFFILIATE;

 

(W)          [INTENTIONALLY OMITTED];

 

(X)           [INTENTIONALLY OMITTED];

 

(Y)           IN THE CASE OF COMPANY, MAINTAIN DIRECT OWNERSHIP OF ALL OF, AND
NOT TRANSFER OR DISPOSE OF ANY OF, AND NOT PERMIT TO BE ISSUED TO ANY PERSON
OTHER THAN COMPANY ANY OF, THE CAPITAL STOCK IN THE PLEDGED SUBSIDIARIES;
PROVIDED THAT, IN THE CASE OF SHENZHEN, PAI SHALL MAINTAIN DIRECT OWNERSHIP OF
ALL OF, AND SHALL NOT TRANSFER OR DISPOSE OF ANY OF, AND SHALL NOT PERMIT TO BE
ISSUED TO ANY PERSON OTHER THAN PAI ANY OF, THE CAPITAL STOCK IN SHENZHEN; AND
PROVIDED FURTHER THAT, IN THE CASE OF POWERONE UK, COMPANY SHALL MAINTAIN DIRECT
OWNERSHIP OF NO LESS THAN 60.5% OF, AND SHALL NOT TRANSFER OR DISPOSE OF ANY OF,
AND SHALL NOT PERMIT TO BE ISSUED (IF AFTER SUCH ISSUANCE COMPANY SHALL HAVE
LESS THAN 60.5% OF THE CAPITAL STOCK IN POWERONE UK) TO ANY PERSON OTHER THAN
COMPANY ANY OF, THE CAPITAL STOCK IN POWERONE UK; AND

 

(Z)            NOT MAKE OR HOLD ANY INVESTMENTS IN ANY OTHER PERSON, EXCEPT FOR
PERMITTED INVESTMENTS.

 

SECTION 7.              Further Assurances.

 

(A)           EACH PLEDGOR AGREES THAT FROM TIME TO TIME, AT THE EXPENSE OF SUCH
PLEDGOR, SUCH PLEDGOR WILL PROMPTLY EXECUTE AND DELIVER, AND CAUSE TO BE
EXECUTED AND DELIVERED, AT REQUEST OF COLLATERAL AGENT, AGREEMENTS ESTABLISHING
THAT COLLATERAL AGENT HAS CONTROL OVER ALL PLEDGED COLLATERAL AND ALL FURTHER
INSTRUMENTS AND DOCUMENTS, AND TAKE ALL FURTHER ACTION, THAT MAY BE NECESSARY OR
DESIRABLE, OR THAT COLLATERAL AGENT MAY REQUEST, IN ORDER TO PERFECT AND PROTECT
ANY SECURITY INTEREST GRANTED OR PURPORTED TO BE GRANTED HEREBY OR TO ENABLE
COLLATERAL AGENT TO EXERCISE AND ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER WITH
RESPECT TO ANY PLEDGED COLLATERAL.  WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, EACH PLEDGOR WILL:  (I) EXECUTE (IF NECESSARY) AND FILE SUCH
FINANCING OR CONTINUATION STATEMENTS, OR AMENDMENTS THERETO, AND SUCH OTHER
INSTRUMENTS OR NOTICES, AS MAY BE NECESSARY OR DESIRABLE, OR AS COLLATERAL AGENT
MAY REQUEST, IN ORDER TO PERFECT AND PRESERVE THE SECURITY INTERESTS GRANTED OR
PURPORTED TO BE GRANTED HEREBY (INCLUDING, WITHOUT LIMITATION, PLEDGE AGREEMENTS
UNDER THE LOCAL LAW OF THE JURISDICTION OF ANY PERSON THE EQUITY INTERESTS IN
WHICH CONSTITUTE PLEDGED COLLATERAL, AND ALL FILINGS, NOTICES, INSTRUMENTS AND
OTHER DOCUMENTS RELATING THERETO) AND (II) AT COLLATERAL AGENT’S REQUEST, APPEAR
IN AND DEFEND ANY ACTION OR PROCEEDING THAT MAY AFFECT SUCH PLEDGOR’S TITLE TO
OR COLLATERAL AGENT’S SECURITY INTEREST IN ALL OR ANY PART OF THE PLEDGED
COLLATERAL.  EACH PLEDGOR HEREBY AUTHORIZES COLLATERAL AGENT (PROVIDED
COLLATERAL AGENT SHALL HAVE NO OBLIGATION) TO FILE ONE OR MORE FINANCING OR
CONTINUATION STATEMENTS, AND AMENDMENTS THERETO, RELATIVE TO ALL OR ANY PART OF
THE PLEDGED COLLATERAL WITHOUT THE SIGNATURE OF SUCH PLEDGOR; PROVIDED, HOWEVER,
THAT EACH PLEDGOR SHALL HAVE THE PRIMARY OBLIGATION TO FILE ANY FINANCING OR
CONTINUATION STATEMENT.

 

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(B)           EACH PLEDGOR FURTHER AGREES THAT IT WILL, UPON OBTAINING ANY
ADDITIONAL EQUITY INTEREST (INCLUDING ANY ADDITIONAL EQUITY INTEREST HEREAFTER
OWNED IN A DOMESTIC SUBSIDIARY THAT IS A DIRECT SUBSIDIARY OF COMPANY OR A
FOREIGN SUBSIDIARY THAT IS A FIRST TIER SUBSIDIARY OF COMPANY (IN EACH CASE,
FORMED OR ACQUIRED AFTER THE DATE OF THIS AGREEMENT)), PROMPTLY (AND IN ANY
EVENT WITHIN FIVE BUSINESS DAYS) DELIVER TO COLLATERAL AGENT A PLEDGE AMENDMENT,
DULY EXECUTED BY SUCH PLEDGOR, IN SUBSTANTIALLY THE FORM OF SCHEDULE V ANNEXED
HERETO (A “PLEDGE AMENDMENT”), IN RESPECT OF THE ADDITIONAL PLEDGED EQUITY TO BE
PLEDGED PURSUANT TO THIS AGREEMENT; PROVIDED THAT THE FAILURE OF SUCH PLEDGOR TO
EXECUTE A PLEDGE AMENDMENT WITH RESPECT TO ANY ADDITIONAL PLEDGED EQUITY SHALL
NOT IMPAIR THE SECURITY INTEREST OF COLLATERAL AGENT THEREIN OR OTHERWISE
ADVERSELY AFFECT THE RIGHTS AND REMEDIES OF COLLATERAL AGENT HEREUNDER WITH
RESPECT THERETO.  UPON EACH SUCH ACQUISITION, THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN SECTION 5 HEREOF SHALL BE DEEMED TO HAVE BEEN MADE BY SUCH PLEDGOR
AS TO THE PLEDGED EQUITY DESCRIBED IN SUCH PLEDGE AMENDMENT.

 

(C)           EACH PLEDGOR SHALL PROMPTLY NOTIFY COLLATERAL AGENT IN WRITING OF
ANY RIGHTS TO INTELLECTUAL PROPERTY COLLATERAL ACQUIRED BY SUCH PLEDGOR AFTER
THE DATE HEREOF.  PROMPTLY AFTER THE FILING OF AN APPLICATION FOR ANY TRADEMARK
REGISTRATION, PATENT OR COPYRIGHT REGISTRATION, EACH PLEDGOR SHALL EXECUTE AND
DELIVER TO COLLATERAL AGENT AN IP SUPPLEMENT, AND SUBMIT A GRANT FOR RECORDATION
WITH RESPECT THERETO IN THE APPLICABLE IP FILING OFFICE; PROVIDED, THE FAILURE
OF ANY PLEDGOR TO EXECUTE AN IP SUPPLEMENT OR SUBMIT A GRANT FOR RECORDATION
WITH RESPECT TO ANY ADDITIONAL INTELLECTUAL PROPERTY COLLATERAL SHALL NOT IMPAIR
THE SECURITY INTEREST OF COLLATERAL AGENT THEREIN OR OTHERWISE ADVERSELY AFFECT
THE RIGHTS AND REMEDIES OF COLLATERAL AGENT HEREUNDER WITH RESPECT THERETO. 
UPON DELIVERY TO COLLATERAL AGENT OF AN IP SUPPLEMENT, SCHEDULES VII, VIII, IX
ANNEXED HERETO AND SCHEDULE A TO EACH GRANT, AS APPLICABLE, SHALL BE DEEMED
MODIFIED TO INCLUDE A REFERENCE TO ANY RIGHT, TITLE OR INTEREST IN ANY EXISTING
INTELLECTUAL PROPERTY COLLATERAL OR ANY INTELLECTUAL PROPERTY COLLATERAL SET
FORTH ON SCHEDULE A TO SUCH IP SUPPLEMENT.  UPON EACH SUCH ACQUISITION, THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 5(H) HEREOF SHALL BE DEEMED
TO HAVE BEEN MADE BY SUCH PLEDGOR AS TO SUCH INTELLECTUAL PROPERTY COLLATERAL,
WHETHER OR NOT SUCH IP SUPPLEMENT IS DELIVERED.

 

(D)           COMPANY AGREES TO USE COMMERCIALLY REASONABLE EFFORTS TO PERFECT,
WITHIN 30 DAYS AFTER THE ISSUE DATE, THE LIEN GRANTED HEREBY ON THE EQUITY
INTERESTS OWNED BY COMPANY IN POWER-ONE LTD. (CAYMAN ISLANDS) BY MEANS OF A
LEGAL PLEDGE, IN A MANNER THAT ENSURES THE FIRST PRIORITY OF SUCH LIEN AND IS
OTHERWISE ON CUSTOMARY TERMS REASONABLY ACCEPTABLE TO COLLATERAL AGENT.

 

SECTION 8.              Voting Rights; Dividends; Etc.

 

(A)           SO LONG AS NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING:

 

(I)            EACH PLEDGOR SHALL BE ENTITLED TO EXERCISE OR REFRAIN FROM
EXERCISING ANY AND ALL VOTING AND OTHER CONSENSUAL RIGHTS PERTAINING TO THE
PLEDGED COLLATERAL OR ANY PART THEREOF FOR ANY PURPOSE NOT INCONSISTENT WITH THE
TERMS OF THIS AGREEMENT OR THE INDENTURE DOCUMENTS; PROVIDED, HOWEVER, THAT SUCH
PLEDGOR SHALL NOT EXERCISE OR REFRAIN FROM EXERCISING ANY SUCH RIGHT IF
COLLATERAL AGENT SHALL HAVE NOTIFIED SUCH PLEDGOR THAT, IN COLLATERAL AGENT’S
JUDGMENT, SUCH ACTION WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE VALUE OF THE
PLEDGED COLLATERAL OR ANY PART THEREOF; AND

 

15

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(ii)           each Pledgor shall be entitled to receive and retain any and all
dividends, other distributions and interest paid in respect of the Pledged
Collateral.

 

(B)          UPON THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF
DEFAULT:

 

(I)            UPON WRITTEN NOTICE FROM COLLATERAL AGENT TO PLEDGORS, ALL RIGHTS
OF PLEDGORS TO EXERCISE THE VOTING AND OTHER CONSENSUAL RIGHTS THAT THEY WOULD
OTHERWISE BE ENTITLED TO EXERCISE PURSUANT TO SECTION 8(A)(I) SHALL CEASE, AND
ALL SUCH RIGHTS SHALL THEREUPON BECOME VESTED IN COLLATERAL AGENT WHO SHALL
THEREUPON HAVE THE SOLE RIGHT TO EXERCISE SUCH VOTING AND OTHER CONSENSUAL
RIGHTS;

 

(II)           ALL RIGHTS OF PLEDGORS TO RECEIVE THE DIVIDENDS, OTHER
DISTRIBUTIONS AND INTEREST PAYMENTS THAT THEY WOULD OTHERWISE BE AUTHORIZED TO
RECEIVE AND RETAIN PURSUANT TO SECTION 8(A)(II) SHALL CEASE, AND ALL SUCH RIGHTS
SHALL THEREUPON BECOME VESTED IN COLLATERAL AGENT WHO SHALL THEREUPON HAVE THE
SOLE RIGHT TO RECEIVE AND HOLD AS PLEDGED COLLATERAL SUCH DIVIDENDS, OTHER
DISTRIBUTIONS AND INTEREST PAYMENTS; AND

 

(III)          ALL DIVIDENDS, PRINCIPAL, INTEREST PAYMENTS AND OTHER
DISTRIBUTIONS THAT ARE RECEIVED BY PLEDGORS CONTRARY TO THE PROVISIONS OF
PARAGRAPH (II) OF THIS SECTION 8(B) SHALL BE RECEIVED IN TRUST FOR THE BENEFIT
OF COLLATERAL AGENT, SHALL BE SEGREGATED FROM OTHER FUNDS OF PLEDGORS AND SHALL
FORTHWITH BE PAID OVER TO COLLATERAL AGENT AS PLEDGED COLLATERAL IN THE SAME
FORM AS SO RECEIVED (WITH ANY NECESSARY ENDORSEMENTS).

 

(C)           IN ORDER TO PERMIT COLLATERAL AGENT TO EXERCISE THE VOTING AND
OTHER CONSENSUAL RIGHTS THAT IT MAY BE ENTITLED TO EXERCISE PURSUANT TO
SECTION 8(B)(I) AND TO RECEIVE ALL DIVIDENDS AND OTHER DISTRIBUTIONS WHICH IT
MAY BE ENTITLED TO RECEIVE UNDER SECTION 8(A)(II) OR SECTION 8(B)(II), (I) EACH
PLEDGOR SHALL PROMPTLY EXECUTE AND DELIVER (OR CAUSE TO BE EXECUTED AND
DELIVERED) TO COLLATERAL AGENT ALL SUCH PROXIES, DIVIDEND PAYMENT ORDERS AND
OTHER INSTRUMENTS AS COLLATERAL AGENT MAY FROM TIME TO TIME REASONABLY REQUEST
AND (II) WITHOUT LIMITING THE EFFECT OF THE IMMEDIATELY PRECEDING CLAUSE (I),
EACH PLEDGOR HEREBY GRANTS TO COLLATERAL AGENT AN IRREVOCABLE PROXY TO VOTE THE
PLEDGED EQUITY AND TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES
TO WHICH A HOLDER OF THE PLEDGED EQUITY WOULD BE ENTITLED (INCLUDING, WITHOUT
LIMITATION, GIVING OR WITHHOLDING WRITTEN CONSENTS OF HOLDERS OF EQUITY
INTERESTS, CALLING SPECIAL MEETINGS OF HOLDERS OF EQUITY INTERESTS AND VOTING AT
SUCH MEETINGS), WHICH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED EQUITY ON THE
RECORD BOOKS OF THE ISSUER THEREOF) BY ANY OTHER PERSON (INCLUDING THE ISSUER OF
THE PLEDGED EQUITY OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT AND WHICH PROXY SHALL ONLY TERMINATE UPON THE PAYMENT IN FULL
OF THE SECURED OBLIGATIONS.

 

SECTION 9.              Collateral Agent Appointed Attorney-in-Fact.  Each
Pledgor hereby irrevocably appoints Collateral Agent as such Pledgor’s
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of such Pledgor, Collateral Agent or otherwise, from time to time in
Collateral Agent’s discretion to take any action and to execute any instrument
that Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including without limitation:

 

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(A)           TO FILE ONE OR MORE FINANCING OR CONTINUATION STATEMENTS, OR
AMENDMENTS THERETO, RELATIVE TO ALL OR ANY PART OF THE PLEDGED COLLATERAL
WITHOUT THE SIGNATURE OF SUCH PLEDGOR;

 

(B)           UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT, TO ASK, DEMAND, COLLECT, SUE FOR, RECOVER, COMPOUND, RECEIVE AND GIVE
ACQUITTANCE AND RECEIPTS FOR MONEYS DUE AND TO BECOME DUE UNDER OR IN RESPECT OF
ANY OF THE PLEDGED COLLATERAL;

 

(C)           UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT, TO RECEIVE, ENDORSE AND COLLECT ANY INSTRUMENTS MADE PAYABLE TO SUCH
PLEDGOR REPRESENTING ANY DIVIDEND, PRINCIPAL OR INTEREST PAYMENT OR OTHER
DISTRIBUTION IN RESPECT OF THE PLEDGED COLLATERAL OR ANY PART THEREOF AND TO
GIVE FULL DISCHARGE FOR THE SAME;

 

(D)           UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT, TO FILE ANY CLAIMS OR TAKE ANY ACTION OR INSTITUTE ANY PROCEEDINGS THAT
COLLATERAL AGENT MAY DEEM NECESSARY OR DESIRABLE FOR THE COLLECTION OF ANY OF
THE PLEDGED COLLATERAL OR OTHERWISE TO ENFORCE THE RIGHTS OF COLLATERAL AGENT
WITH RESPECT TO ANY OF THE PLEDGED COLLATERAL;

 

(E)           TO PAY OR DISCHARGE TAXES OR LIENS LEVIED OR PLACED UPON OR
THREATENED AGAINST THE PLEDGED COLLATERAL, THE LEGALITY OR VALIDITY THEREOF AND
THE AMOUNTS NECESSARY TO DISCHARGE THE SAME TO BE DETERMINED BY COLLATERAL AGENT
IN ITS SOLE DISCRETION, ANY SUCH PAYMENTS MADE BY COLLATERAL AGENT TO BECOME
OBLIGATIONS OF SUCH PLEDGOR TO COLLATERAL AGENT, DUE AND PAYABLE IMMEDIATELY
WITHOUT DEMAND;

 

(F)            UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT, GENERALLY TO SELL, TRANSFER, PLEDGE, MAKE ANY AGREEMENT WITH RESPECT TO
OR OTHERWISE DEAL WITH ANY OF THE PLEDGED COLLATERAL AS FULLY AND COMPLETELY AS
THOUGH COLLATERAL AGENT WERE THE ABSOLUTE OWNER THEREOF FOR ALL PURPOSES, AND TO
DO, AT COLLATERAL AGENT’S OPTION AND SUCH PLEDGOR’S EXPENSE, AT ANY TIME OR FROM
TIME TO TIME, ALL ACTS AND THINGS THAT COLLATERAL AGENT DEEMS NECESSARY TO
PROTECT, PRESERVE OR REALIZE UPON THE PLEDGED COLLATERAL AND COLLATERAL AGENT’S
SECURITY INTEREST THEREIN IN ORDER TO EFFECT THE INTENT OF THIS AGREEMENT, ALL
AS FULLY AND EFFECTIVELY AS SUCH PLEDGOR MIGHT DO; AND

 

(G)           UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT, TO OBTAIN AND ADJUSTED INSURANCE REQUIRED TO BE MAINTAINED BY SUCH
PLEDGOR.

 

However, Collateral Agent shall have no obligation to do any of the foregoing or
to take any actions relating to the Pledged Collateral, and Collateral Agent
may, without liability to any Pledgor or any other Person, take or refrain from
taking any such actions, as Collateral Agent in its sole discretion deems to be
in the interest of Collateral Agent.

 

SECTION 10.            Collateral Agent May Perform; No Assumption.

 

(A)           IF ANY PLEDGOR FAILS TO PERFORM ANY AGREEMENT CONTAINED HEREIN,
COLLATERAL AGENT MAY ITSELF PERFORM, OR CAUSE PERFORMANCE OF, SUCH AGREEMENT,
AND THE EXPENSES OF COLLATERAL AGENT INCURRED IN CONNECTION THEREWITH SHALL BE
PAYABLE BY SUCH PLEDGOR UNDER SECTION 15(B).

 

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(B)           ANYTHING CONTAINED HEREIN TO THE CONTRARY NOTWITHSTANDING,
(I) EACH PLEDGOR SHALL REMAIN LIABLE UNDER ANY AGREEMENTS INCLUDED IN OR RELATED
TO THE PLEDGED COLLATERAL, TO THE EXTENT SET FORTH THEREIN, TO PERFORM ALL OF
ITS DUTIES AND OBLIGATIONS THEREUNDER TO THE SAME EXTENT AS IF THIS AGREEMENT
HAD NOT BEEN EXECUTED, (II) THE EXERCISE BY COLLATERAL AGENT OF ANY OF ITS
RIGHTS HEREUNDER SHALL NOT RELEASE ANY PLEDGOR FROM ANY OF ITS DUTIES OR
OBLIGATIONS UNDER ANY SUCH AGREEMENTS, AND (III) COLLATERAL AGENT SHALL NOT HAVE
ANY OBLIGATION OR LIABILITY UNDER ANY SUCH AGREEMENTS BY REASON OF THIS
AGREEMENT, NOR SHALL COLLATERAL AGENT BE OBLIGATED TO PERFORM ANY OF THE
OBLIGATIONS OR DUTIES OF ANY PLEDGOR THEREUNDER OR TO TAKE ANY ACTION TO COLLECT
OR ENFORCE ANY CLAIM FOR PAYMENT ASSIGNED HEREUNDER.

 

SECTION 11.            Standard of Care.

 

(A)           THE POWERS CONFERRED ON COLLATERAL AGENT UNDER THIS AGREEMENT ARE
SOLELY TO PROTECT THE INTERESTS OF COLLATERAL AGENT IN THE PLEDGED COLLATERAL
AND SHALL NOT IMPOSE ANY DUTY UPON COLLATERAL AGENT TO EXERCISE ANY SUCH
POWERS.  EXCEPT FOR THE EXERCISE OF REASONABLE CARE IN THE CUSTODY OF ANY
PLEDGED COLLATERAL IN ITS POSSESSION AND THE ACCOUNTING FOR MONEYS ACTUALLY
RECEIVED BY IT HEREUNDER, COLLATERAL AGENT SHALL HAVE NO DUTY AS TO ANY PLEDGED
COLLATERAL, IT BEING UNDERSTOOD THAT COLLATERAL AGENT SHALL HAVE NO
RESPONSIBILITY FOR (A) ASCERTAINING OR TAKING ACTION WITH RESPECT TO CALLS,
CONVERSIONS, EXCHANGES, MATURITIES, TENDERS OR OTHER MATTERS RELATING TO ANY
PLEDGED COLLATERAL, WHETHER OR NOT COLLATERAL AGENT HAS OR IS DEEMED TO HAVE
KNOWLEDGE OF SUCH MATTERS, (B) TAKING ANY NECESSARY STEPS (OTHER THAN STEPS
TAKEN IN ACCORDANCE WITH THE STANDARD OF CARE SET FORTH ABOVE TO MAINTAIN
POSSESSION OF THE PLEDGED COLLATERAL) TO PRESERVE RIGHTS AGAINST ANY PRIOR
PARTIES OR ANY OTHER RIGHTS PERTAINING TO ANY PLEDGED COLLATERAL, (C) TAKING ANY
NECESSARY STEPS TO COLLECT OR REALIZE UPON THE SECURED OBLIGATIONS OR ANY
GUARANTEE THEREFOR, OR ANY PART THEREOF, OR ANY OF THE PLEDGED COLLATERAL, OR
(D) INITIATING ANY ACTION TO PROTECT THE PLEDGED COLLATERAL AGAINST THE
POSSIBILITY OF A DECLINE IN MARKET VALUE.  COLLATERAL AGENT SHALL BE DEEMED TO
HAVE EXERCISED REASONABLE CARE IN THE CUSTODY AND PRESERVATION OF PLEDGED
COLLATERAL IN ITS POSSESSION IF SUCH PLEDGED COLLATERAL IS ACCORDED TREATMENT
SUBSTANTIALLY EQUAL TO THAT WHICH COLLATERAL AGENT ACCORDS ITS OWN PROPERTY
CONSISTING OF NEGOTIABLE SECURITIES.

 

(B)           THE DUTIES AND OBLIGATIONS OF COLLATERAL AGENT SHALL BE DETERMINED
SOLELY BY THE EXPRESS PROVISIONS OF THIS AGREEMENT AND COLLATERAL AGENT SHALL
NOT BE LIABLE EXCEPT FOR THE PERFORMANCE OF SUCH DUTIES AND OBLIGATIONS AS ARE
SPECIFICALLY SET OUT IN THIS AGREEMENT.  COLLATERAL AGENT SHALL NOT BE REQUIRED
TO INQUIRE AS TO THE PERFORMANCE OR OBSERVATION OF ANY OBLIGATION, TERM OR
CONDITION UNDER ANY AGREEMENT OR ARRANGEMENT BY THE TRUSTEE, THE ISSUER OR ANY
OTHER PARTY TO THE TRANSACTION DOCUMENTS.  COLLATERAL AGENT SHALL BE UNDER NO
LIABILITY TO ANY PARTY HERETO BY REASON OF ANY FAILURE ON THE PART OF ANY PARTY
HERETO OR ANY MAKER, GUARANTOR, ENDORSER OR OTHER SIGNATORY OF ANY DOCUMENT OR
ANY OTHER PERSON TO PERFORM SUCH PERSON’S OBLIGATIONS UNDER ANY SUCH DOCUMENT.

 

(C)           COLLATERAL AGENT SHALL NOT BE RESPONSIBLE IN ANY MANNER FOR THE
VALIDITY OR SUFFICIENCY OF THIS AGREEMENT OR OF ANY PLEDGED COLLATERAL DELIVERED
HEREUNDER OR UNDER THE PLEDGED EQUITY AGREEMENTS, OR FOR THE VALUE OR
COLLECTIBILITY OF ANY NOTE, CHECK OR OTHER INSTRUMENT, IF ANY, SO DELIVERED, OR
FOR ANY REPRESENTATIONS MADE OR OBLIGATIONS ASSUMED BY ANY PARTY OTHER THAN
COLLATERAL AGENT. COLLATERAL AGENT SHALL NOT BE BOUND TO EXAMINE OR INQUIRE INTO
OR BE LIABLE FOR ANY DEFECT OR FAILURE IN THE RIGHT OR TITLE OF EACH PLEDGOR TO
ALL OR ANY OF SUCH

 

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ASSETS WHETHER SUCH DEFECT OR FAILURE WAS KNOWN TO COLLATERAL AGENT OR MIGHT
HAVE BEEN DISCOVERED UPON EXAMINATION OR INQUIRY AND WHETHER CAPABLE OF REMEDY
OR NOT.

 

(D)           COLLATERAL AGENT SHALL BE FULLY PROTECTED IN ACTING ON AND RELYING
UPON ANY WRITTEN NOTICE DIRECTION, REQUEST, WAIVER, CONSENT, RECEIPT OR OTHER
PAPER OR DOCUMENT WHICH COLLATERAL AGENT IN GOOD FAITH BELIEVES TO HAVE BEEN
SIGNED AND PRESENTED BY THE PROPER PARTY OR PARTIES.

 

(E)           COLLATERAL AGENT SHALL NOT BE RESPONSIBLE FOR ANY UNSUITABILITY,
INADEQUACY OR UNFITNESS OF ANY SECURITY INTEREST CREATED HEREUNDER OR PURSUANT
TO ANY OTHER SECURITY DOCUMENT PERTAINING TO THIS MATTER NOR SHALL IT BE
OBLIGATED TO MAKE ANY INVESTIGATION INTO, AND SHALL BE ENTITLED TO ASSUME, THE
ADEQUACY AND FITNESS OF ANY SECURITY INTEREST CREATED HEREUNDER OR PURSUANT TO
ANY OTHER SECURITY DOCUMENT PERTAINING TO THIS MATTER.

 

(F)            COLLATERAL AGENT SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT,
OR FOR ANY ACT DONE OR STEP TAKEN OR OMITTED BY IT IN GOOD FAITH OR FOR ANY
MISTAKE IN ACT OR LAW, OR FOR ANYTHING WHICH IT MAY DO OR REFRAIN FROM DOING IN
CONNECTION HEREWITH, EXCEPT ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(G)           COLLATERAL AGENT MAY SEEK THE ADVICE, AT THE EXPENSE OF COMPANY,
OF LEGAL COUNSEL IN THE EVENT OF ANY DISPUTE OR QUESTION AS TO THE CONSTRUCTION
OF ANY OF THE PROVISIONS OF THIS AGREEMENT OR ITS DUTIES HEREUNDER, AND IT SHALL
INCUR NO LIABILITY AND SHALL BE FULLY PROTECTED IN RESPECT OF ANY ACTION TAKEN,
OMITTED OR SUFFERED BY IT IN GOOD FAITH IN ACCORDANCE WITH THE ADVICE OR OPINION
OF SUCH COUNSEL.

 

(H)           COLLATERAL AGENT SHALL NOT BE REQUIRED TO USE OR RISK ITS OWN
FUNDS OR OTHERWISE INCUR ANY LIABILITY IN THE PERFORMANCE OF ITS OBLIGATIONS OR
DUTIES, OR IN EXERCISE OF ANY RIGHTS OR POWERS, AND SHALL NOT BE REQUIRED TO
TAKE ANY ACTION WHICH, IN COLLATERAL AGENT’S SOLE JUDGMENT, COULD INVOLVE IT IN
EXPENSE OR LIABILITY UNLESS FURNISHED WITH SECURITY AND INDEMNITY WHICH
COLLATERAL AGENT DEEMS IN ITS SOLE DISCRETION TO BE SATISFACTORY.

 

(I)            IN THE ABSENCE OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD
FAITH ON THE PART OF COLLATERAL AGENT, COLLATERAL AGENT MAY CONCLUSIVELY RELY,
AS TO THE TRUTH OF THE STATEMENTS AND THE CORRECTNESS OF THE OPINIONS EXPRESSED
THEREIN, UPON ANY CERTIFICATES OR OPINIONS FURNISHED TO COLLATERAL AGENT WHICH
CONFORM TO THE REQUIREMENTS OF THIS AGREEMENT.

 

(J)            COLLATERAL AGENT SHALL NOT BE LIABLE WITH RESPECT TO ANY ACTION
TAKEN OR OMITTED TO BE TAKEN BY IT IN GOOD FAITH IN ACCORDANCE WITH ANY
DIRECTION GIVEN UNDER THIS AGREEMENT.

 

(K)           COLLATERAL AGENT MAY CONCLUSIVELY RELY AND SHALL BE FULLY
PROTECTED IN ACTING OR REFRAINING FROM ACTING UPON ANY RESOLUTION, CERTIFICATE,
STATEMENT, INSTRUMENT, OPINION, REPORT, NOTICE, REQUEST, CONSENT, ORDER,
APPROVAL OR OTHER PAPER OR DOCUMENT REASONABLY BELIEVED BY IT TO BE GENUINE AND
TO HAVE BEEN SIGNED OR PRESENTED BY THE PROPER PARTY OR PARTIES.

 

(L)            COLLATERAL AGENT SHALL NOT BE BOUND TO MAKE ANY INVESTIGATION
INTO THE FACTS OR MATTERS STATED IN ANY RESOLUTION, CERTIFICATE, STATEMENT,
INSTRUMENT, OPINION, REPORT, NOTICE, REQUEST, CONSENT, APPROVAL OR OTHER PAPER
OR DOCUMENT.

 

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(M)          COLLATERAL AGENT MAY ACT THROUGH AGENTS AND ATTORNEYS-IN-FACT UNDER
THIS AGREEMENT AND SHALL NOT BE RESPONSIBLE FOR THE CONDUCT OR NEGLIGENCE OF ANY
AGENT APPOINTED WITH DUE CARE.  COLLATERAL AGENT MAY ALSO APPOINT ADDITIONAL
INSTITUTIONS AS CO-COLLATERAL AGENTS, PLEDGEE’S OR CHARGEE’S WITH RESPECT TO THE
PLEDGED EQUITY OR ANY OF THE OTHER PLEDGED COLLATERAL.

 

(N)           COLLATERAL AGENT MAY RESIGN AND BE DISCHARGED FROM ITS DUTIES
HEREUNDER AT ANY TIME BY GIVING WRITTEN NOTICE OF SUCH RESIGNATION TO COMPANY.
UPON SUCH NOTICE, A SUCCESSOR COLLATERAL AGENT SHALL BE APPOINTED BY COMPANY AND
SUCH SUCCESSOR COLLATERAL AGENT SHALL BECOME THE SUCCESSOR COLLATERAL AGENT
HEREUNDER UPON THE RESIGNATION DATE SPECIFIED IN SUCH NOTICE.  IF COMPANY SHALL
FAIL TO HAVE APPOINTED A SUCCESSOR COLLATERAL AGENT WITHIN 30 DAYS AFTER
COLLATERAL AGENT HAS GIVEN WRITTEN NOTICE OF ITS RESIGNATION TO COMPANY,
COLLATERAL AGENT MAY PETITION A COURT OF COMPETENT JURISDICTION TO APPOINT A
SUCCESSOR COLLATERAL AGENT.

 

(O)           IN NO EVENT SHALL COLLATERAL AGENT BE LIABLE FOR ANY INDIRECT,
SPECIAL, PUNITIVE OR CONSEQUENTIAL LOSS OR DAMAGE OF ANY KIND WHATSOEVER,
INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, EVEN IF IT HAS BEEN ADVISED OF THE
LIKELIHOOD OF SUCH LOSS OR DAMAGE AND REGARDLESS OF THE FORM OF ACTION.

 

(P)           IN NO EVENT SHALL COLLATERAL AGENT BE LIABLE FOR ANY FAILURE OR
DELAY IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER BECAUSE OF CIRCUMSTANCES
BEYOND ITS CONTROL, INCLUDING, BUT NOT LIMITED TO, ACTS OF GOD, FLOOD, WAR
(WHETHER DECLARED OR UNDECLARED), TERRORISM, STRIKES, WORK STOPPAGES, CIVIL OR
MILITARY DISTURBANCES, NUCLEAR OR NATURAL CATASTROPHES, FIRE, RIOT, EMBARGO,
LOSS OR MALFUNCTIONS OF UTILITIES, COMMUNICATIONS OR COMPUTER (SOFTWARE AND
HARDWARE) SERVICES, GOVERNMENT ACTION, INCLUDING ANY LAWS, ORDINANCES,
REGULATIONS, GOVERNMENTAL ACTION OR THE LIKE WHICH DELAY, RESTRICT OR PROHIBIT
THE PROVIDING OF THE SERVICES CONTEMPLATED BY THIS AGREEMENT.

 

(Q)           COLLATERAL AGENT AGREES TO ACCEPT AND ACT UPON FACSIMILE
TRANSMISSION OF WRITTEN INSTRUCTIONS PURSUANT TO THIS AGREEMENT; PROVIDED,
HOWEVER, THAT (A) THE PARTY PROVIDING SUCH WRITTEN INSTRUCTIONS, SUBSEQUENT TO
SUCH TRANSMISSION OF WRITTEN INSTRUCTIONS, SHALL PROVIDE THE ORIGINALLY EXECUTED
INSTRUCTIONS OR DIRECTIONS TO COLLATERAL AGENT IN A TIMELY MANNER, AND (B) SUCH
ORIGINALLY EXECUTED INSTRUCTIONS OR DIRECTIONS SHALL BE SIGNED BY AN AUTHORIZED
REPRESENTATIVE OF THE PARTY PROVIDING SUCH INSTRUCTIONS OR DIRECTIONS.

 

(R)            THE PLEDGORS AND COLLATERAL AGENT HEREBY APPOINT BNY CORPORATE
TRUSTEE SERVICES LIMITED, THE BANK OF NEW YORK TRUST COMPANY (CAYMAN) LIMITED,
THE BANK OF NEW YORK (LUXEMBOURG) S.A. AND THE BANK OF NEW YORK, AS
CO-COLLATERAL AGENTS WITH RESPECT TO THE PLEDGED EQUITY (THE “PLEDGED EQUITY
CO-COLLATERAL AGENTS”).  UPON AN EVENT OF DEFAULT, THE PLEDGED EQUITY
CO-COLLATERAL AGENTS SHALL TAKE ALL ENFORCEMENT ACTIONS WITH RESPECT TO THE
PLEDGED EQUITY AS DIRECTED BY COLLATERAL AGENT.  FROM TIME TO TIME COLLATERAL
AGENT MAY ALSO APPOINT ADDITIONAL INSTITUTIONS AS CO-COLLATERAL AGENTS, PLEDGEES
OR CHARGEES WITH RESPECT TO THE PLEDGED EQUITY OR ANY OF THE OTHER PLEDGED
COLLATERAL.

 

The Pledgors hereby agree that all rights, privileges, protections, immunities
and benefits given to the Trustee under the Indenture and Collateral Agent
hereunder (including, but not limited to, the right to be indemnified by the
Pledgors)  are extended to the Pledged Equity

 

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Co-Collateral Agents and any other co-collateral agent, pledgee or chargee
appointed by Collateral Agent with respect to the Pledged Equity or any of the
other Pledged Collateral.

 

SECTION 12.            Insurance Matters.

 

(A)           EACH PLEDGOR WILL MAINTAIN WITH FINANCIALLY SOUND AND REPUTABLE
INSURERS INSURANCE WITH RESPECT TO ITS INVENTORY INSURED WITH CASUALTY OR
PHYSICAL HAZARD INSURANCE ON AN “ALL RISKS” BASIS, WITH A FULL REPLACEMENT COST
ENDORSEMENT AND AN “AGREED AMOUNT” CLAUSE IN AN AMOUNT EQUAL TO 100% OF THE FULL
REPLACEMENT COST OF SUCH INVENTORY.  SUCH INSURANCE SHALL BE IN SUCH MINIMUM
AMOUNTS THAT SUCH PLEDGOR WILL NOT BE DEEMED A CO-INSURER UNDER APPLICABLE
INSURANCE LAWS, REGULATIONS AND POLICIES AND OTHERWISE SHALL BE IN SUCH AMOUNTS,
CONTAIN SUCH TERMS, BE IN SUCH FORMS AND BE FOR SUCH PERIODS AS MAY BE
REASONABLY SATISFACTORY TO COLLATERAL AGENT.  IN ADDITION, WITHIN THIRTY (30)
DAYS OF THE DATE OF THIS AGREEMENT, ALL SUCH INSURANCE SHALL NAME COLLATERAL
AGENT AS AN ADDITIONAL INSURED.

 

(B)           THE PROCEEDS OF ANY CASUALTY INSURANCE IN RESPECT OF ANY CASUALTY
LOSS OF ANY OF THE PLEDGED COLLATERAL SHALL BE HELD BY COLLATERAL AGENT AS CASH
COLLATERAL FOR THE SECURED OBLIGATIONS.  COLLATERAL AGENT MAY, AT ITS SOLE
OPTION, DISBURSE FROM TIME TO TIME ALL OR ANY PART OF SUCH PROCEEDS SO HELD AS
CASH COLLATERAL, UPON SUCH TERMS AND CONDITIONS AS COLLATERAL AGENT MAY
REASONABLY PRESCRIBE, FOR DIRECT APPLICATION BY SUCH PLEDGOR SOLELY TO THE
REPAIR OR REPLACEMENT OF THE INVENTORY PROPERTY SO DAMAGED OR DESTROYED, OR
COLLATERAL AGENT MAY APPLY ALL OR ANY PART OF SUCH PROCEEDS TO THE SECURED
OBLIGATIONS.

 

(C)           ALL POLICIES OF INSURANCE SHALL PROVIDE FOR AT LEAST THIRTY (30)
DAYS’ PRIOR WRITTEN CANCELLATION NOTICE TO COLLATERAL AGENT.  IN THE EVENT OF
FAILURE BY ANY PLEDGOR TO PROVIDE AND MAINTAIN INSURANCE AS HEREIN PROVIDED,
COLLATERAL AGENT MAY (BUT SHALL HAVE NO OBLIGATION TO), AT ITS OPTION, PROVIDE
SUCH INSURANCE AND CHARGE THE AMOUNT THEREOF TO SUCH PLEDGOR.  WITHIN THIRTY
(30) DAYS OF THE DATE OF THIS AGREEMENT, AND ON EACH ANNUAL ANNIVERSARY DATE
THEREAFTER, COMPANY SHALL FURNISH COLLATERAL AGENT WITH CERTIFICATES OF
INSURANCE AND POLICIES EVIDENCING COMPLIANCE WITH THE FOREGOING INSURANCE
PROVISION.

 

SECTION 13.            Remedies.

 

(A)           IF ANY EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING,
COLLATERAL AGENT MAY (AND UPON THE WRITTEN DIRECTION AND INDEMNITY OF THE
HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE OUTSTANDING SECURITIES UNDER
THE INDENTURE SHALL) EXERCISE IN RESPECT OF THE PLEDGED COLLATERAL, IN ADDITION
TO ALL OTHER RIGHTS AND REMEDIES PROVIDED FOR HEREIN OR OTHERWISE AVAILABLE TO
IT, ALL THE RIGHTS AND REMEDIES OF A SECURED PARTY ON DEFAULT UNDER THE UCC
(WHETHER OR NOT THE UCC APPLIES TO THE AFFECTED PLEDGED COLLATERAL), AND
COLLATERAL AGENT MAY ALSO IN ITS SOLE DISCRETION (AND UPON THE WRITTEN DIRECTION
AND INDEMNITY OF THE HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE
OUTSTANDING SECURITIES UNDER THE INDENTURE SHALL), WITHOUT NOTICE EXCEPT AS
SPECIFIED BELOW, SELL THE PLEDGED COLLATERAL OR ANY PART THEREOF IN ONE OR MORE
PARCELS AT PUBLIC OR PRIVATE SALE, AT ANY EXCHANGE OR BROKER’S BOARD OR AT ANY
OF COLLATERAL AGENT’S OFFICES OR ELSEWHERE, FOR CASH, ON CREDIT OR FOR FUTURE
DELIVERY, AT SUCH TIME OR TIMES AND AT SUCH PRICE OR PRICES AND UPON SUCH OTHER
TERMS AS COLLATERAL AGENT MAY DEEM COMMERCIALLY REASONABLE, IRRESPECTIVE OF THE
IMPACT OF ANY SUCH SALES ON THE MARKET PRICE OF THE PLEDGED COLLATERAL. 
COLLATERAL AGENT MAY BE THE PURCHASER OF ANY OR ALL OF THE PLEDGED COLLATERAL AT
ANY

 

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SUCH SALE, AND SHALL BE ENTITLED, FOR THE PURPOSE OF BIDDING AND MAKING
SETTLEMENT OR PAYMENT OF THE PURCHASE PRICE FOR ALL OR ANY PORTION OF THE
PLEDGED COLLATERAL SOLD AT ANY SUCH PUBLIC SALE, TO USE AND APPLY ANY OF THE
SECURED OBLIGATIONS AS A CREDIT ON ACCOUNT OF THE PURCHASE PRICE FOR ANY PLEDGED
COLLATERAL PAYABLE BY COLLATERAL AGENT AT SUCH SALE.  EACH PURCHASER AT ANY SUCH
SALE SHALL HOLD THE PROPERTY SOLD ABSOLUTELY FREE FROM ANY CLAIM OR RIGHT ON THE
PART OF PLEDGORS, AND EACH PLEDGOR HEREBY WAIVES (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) ALL RIGHTS OF REDEMPTION, STAY AND/OR APPRAISAL WHICH IT NOW HAS
OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW
EXISTING OR HEREAFTER ENACTED.  EACH PLEDGOR AGREES THAT, TO THE EXTENT NOTICE
OF SALE SHALL BE REQUIRED BY LAW, AT LEAST TEN DAYS’ NOTICE TO SUCH PLEDGOR OF
THE TIME AND PLACE OF ANY PUBLIC SALE OR THE TIME AFTER WHICH ANY PRIVATE SALE
IS TO BE MADE SHALL CONSTITUTE REASONABLE NOTIFICATION.  COLLATERAL AGENT SHALL
NOT BE OBLIGATED TO MAKE ANY SALE OF PLEDGED COLLATERAL REGARDLESS OF NOTICE OF
SALE HAVING BEEN GIVEN.  COLLATERAL AGENT MAY ADJOURN ANY PUBLIC OR PRIVATE SALE
FROM TIME TO TIME BY ANNOUNCEMENT AT THE TIME AND PLACE FIXED THEREFOR, AND SUCH
SALE MAY, WITHOUT FURTHER NOTICE, BE MADE AT THE TIME AND PLACE TO WHICH IT WAS
SO ADJOURNED.  EACH PLEDGOR HEREBY WAIVES ANY CLAIMS AGAINST COLLATERAL AGENT
ARISING BY REASON OF THE FACT THAT THE PRICE AT WHICH ANY PLEDGED COLLATERAL MAY
HAVE BEEN SOLD AT SUCH A PRIVATE SALE WAS LESS THAN THE PRICE WHICH MIGHT HAVE
BEEN OBTAINED AT A PUBLIC SALE, EVEN IF COLLATERAL AGENT ACCEPTS THE FIRST OFFER
RECEIVED AND DOES NOT OFFER SUCH PLEDGED COLLATERAL TO MORE THAN ONE OFFEREE. 
IF THE PROCEEDS OF ANY SALE OR OTHER DISPOSITION OF THE PLEDGED COLLATERAL ARE
INSUFFICIENT TO PAY ALL THE SECURED OBLIGATIONS, PLEDGORS SHALL BE JOINTLY AND
SEVERALLY LIABLE FOR THE DEFICIENCY AND THE FEES OF ANY ATTORNEYS EMPLOYED BY
COLLATERAL AGENT TO COLLECT SUCH DEFICIENCY.

 

(B)           EACH PLEDGOR RECOGNIZES THAT, BY REASON OF CERTAIN PROHIBITIONS
CONTAINED IN THE SECURITIES ACT OF 1933, AS FROM TIME TO TIME AMENDED (THE
“SECURITIES ACT”), AND APPLICABLE STATE SECURITIES LAWS, COLLATERAL AGENT MAY BE
COMPELLED, WITH RESPECT TO ANY SALE OF ALL OR ANY PART OF THE PLEDGED EQUITY
CONDUCTED WITHOUT PRIOR REGISTRATION OR QUALIFICATION OF SUCH PLEDGED EQUITY
UNDER THE SECURITIES ACT AND/OR SUCH STATE OR OTHER APPLICABLE SECURITIES LAWS,
TO LIMIT PURCHASERS TO THOSE WHO WILL AGREE, AMONG OTHER THINGS, TO ACQUIRE THE
PLEDGED EQUITY FOR THEIR OWN ACCOUNT, FOR INVESTMENT AND NOT WITH A VIEW TO THE
DISTRIBUTION OR RESALE THEREOF.  EACH PLEDGOR ACKNOWLEDGES THAT ANY SUCH PRIVATE
PLACEMENT MAY BE AT PRICES AND ON TERMS LESS FAVORABLE THAN THOSE OBTAINABLE
THROUGH A SALE WITHOUT SUCH RESTRICTIONS (INCLUDING, WITHOUT LIMITATION, AN
OFFERING MADE PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT)
AND, NOTWITHSTANDING SUCH CIRCUMSTANCES, SUCH PLEDGOR AGREES THAT ANY SUCH
PRIVATE PLACEMENT SHALL, IN AND OF ITSELF, NOT BE DEEMED TO BE COMMERCIALLY
UNREASONABLE AND THAT COLLATERAL AGENT SHALL HAVE NO OBLIGATION TO DELAY THE
SALE OF ANY PLEDGED EQUITY FOR THE PERIOD OF TIME NECESSARY TO PERMIT THE ISSUER
THEREOF TO REGISTER IT FOR A FORM OF SALE REQUIRING REGISTRATION UNDER THE
SECURITIES ACT OR UNDER APPLICABLE STATE OR OTHER SECURITIES LAWS, EVEN IF SUCH
ISSUER WOULD, OR SHOULD, AGREE TO SO REGISTER IT.

 

(C)           IF COLLATERAL AGENT DETERMINES TO EXERCISE ITS RIGHT TO SELL ANY
OR ALL OF THE PLEDGED EQUITY, UPON WRITTEN REQUEST, EACH PLEDGOR SHALL AND SHALL
CAUSE EACH ISSUER OF ANY PLEDGED EQUITY TO BE SOLD HEREUNDER FROM TIME TO TIME
TO FURNISH TO COLLATERAL AGENT ALL SUCH INFORMATION AS COLLATERAL AGENT MAY
REQUEST IN ORDER TO DETERMINE THE AMOUNT OF PLEDGED EQUITY THAT MAY BE SOLD BY
COLLATERAL AGENT IN EXEMPT TRANSACTIONS UNDER THE SECURITIES ACT AND THE
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION THEREUNDER, AS
THE SAME ARE FROM TIME TO TIME IN EFFECT.

 

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(D)           COLLATERAL AGENT SHALL NOT BE LIABLE FOR ANY DECLINE IN THE VALUE
OF ANY COLLATERAL OR FOR ANY LOSS REALIZED UPON ANY SALE OR OTHER DISPOSITION OF
THE PLEDGED COLLATERAL.

 

SECTION 14.            Application of Proceeds.  Except as expressly provided
elsewhere in this Agreement, all proceeds received by Collateral Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral shall be applied in the order of priority specified in
Section 7.06 of the Indenture.

 

SECTION 15.            Indemnity and Expenses.

 

(A)           PLEDGORS JOINTLY AND SEVERALLY AGREE TO INDEMNIFY COLLATERAL AGENT
AND THE PLEDGED EQUITY CO-COLLATERAL AGENTS (INCLUDING THEIR OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES AND
LIABILITIES IN ANY WAY RELATING TO, GROWING OUT OF OR RESULTING FROM THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING, WITHOUT
LIMITATION, ENFORCEMENT OF THIS AGREEMENT AND ANY ACCOUNT CONTROL AGREEMENT),
EXCEPT TO THE EXTENT SUCH CLAIMS, LOSSES OR LIABILITIES RESULT SOLELY FROM THEIR
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION.

 

(B)           PLEDGORS JOINTLY AND SEVERALLY AGREE TO PAY TO COLLATERAL AGENT
AND THE PLEDGED EQUITY CO-COLLATERAL AGENTS UPON DEMAND THE AMOUNT OF ANY AND
ALL COSTS AND EXPENSES, INCLUDING THE REASONABLE FEES AND EXPENSES OF ITS
COUNSEL AND OF ANY EXPERTS AND AGENTS, THAT COLLATERAL AGENT MAY INCUR IN
CONNECTION WITH (I) THE ADMINISTRATION OF THIS AGREEMENT, (II) THE CUSTODY OR
PRESERVATION OF, OR THE SALE OF, COLLECTION FROM, OR OTHER REALIZATION UPON, ANY
OF THE PLEDGED COLLATERAL, (III) THE EXERCISE OR ENFORCEMENT OF ANY OF THE
RIGHTS OF COLLATERAL AGENT HEREUNDER, OR (IV) THE FAILURE BY ANY PLEDGOR TO
PERFORM OR OBSERVE ANY OF THE PROVISIONS HEREOF.

 

(C)           THE OBLIGATIONS OF PLEDGORS IN THIS SECTION 15 SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT, THE RESIGNATION OR REMOVAL OF COLLATERAL AGENT
AND THE PLEDGED EQUITY CO-COLLATERAL AGENTS, AND THE DISCHARGE OF PLEDGORS’
OTHER OBLIGATIONS UNDER THIS AGREEMENT AND THE INDENTURE DOCUMENTS, AS THE CASE
MAY BE.

 

SECTION 16.            Set-Off.  Each Pledgor hereby irrevocably authorizes
Collateral Agent and each other Secured Party at any time and from time to time
while an Event of Default shall have occurred and be continuing, without notice
to such Pledgor or any other Pledgor, any such notice being expressly waived by
each Pledgor, to set-off and appropriate and apply any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by Collateral Agent or such Secured Party to or for the credit or
the account of such Pledgor, or any part thereof in such amounts as Collateral
Agent or such Secured Party may elect, against and on account of the obligations
and liabilities of such Pledgor to Collateral Agent or such Secured Party
hereunder and claims of every nature and description of Collateral Agent or such
Secured Party against such Pledgor, in any currency, whether arising hereunder
or under the Indenture Documents, as Collateral Agent or such Secured Party may
elect, whether or not Collateral Agent or any Secured Party has made any demand
for payment and although such obligations, liabilities and claims may be
contingent or unmatured.  Collateral Agent and each other Secured Party shall

 

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notify such Pledgor promptly of any such set-off and the application made by
Collateral Agent or such Secured Party of the proceeds thereof, provided that
the failure to give such notice shall not affect the validity of such set-off
and application.  The rights of Collateral Agent and each other Secured Party
under this Section 16 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which Collateral Agent or such
Secured Party may have.

 

SECTION 17.       Continuing Security Interest; Assigns.  This Agreement shall
create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until the payment in full of all Secured
Obligations, (b) be binding upon each Pledgor, its successors and assigns, and
(c) inure, together with the rights and remedies of Collateral Agent hereunder,
to the benefit of Collateral Agent and its successors, transferees and assigns;
provided, however, that neither Secured Party nor any Pledgor may assign this
Agreement without the prior written consent of the other.  Upon the payment in
full of all Secured Obligations, the security interest granted hereby shall
terminate and all rights to the Pledged Collateral shall revert to Pledgors. 
Upon any such termination Collateral Agent will, at Pledgors’ expense, execute
and deliver to Pledgors such documents as Pledgors shall reasonably request to
evidence such termination.

 

SECTION 18.       Additional Pledgors.  From time to time subsequent to the date
hereof, additional Subsidiaries of Company may become parties hereto as
additional Pledgors (each an “Additional Pledgor”), by executing a counterpart
of this Agreement substantially in the form of Schedule VI annexed hereto.  Upon
delivery of any such counterpart to Collateral Agent, notice of which is hereby
waived by Pledgors, each such Additional Pledgor shall be a Pledgor and shall be
as fully a party hereto as if such Additional Pledgor were an original signatory
hereto.  Each Pledgor expressly agrees that its obligations arising hereunder
shall not be affected or diminished by the addition or release of any other
Pledgor hereunder, nor by any election of Collateral Agent not to cause any
Subsidiary of Company to become an Additional Pledgor hereunder.  This Agreement
shall be fully effective as to any Pledgor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or ceases to
be a Pledgor hereunder.

 

SECTION 19.       Amendments; Etc.  No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
any Pledgor therefrom, shall in any event be effective unless the same shall be
in writing and signed by Collateral Agent and, in the case of any such amendment
or modification, by Pledgors.  Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.

 

SECTION 20.       Notices.  Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served or sent
by telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Collateral Agent shall not be effective until received.  For the purposes
hereof, the address of each party hereto shall be as set forth under such
party’s name on the signature

 

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pages hereof or such other address as shall be designated by such party in a
written notice delivered to the other party hereto.

 

SECTION 21.       Failure or Indulgence Not Waiver; Remedies Cumulative.  No
failure or delay on the part of Collateral Agent in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. 
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

 

SECTION 22.       Severability.  In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

 

SECTION 23.       Headings.  Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.

 

SECTION 24.       Governing Law; Terms.  THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.

 

SECTION 25.       Consent to Jurisdiction and Service of Process.  ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN THE SUPREME COURT OF
THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PLEDGOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF
ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PLEDGOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 20; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
PLEDGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT COLLATERAL AGENT
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 25 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER APPLICABLE LAW.

 

25

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NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 25 SHALL LIMIT THE RIGHT
OF COLLATERAL AGENT TO TAKE PROCEEDINGS AGAINST ANY PLEDGOR IN ANY OTHER COURT
OF COMPETENT JURISDICTION, NOR SHALL THE TAKING OF PROCEEDINGS IN ANY ONE OR
MORE JURISDICTIONS PRECLUDE THE TAKING OF PROCEEDINGS IN ANY OTHER
JURISDICTIONS, WHETHER CONCURRENTLY OR NOT, TO THE EXTENT PERMITTED BY THE LAW
OF SUCH OTHER JURISDICTION.

 

SECTION 26.       Waiver of Jury Trial.   EACH OF THE PLEDGORS AND COLLATERAL
AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING BASED UPON,
ARISING OUT OF OR RELATING TO THIS AGREEMENT.  In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.

 

SECTION 27.       Acknowledgments.  Each Pledgor hereby acknowledges that:

 

(A)           IT HAS BEEN ADVISED BY COUNSEL IN THE NEGOTIATION, EXECUTION AND
DELIVERY OF THIS AGREEMENT AND THE INDENTURE DOCUMENTS TO WHICH IT IS A PARTY;

 

(B)           NEITHER COLLATERAL AGENT NOR ANY OTHER SECURED PARTY HAS ANY
FIDUCIARY RELATIONSHIP WITH OR DUTY TO ANY PLEDGOR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR THE INDENTURE DOCUMENTS, AND THE RELATIONSHIP
BETWEEN THE PLEDGORS, ON THE ONE HAND, AND THE SECURED PARTIES, ON THE OTHER
HAND, IN CONNECTION HEREWITH OR THEREWITH IS SOLELY THAT OF DEBTOR AND CREDITOR;
AND

 

(C)           NO JOINT VENTURE IS CREATED HEREBY OR BY THE INDENTURE DOCUMENTS
OR OTHERWISE EXISTS BY VIRTUE OF THE TRANSACTIONS CONTEMPLATED HEREBY AMONG THE
SECURED PARTIES OR AMONG THE PLEDGORS AND THE SECURED PARTIES.

 

(D)           ITS AGREEMENT TO FULFILL ITS OBLIGATIONS HEREUNDER IS A MATERIAL
AND ESSENTIAL PART OF THE CONSIDERATION AND INDUCEMENT OF COLLATERAL AGENT TO
ENTER INTO THIS AGREEMENT, AND WITHOUT SUCH AGREEMENT BY SUCH PLEDGOR, THE
SECURITIES WOULD NOT BE PURCHASED.

 

SECTION 28.       Counterparts.  This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

 

SECTION 29.       SURETYSHIP WAIVERS BY PLEDGORS, ETC.

 

(A)           EACH PLEDGOR JOINTLY AND SEVERALLY AGREES THAT ITS OBLIGATIONS
HEREUNDER ARE IRREVOCABLE, ABSOLUTE, INDEPENDENT AND UNCONDITIONAL AND SHALL NOT
BE AFFECTED BY ANY CIRCUMSTANCE WHICH CONSTITUTES A LEGAL OR EQUITABLE DISCHARGE
OF A GUARANTOR OR SURETY OTHER THAN PAYMENT IN FULL OF THE SECURED OBLIGATIONS. 
IN FURTHERANCE OF THE FOREGOING AND WITHOUT LIMITING THE GENERALITY THEREOF,
EACH PLEDGOR AGREES AS FOLLOWS:  (I) COLLATERAL AGENT MAY FROM TIME TO

 

26

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TIME, WITHOUT NOTICE OR DEMAND AND WITHOUT AFFECTING THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR GIVING RISE TO ANY LIMITATION, IMPAIRMENT OR
DISCHARGE OF SUCH PLEDGOR’S LIABILITY HEREUNDER, (A) RENEW, EXTEND, ACCELERATE
OR OTHERWISE CHANGE THE TIME, PLACE, MANNER OR TERMS OF PAYMENT OR PERFORMANCE
OF THE SECURED OBLIGATIONS, (B) SETTLE, COMPROMISE, RELEASE OR DISCHARGE, OR
ACCEPT OR REFUSE ANY OFFER OF PERFORMANCE WITH RESPECT TO, OR SUBSTITUTIONS FOR,
THE SECURED OBLIGATIONS OR ANY AGREEMENT RELATING THERETO AND/OR SUBORDINATE THE
PAYMENT OF THE SAME TO THE PAYMENT OF ANY OTHER OBLIGATIONS, (C) REQUEST AND
ACCEPT GUARANTIES OF THE SECURED OBLIGATIONS AND TAKE AND HOLD OTHER SECURITY
FOR THE PAYMENT OF THE SECURED OBLIGATIONS, (D) RELEASE, EXCHANGE, COMPROMISE,
SUBORDINATE OR MODIFY, WITH OR WITHOUT CONSIDERATION, ANY OTHER SECURITY FOR
PAYMENT OF THE SECURED OBLIGATIONS, ANY GUARANTIES OF THE SECURED OBLIGATIONS,
OR ANY OTHER OBLIGATION OF ANY PERSON WITH RESPECT TO THE SECURED OBLIGATIONS,
(E) ENFORCE AND APPLY ANY OTHER SECURITY NOW OR HEREAFTER HELD BY OR FOR THE
BENEFIT OF COLLATERAL AGENT IN RESPECT OF THE SECURED OBLIGATIONS AND DIRECT THE
ORDER OR MANNER OF SALE THEREOF, OR EXERCISE ANY OTHER RIGHT OR REMEDY THAT
COLLATERAL AGENT MAY HAVE AGAINST ANY SUCH SECURITY, AS COLLATERAL AGENT IN ITS
DISCRETION MAY DETERMINE CONSISTENT WITH THE INDENTURE AND ANY APPLICABLE
SECURITY AGREEMENT, INCLUDING FORECLOSURE ON ANY SUCH SECURITY PURSUANT TO ONE
OR MORE JUDICIAL OR NONJUDICIAL SALES, WHETHER OR NOT EVERY ASPECT OF ANY SUCH
SALE IS COMMERCIALLY REASONABLE, AND (F) EXERCISE ANY OTHER RIGHTS AVAILABLE TO
COLLATERAL AGENT UNDER THE INDENTURE, AT LAW OR IN EQUITY; AND (II) THIS
AGREEMENT AND THE OBLIGATIONS OF SUCH PLEDGOR HEREUNDER SHALL BE VALID AND
ENFORCEABLE AND SHALL NOT BE SUBJECT TO ANY LIMITATION, IMPAIRMENT OR DISCHARGE
FOR ANY REASON (OTHER THAN PAYMENT IN FULL OF THE SECURED OBLIGATIONS),
INCLUDING WITHOUT LIMITATION THE OCCURRENCE OF ANY OF THE FOLLOWING, WHETHER OR
NOT SUCH PLEDGOR SHALL HAVE HAD NOTICE OR KNOWLEDGE OF ANY OF THEM:  (A) ANY
FAILURE TO ASSERT OR ENFORCE OR AGREEMENT NOT TO ASSERT OR ENFORCE, OR THE STAY
OR ENJOINING, BY ORDER OF COURT, BY OPERATION OF LAW OR OTHERWISE, OF THE
EXERCISE OR ENFORCEMENT OF, ANY CLAIM OR DEMAND OR ANY RIGHT, POWER OR REMEDY
WITH RESPECT TO THE SECURED OBLIGATIONS OR ANY AGREEMENT RELATING THERETO, OR
WITH RESPECT TO ANY GUARANTY OF OR OTHER SECURITY FOR THE PAYMENT OF THE SECURED
OBLIGATIONS, (B) ANY WAIVER, AMENDMENT OR MODIFICATION OF, OR ANY CONSENT TO
DEPARTURE FROM, ANY OF THE TERMS OR PROVISIONS OF THE INDENTURE OR ANY AGREEMENT
OR INSTRUMENT EXECUTED PURSUANT THERETO, OR OF ANY GUARANTY OR OTHER SECURITY
FOR THE SECURED OBLIGATIONS, (C) THE SECURED OBLIGATIONS, OR ANY AGREEMENT
RELATING THERETO, AT ANY TIME BEING FOUND TO BE ILLEGAL, INVALID OR
UNENFORCEABLE IN ANY RESPECT, (D) THE APPLICATION OF PAYMENTS RECEIVED FROM ANY
SOURCE TO THE PAYMENT OF INDEBTEDNESS OTHER THAN THE SECURED OBLIGATIONS, EVEN
THOUGH COLLATERAL AGENT MIGHT HAVE ELECTED TO APPLY SUCH PAYMENT TO ANY PART OR
ALL OF THE SECURED OBLIGATIONS, (E) ANY FAILURE TO PERFECT OR CONTINUE
PERFECTION OF A SECURITY INTEREST IN ANY COLLATERAL WHICH SECURES ANY OF THE
SECURED OBLIGATIONS, (F) ANY DEFENSES, SET-OFFS OR COUNTERCLAIMS WHICH COMPANY
MAY ALLEGE OR ASSERT AGAINST COLLATERAL AGENT IN RESPECT OF THE SECURED
OBLIGATIONS, INCLUDING BUT NOT LIMITED TO FAILURE OF CONSIDERATION, BREACH OF
WARRANTY, PAYMENT, STATUTE OF FRAUDS, STATUTE OF LIMITATIONS, ACCORD AND
SATISFACTION AND USURY, AND (G) ANY OTHER ACT OR THING OR OMISSION, OR DELAY TO
DO ANY OTHER ACT OR THING, WHICH MAY OR MIGHT IN ANY MANNER OR TO ANY EXTENT
VARY THE RISK OF SUCH PLEDGOR AS AN OBLIGOR IN RESPECT OF THE SECURED
OBLIGATIONS.

 

(B)           EACH PLEDGOR HEREBY WAIVES, FOR THE BENEFIT OF COLLATERAL AGENT: 
(I) ANY RIGHT TO REQUIRE COLLATERAL AGENT, AS A CONDITION OF PAYMENT OR
PERFORMANCE BY SUCH PLEDGOR, TO (A) PROCEED AGAINST COMPANY, ANY GUARANTOR OF
THE SECURED OBLIGATIONS OR ANY OTHER PERSON, (B) PROCEED AGAINST OR EXHAUST ANY
OTHER SECURITY HELD FROM COMPANY, ANY GUARANTOR OF THE SECURED OBLIGATIONS OR
ANY OTHER PERSON, (C) PROCEED AGAINST OR HAVE RESORT TO ANY BALANCE OF

 

27

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ANY DEPOSIT ACCOUNT OR CREDIT ON THE BOOKS OF COLLATERAL AGENT IN FAVOR OF
COMPANY OR ANY OTHER PERSON, OR (D) PURSUE ANY OTHER REMEDY IN THE POWER OF
COLLATERAL AGENT WHATSOEVER; (II) ANY DEFENSE ARISING BY REASON OF THE
INCAPACITY, LACK OF AUTHORITY OR ANY DISABILITY OR OTHER DEFENSE OF COMPANY
INCLUDING, WITHOUT LIMITATION, ANY DEFENSE BASED ON OR ARISING OUT OF THE LACK
OF VALIDITY OR THE UNENFORCEABILITY OF THE SECURED OBLIGATIONS OR ANY AGREEMENT
OR INSTRUMENT RELATING THERETO OR BY REASON OF THE CESSATION OF THE LIABILITY OF
COMPANY FROM ANY CAUSE OTHER THAN PAYMENT IN FULL OF THE SECURED OBLIGATIONS;
(III) ANY DEFENSE BASED UPON ANY STATUTE OR RULE OF LAW WHICH PROVIDES THAT THE
OBLIGATION OF A SURETY MUST BE NEITHER LARGER IN AMOUNT NOR IN OTHER RESPECTS
MORE BURDENSOME THAN THAT OF THE PRINCIPAL; (IV) ANY DEFENSE BASED UPON
COLLATERAL AGENT’S ERRORS OR OMISSIONS IN THE ADMINISTRATION OF THE SECURED
OBLIGATIONS, EXCEPT BEHAVIOR WHICH AMOUNTS TO BAD FAITH; (V) (A) ANY PRINCIPLES
OR PROVISIONS OF LAW, STATUTORY OR OTHERWISE, WHICH ARE OR MIGHT BE IN CONFLICT
WITH THE TERMS OF THIS AGREEMENT AND ANY LEGAL OR EQUITABLE DISCHARGE OF SUCH
PLEDGOR’S OBLIGATIONS HEREUNDER, (B) THE BENEFIT OF ANY STATUTE OF LIMITATIONS
AFFECTING SUCH PLEDGOR’S LIABILITY HEREUNDER OR THE ENFORCEMENT HEREOF, (C) ANY
RIGHTS TO SET-OFFS, RECOUPMENTS AND COUNTERCLAIMS, AND (D) PROMPTNESS, DILIGENCE
AND ANY REQUIREMENT THAT COLLATERAL AGENT PROTECT, SECURE, PERFECT OR INSURE ANY
OTHER SECURITY INTEREST OR LIEN OR ANY PROPERTY SUBJECT THERETO; (VI) NOTICES,
DEMANDS, PRESENTMENTS, PROTESTS, NOTICES OF PROTEST, NOTICES OF DISHONOR AND
NOTICES OF ANY ACTION OR INACTION, NOTICES OF DEFAULT UNDER THE INDENTURE OR ANY
AGREEMENT OR INSTRUMENT RELATED THERETO, NOTICES OF ANY RENEWAL, EXTENSION OR
MODIFICATION OF THE SECURED OBLIGATIONS OR ANY AGREEMENT RELATED THERETO,
NOTICES OF ANY EXTENSION OF CREDIT TO COMPANY AND NOTICES OF ANY OF THE MATTERS
REFERRED TO IN SECTION 29(A) AND ANY RIGHT TO CONSENT TO ANY THEREOF; AND
(VII) TO THE FULLEST EXTENT PERMITTED BY LAW, ANY DEFENSES OR BENEFITS THAT MAY
BE DERIVED FROM OR AFFORDED BY LAW WHICH LIMIT THE LIABILITY OF OR EXONERATE
GUARANTORS OR SURETIES, OR WHICH MAY CONFLICT WITH THE TERMS OF THIS AGREEMENT.

 

(C)           [INTENTIONALLY OMITTED].

 

(D)           UNTIL THE SECURED OBLIGATIONS SHALL HAVE BEEN PAID IN FULL, EACH
PLEDGOR SHALL WITHHOLD EXERCISE OF (I) ANY CLAIM, RIGHT OR REMEDY, DIRECT OR
INDIRECT, THAT SUCH PLEDGOR NOW HAS OR MAY HEREAFTER HAVE AGAINST COMPANY OR ANY
OF ITS ASSETS IN CONNECTION WITH THIS AGREEMENT OR THE PERFORMANCE BY SUCH
PLEDGOR OF ITS OBLIGATIONS HEREUNDER, IN EACH CASE WHETHER SUCH CLAIM, RIGHT OR
REMEDY ARISES IN EQUITY, UNDER CONTRACT, BY STATUTE, UNDER COMMON LAW OR
OTHERWISE AND INCLUDING WITHOUT LIMITATION (A) ANY RIGHT OF SUBROGATION,
REIMBURSEMENT OR INDEMNIFICATION THAT SUCH PLEDGOR NOW HAS OR MAY HEREAFTER HAVE
AGAINST COMPANY, (B) ANY RIGHT TO ENFORCE, OR TO PARTICIPATE IN, ANY CLAIM,
RIGHT OR REMEDY THAT COLLATERAL AGENT NOW HAS OR MAY HEREAFTER HAVE AGAINST
COMPANY, AND (C) ANY BENEFIT OF, AND ANY RIGHT TO PARTICIPATE IN, ANY OTHER
COLLATERAL OR SECURITY NOW OR HEREAFTER HELD BY COLLATERAL AGENT, AND (II) ANY
RIGHT OF CONTRIBUTION SUCH PLEDGOR NOW HAS OR MAY HEREAFTER HAVE AGAINST ANY
GUARANTOR OF ANY OF THE SECURED OBLIGATIONS.  EACH PLEDGOR FURTHER AGREES THAT,
TO THE EXTENT THE AGREEMENT TO WITHHOLD EXERCISE OF ITS RIGHTS OF SUBROGATION,
REIMBURSEMENT, INDEMNIFICATION AND CONTRIBUTION AS SET FORTH HEREIN IS FOUND BY
A COURT OF COMPETENT JURISDICTION TO BE VOID OR VOIDABLE FOR ANY REASON, ANY
RIGHTS OF SUBROGATION, REIMBURSEMENT OR INDEMNIFICATION SUCH PLEDGOR MAY HAVE
AGAINST COMPANY OR AGAINST ANY OTHER COLLATERAL OR SECURITY, AND ANY RIGHTS OF
CONTRIBUTION SUCH PLEDGOR MAY HAVE AGAINST ANY SUCH GUARANTOR, SHALL BE JUNIOR
AND SUBORDINATE TO ANY RIGHTS COLLATERAL AGENT MAY HAVE AGAINST COMPANY, TO ALL
RIGHT, TITLE AND INTEREST COLLATERAL AGENT MAY HAVE IN ANY SUCH OTHER COLLATERAL
OR SECURITY, AND TO ANY RIGHT COLLATERAL AGENT MAY HAVE AGAINST ANY SUCH
GUARANTOR.

 

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(E)           COLLATERAL AGENT SHALL HAVE NO OBLIGATION TO DISCLOSE OR DISCUSS
WITH PLEDGORS ITS ASSESSMENT, OR ANY PLEDGOR’S ASSESSMENT, OF THE FINANCIAL
CONDITION OF COMPANY.  EACH PLEDGOR HAS ADEQUATE MEANS TO OBTAIN INFORMATION
FROM COMPANY ON A CONTINUING BASIS CONCERNING THE FINANCIAL CONDITION OF COMPANY
AND ITS ABILITY TO PERFORM ITS OBLIGATIONS UNDER THE INDENTURE, AND EACH PLEDGOR
ASSUMES THE RESPONSIBILITY FOR BEING AND KEEPING INFORMED OF THE FINANCIAL
CONDITION OF COMPANY AND OF ALL CIRCUMSTANCES BEARING UPON THE RISK OF
NONPAYMENT OF THE SECURED OBLIGATIONS.  EACH PLEDGOR HEREBY WAIVES AND
RELINQUISHES ANY DUTY ON THE PART OF COLLATERAL AGENT TO DISCLOSE ANY MATTER,
FACT OR THING RELATING TO THE BUSINESS, OPERATIONS OR CONDITION OF COMPANY NOW
KNOWN OR HEREAFTER KNOWN BY COLLATERAL AGENT.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, Pledgors and Collateral Agent have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

 

 

PLEDGORS:

 

 

 

 

 

 

 

POWER-ONE, INC., a Delaware corporation

 

 

 

 

 

 

 

By:

/ s / Randall Holliday

 

 

Title: Secretary

 

 

Notice

740 Calle Plano

 

Address:

 

 

 

Camarillo, CA 93012

 

 

Attn: Randall H. Holliday

 

 

 

P-O DELAWARE, INC., a Delaware
corporation

 

 

 

 

 

 

 

By:

/ s / Randall Holliday

 

 

Title: Secretary

 

 

Notice

740 Calle Plano

 

Address:

 

 

 

Camarillo, CA 93012

 

 

Attn: Randall H. Holliday

 

 

 

PAI CAPITAL LLC, a Delaware limited
liability company

 

 

 

 

 

 

 

By:

/ s / Randall Holliday

 

 

Title: Member

 

 

Notice

740 Calle Plano

 

Address:

 

 

 

Camarillo, CA 93012

 

 

Attn: Randall H. Holliday

 

S-1

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

 

 

PLEDGORS:

 

 

 

 

 

 

 

HC POWER, INC., a California corporation

 

 

 

 

 

 

 

By:

/ s / Randall Holliday

 

 

Title: Secretary

 

 

Notice

740 Calle Plano

 

Address:

 

 

 

Camarillo, CA 93012

 

 

Attn: Randall H. Holliday

 

 

 

P-O NEVADA CORP., a Nevada corporation

 

 

 

 

 

 

 

By:

/ s / Randall Holliday

 

 

Title: Secretary

 

 

 

 

 

Notice

740 Calle Plano

 

Address:

 

 

 

Camarillo, CA 93012

 

 

Attn: Randall H. Holliday

 

S-2

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SECURED PARTY:

 

 

 

 

 

 

 

THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Collateral Agent

 

 

 

 

 

 

 

By:

/ s/ Teresa Petta

 

 

Title: Vice President

 

 

Notice

700 South Flower Street, suite

 

Address:

500

 

 

Los Angeles, CA 90017

 

 

 

ACKNOWLEDGED BY:

 

 

 

THE BANK OF NEW YORK

 

 

 

 

By:

/s/ Tania Sibree

 

Title:

 Vice President

 

 

 

 

Notice Address: Level 12, Three Pacific Place,
1 Queen’s Road East, Hong Kong

 

 

BNY CORPORATE TRUSTEE SERVICES
LIMITED

 

 

 

By:

 /s / Mark Elsom

 

 

Title: Assistant Vice President

 

 

Notice

40th Floor, One Canada Square,

 

Address:

London, E14 5AL

 

 

THE BANK OF NEW YORK TRUST
COMPANY (CAYMAN) LIMITED

 

 

 

 

 

 

 

By:

 /s/ Illegible

 

 

Title: Field Secretaries (Cayman) Limited

 

S-3

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

 

 

Notice Address:

 

 

 

THE BANK OF NEW YORK
(LUXEMBOURG) S.A

 

 

 

 

 

 

 

By:

 / s / Adriana Pierelli

 

 

 Title: MD and General Manager

 

 

Notice

Italian Branch, Via Carducci 31

 

Address:

20123 Milan, Italy

 

S-4

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

 

SCHEDULE I

 

Pledged Equity

 

Issuer

 

Class of 
Equity Interest

 

Certificate 
Nos.

 

Amount of 
Equity 
Interests

 

Percentage 
Pledged

 

DOMESTIC SUBSIDIARIES

 

 

 

 

 

 

 

 

 

P-O Delaware, Inc. (Delaware)

 

Common Stock

 

2

 

100%

 

100%

 

P-O Nevada Corp. (Nevada)

 

Common Stock

 

2

 

100%

 

100%

 

PAI Capital LLC (Delaware)

 

Membership Interest

 

N/A

 

100%

 

100%

 

HC Power, Inc. (California)

 

Common Stock

 

40

 

100%

 

100%

 

FOREIGN SUBSIDIARIES

 

 

 

 

 

 

 

 

 

Power-One Limited (Cayman Islands)

 

Ordinary

 

2

 

100%

 

Up to 66%

 

Power-One Asia Pacific Electronics (Shenzhen) Co. (China)

 

Not applicable

 

Not applicable

 

100%

 

Up to 66%

 

Power-One Italy Holdings S.p.A. (Italy)

 

Ordinary

 

Certificate to be issued

 

100%

 

Up to 66%

 

Power-One Limited (UK)

 

Ordinary

 

5

 

100%

 

Up to 66%

 

 

I-1

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

 

SCHEDULE II

 

Property and Assets

 

All of the property and assets (other than leased or owned real property, and
foreign intellectual property) of the entities listed below as Pledgors,
including all such property and assets that are now owned and all such property
and assets that may hereafter be acquired, and including, but not limited to,
inventory, accounts, equipment, chattel paper, documents, instruments,
copyrights, trademarks, service marks, patents and related rights, general
intangibles, deposit accounts, cash and cash equivalents, investment property
(including, but not limited to, interests in subsidiaries) and any and all
proceeds and products of any of the foregoing and any of the proceeds or
products thereof:

 

The Pledgors of the collateral described herein shall include the following:

 

Power-One, Inc.,

 

P-O Delaware, Inc.,

 

PAI Capital LLC,

 

HC Power, Inc., and

 

P-O Nevada Corp.

 

Notwithstanding the foregoing, the Pledged Collateral shall not include the
following assets:

 

(a)           certain power supply products to be sold to Emerson Process
Management Power and Water Solutions, Inc. and Fisher-Rosemount Systems, Inc.
for a purchase price of approximately $1.59 million;

 

(b)           certain non-exclusive licensing and second source rights relating
to the Company’s Z-One digital power management and control products
intellectual property; and

 

(c)           certain products relating to power management of residential
appliances (i.e., the Company’s digital motor control product line).

 

II-1

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

 

SCHEDULE III

 

Filing Offices

 

Pledgor

 

Filing Offices

 

 

 

 

 

Power-One, Inc.

 

Delaware

 

P-O Delaware, Inc.

 

Delaware

 

PAI Capital LLC

 

Delaware

 

HC Power, Inc.

 

California

 

P-O Nevada Corp.

 

Nevada

 

 

III-1

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

 

SCHEDULE IV

 

Office Locations, Type and Jurisdiction of Organization

 

Name of
Pledgor

 

Type of
Organization

 

Office
Locations

 

Jurisdiction of
Organization

 

Organization Number

 

 

 

 

 

 

 

 

 

 

 

Power-One, Inc.

 

Corporation

 

Camarillo, CA

 

Delaware

 

77-0420182

 

P-O Delaware, Inc.

 

Corporation

 

Camarillo, CA

 

Delaware

 

3621936

 

PAI Capital LLC

 

Limited liability company

 

Camarillo, CA

 

Delaware

 

20-8164367

 

HC Power, Inc.

 

Corporation

 

Camarillo, CA

 

California

 

1260082

 

P-O Nevada Corp.

 

Corporation

 

Camarillo, CA

 

Nevada

 

C18404-00

 

 

Names of Pledgors Used in Past Five Years

 

Not applicable

 

IV-1

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

 

SCHEDULE V

 

Pledge Amendment

 

This Pledge Amendment, dated                         ,      , is delivered
pursuant to Section 7(b) of the Security Agreement referred to below.  The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Security Agreement dated                  ,         , among
                        , as Company, the other Pledgors named therein, and
                        , as Collateral Agent (the “Security Agreement,”
capitalized terms defined therein being used herein as therein defined) and that
the Pledged Equity listed on this Pledge Amendment shall be deemed to be part of
the Pledged Equity and shall become part of the Pledged Collateral and shall
secure all Secured Obligations.

 

 

[NAME OF PLEDGOR]

 

 

 

 

 

By:

 

 

 

Title:

 

Issuer

 

Class of 
Equity 
Interests

 

Certificate  
Nos.

 

Amount of 
Equity 
Interests

 

Percentage 
Ownership 
Interest

 

Percentage 
Pledged

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

V-1

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

 

SCHEDULE VI

 

Form of Counterpart

 

COUNTERPART (this “Counterpart”), dated                         , is delivered
pursuant to Section 18 of the Security Agreement referred to below.  The
undersigned hereby agrees that this Counterpart may be attached to the Security
Agreement, dated as of                         ,                         (as it
may be from time to time amended, modified or supplemented, the “Security
Agreement”; capitalized terms used herein not otherwise defined herein shall
have the meanings ascribed therein), among Power-One, Inc., PAI Capital LLC and
The Bank Of New York Trust Company, N.A., as Collateral Agent.  The undersigned,
by executing and delivering this Counterpart, hereby becomes a Pledgor under the
Security Agreement in accordance with Section 18 thereof and agrees to be bound
by all of the terms thereof.  Without limiting the generality of the foregoing,
the items of property described in the schedule attached hereto shall be deemed
to be part of the and shall become part of the Pledged Collateral and shall
secure all Secured Obligations.

 

 

[NAME OF ADDITIONAL PLEDGOR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

VI-1

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

 

EXHIBIT I TO
SECURITY AGREEMENT

 

[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]

 

GRANT OF TRADEMARK SECURITY INTEREST

 

WHEREAS, [NAME OF PLEDGOR], a                 corporation (“Pledgor”), owns and
uses in its business, and will in the future adopt and so use, various
intangible assets, including the Trademark Collateral (as defined below); and

 

WHEREAS, pursuant to (i) that certain Indenture dated as of June 17, 2008 (as
such Indenture may be amended, amended and restated, supplemented or otherwise
modified from time to time, the “Indenture”) among The Bank of New York Trust
Company, N.A., as Trustee for the Holders (as defined in the Indenture) (in such
capacity, the “Trustee”), the Company, as Issuer, and (ii) the Purchase
Agreement dated as of June [    ], 2008 (as such Purchase Agreement may be
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Purchase Agreement”) among the Company, and Lehman Brothers Inc., as
Initial Purchaser, the Company issued the 8.0% Senior Secured Notes due 2013
(the “Notes”), and (iii) the terms of a Security Agreement dated as of June 17,
2008 (as further amended, supplemented or otherwise modified from time to time,
the “Security Agreement”; capitalized terms used in this Agreement without
definition have the respective meanings assigned such terms in the Security
Agreement), among Grantor, Collateral Agent and the other grantors named
therein, Grantor has agreed to create in favor of Collateral Agent a secured and
protected interest in, and Collateral Agent has agreed to become a secured
creditor with respect to, the Trademark Collateral;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, subject to the terms and conditions of the
Security Agreement, to evidence further the security interest granted by Pledgor
to Collateral Agent pursuant to the Security Agreement, Pledgor hereby grants to
Collateral Agent a security interest in all of Pledgor’s right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Pledgor now has or hereafter acquires an interest and wherever the
same may be located (the “Trademark Collateral”):

 

(i)            all rights, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all trademarks, service marks,
designs, logos, indicia, tradenames, trade dress, corporate names, company
names, business names, fictitious business names, trade styles and/or other
source and/or business identifiers and applications pertaining thereto, owned by
such Pledgor, or hereafter adopted and used, in its business (including, without
limitation, the trademarks set forth on Schedule A annexed hereto)
(collectively, the “Trademarks”), all registrations that have been or may
hereafter be issued or applied for thereon in the United States and any state
thereof and in foreign countries (including, without limitation, the
registrations and applications set forth on Schedule A annexed hereto), all
common law and other rights (but in no event any of the obligations) in and to
the Trademarks in the United States and any state thereof

 

I-1

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

 

and in foreign countries, and all goodwill of such Pledgor’s business symbolized
by the Trademarks and associated therewith; and

 

(ii)           all proceeds, products, rents and profits of or from any and all
of the foregoing Trademark Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Trademark
Collateral.  For purposes of this Grant of Trademark Security Interest, the term
“proceeds” includes whatever is receivable or received when Trademark Collateral
or proceeds are sold, licensed, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.

 

Pledgor does hereby further acknowledge and affirm that the rights and remedies
of Collateral Agent with respect to the security interest in the Trademark
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

 

[The remainder of this page is intentionally left blank.]

 

I-2

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

 

IN WITNESS WHEREOF, Pledgor has caused this Grant of Trademark Security Interest
to be duly executed and delivered by its officer thereunto duly authorized as of
the      day of     ,     .

 

 

 

[NAME OF PLEDGOR]

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

I-3

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

 

SCHEDULE A

 

TO

 

GRANT OF TRADEMARK SECURITY INTEREST

 

Owner

 

Trademark
Description

 

Registration/Appl.
Number

 

Registration/Appl.
Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I-A-1

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

 

EXHIBIT II TO
SECURITY AGREEMENT

 

[FORM OF GRANT OF PATENT SECURITY INTEREST]

 

GRANT OF PATENT SECURITY INTEREST

 

WHEREAS, [NAME OF PLEDGOR], a                       corporation (“Pledgor”),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and

 

WHEREAS, pursuant to (i) that certain Indenture dated as of June 17, 2008 (as
such Indenture may be amended, amended and restated, supplemented or otherwise
modified from time to time, the “Indenture”) among The Bank of New York Trust
Company, N.A., as Trustee for the Holders (as defined in the Indenture) (in such
capacity, the “Trustee”), the Company, as Issuer, and (ii) the Purchase
Agreement dated as of June [    ], 2008 (as such Purchase Agreement may be
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Purchase Agreement”) among the Company, and Lehman Brothers Inc., as
Initial Purchaser, the Company issued the 8.0% Senior Secured Notes due 2013
(the “Notes”), and (iii) the terms of a Security Agreement dated as of June 17,
2008 (as further amended, supplemented or otherwise modified from time to time,
the “Security Agreement”; capitalized terms used in this Agreement without
definition have the respective meanings assigned such terms in the Security
Agreement), among Grantor, Collateral Agent and the other grantors named
therein, Grantor has agreed to create in favor of Collateral Agent a secured and
protected interest in, and Collateral Agent has agreed to become a secured
creditor with respect to, the Patent Collateral;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, subject to the terms and conditions of the
Security Agreement, to evidence further the security interest granted by Pledgor
to Collateral Agent pursuant to the Security Agreement, Pledgor hereby grants to
Collateral Agent a security interest in all of Pledgor’s right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Pledgor now has or hereafter acquires an interest and wherever the
same may be located (the “Patent Collateral”):

 

(i)            all rights, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all patents and patent
applications and rights and interests in patents and patent applications under
any domestic or foreign law that are presently, or in the future may be, owned
or held by such Pledgor and all patents and patent applications and rights,
title and interests in patents and patent applications under any domestic or
foreign law that are presently, or in the future may be, owned by such Pledgor
in whole or in part (including, without limitation, the patents and patent
applications set forth on Schedule A annexed hereto), all rights (but not
obligations) corresponding thereto to sue for past, present and future
infringements and all re-issues, divisions, continuations, renewals, extensions
and continuations-in-part thereof; and

 

(ii)           all proceeds, products, rents and profits of or from any and all
of the foregoing Patent Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Collateral Agent is the loss payee
thereof), or any indemnity, warranty or

 

II-1

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

 

guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Patent Collateral.  For purposes of this Grant of Patent
Security Interest, the term “proceeds” includes whatever is receivable or
received when Patent Collateral or proceeds are sold, licensed, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.

 

Pledgor does hereby further acknowledge and affirm that the rights and remedies
of Collateral Agent with respect to the security interest in the Patent
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

 

[The remainder of this page intentionally left blank.]

 

II-2

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

 

IN WITNESS WHEREOF, Pledgor has caused this Grant of Patent Security Interest to
be duly executed and delivered by its officer thereunto duly authorized as of
the        day of               ,        .

 

 

 

[NAME OF PLEDGOR]

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

II-3

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

 

SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST

 

Patents Issued:

 

Patent No.

 

Issue Date

 

Invention

 

Inventor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patents Pending:

 

Applicant’s
Name

 

Date
Filed

 

Application
Number

 

Invention

 

Inventor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

II-A-1

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

 

EXHIBIT III TO
SECURITY AGREEMENT

 

[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]

 

GRANT OF COPYRIGHT SECURITY INTEREST

 

WHEREAS, [NAME OF PLEDGOR], a                       corporation (“Pledgor”),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Copyright Collateral (as defined below); and

 

WHEREAS, pursuant to (i) that certain Indenture dated as of June 17, 2008 (as
such Indenture may be amended, amended and restated, supplemented or otherwise
modified from time to time, the “Indenture”) among The Bank of New York Trust
Company, N.A., as Trustee for the Holders (as defined in the Indenture) (in such
capacity, the “Trustee”), the Company, as Issuer, and (ii) the Purchase
Agreement dated as of June [    ], 2008 (as such Purchase Agreement may be
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Purchase Agreement”) among the Company, and Lehman Brothers Inc., as
Initial Purchaser, the Company issued the 8.0% Senior Secured Notes due 2013
(the “Notes”), and (iii) the terms of a Security Agreement dated as of June 17,
2008 (as further amended, supplemented or otherwise modified from time to time,
the “Security Agreement”; capitalized terms used in this Agreement without
definition have the respective meanings assigned such terms in the Security
Agreement), among Grantor, Collateral Agent and the other grantors named
therein, Grantor has agreed to create in favor of Collateral Agent a secured and
protected interest in, and Collateral Agent has agreed to become a secured
creditor with respect to, the Copyright Collateral;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, subject to the terms and conditions of the
Security Agreement, to evidence further the security interest granted by Pledgor
to Collateral Agent pursuant to the Security Agreement, Pledgor hereby grants to
Collateral Agent a security interest in all of Pledgor’s right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Pledgor now has or hereafter acquires an interest and wherever the
same may be located (the “Copyright Collateral”):

 

(i)            all rights, title and interest (including rights acquired
pursuant to a license or otherwise) under copyright in various published and
unpublished works of authorship including, without limitation, computer
programs, computer data bases, other computer software layouts, trade dress,
drawings, designs, writings, and formulas (including, without limitation, the
works set forth on Schedule A annexed hereto, as the same may be amended
pursuant hereto from time to time) (collectively, the “Copyrights”), all
copyright registrations issued to Pledgor and applications for copyright
registration that have been or may hereafter be issued or applied for thereon in
the United States and any state thereof and in foreign countries (including,
without limitation, the registrations set forth on Schedule A annexed hereto, as
the same may be amended pursuant hereto from time to time) (collectively, the
“Copyright Registrations”), all common law and other rights in and to the
Copyrights in the United States and any state thereof and in

 

III-1

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

 

foreign countries including all copyright licenses (but with respect to such
copyright licenses, only to the extent permitted by such licensing arrangements)
(the “Copyright Rights”), including, without limitation, each of the Copyrights,
rights, titles and interests in and to the Copyrights, all derivative works and
other works protectable by copyright, which are presently, or in the future may
be, owned, created (as a work for hire for the benefit of Pledgor), authored (as
a work for hire for the benefit of Pledgor), or acquired by Pledgor, in whole or
in part, and all Copyright Rights with respect thereto and all Copyright
Registrations therefor, heretofore or hereafter granted or applied for, and all
renewals and extensions thereof, throughout the world, including all proceeds
thereof (such as, by way of example and not by limitation, license royalties and
proceeds of infringement suits), the right (but not the obligation) to renew and
extend such Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right (but not the obligation) to sue in the
name of such Pledgor or in the name of Collateral Agent or Lenders for past,
present and future infringements of the Copyrights and Copyright Rights; and

 

(ii)           all proceeds, products, rents and profits of or from any and all
of the foregoing Copyright Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Copyright
Collateral.  For purposes of this Grant of Copyright Security Interest, the term
“proceeds” includes whatever is receivable or received when Copyright Collateral
or proceeds are sold, licensed, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.

 

Pledgor does hereby further acknowledge and affirm that the rights and remedies
of Collateral Agent with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

 

IN WITNESS WHEREOF, Pledgor has caused this Grant of Copyright Security Interest
to be duly executed and delivered by its officer thereunto duly authorized as of
the        day of             ,       .

 

 

 

[NAME OF PLEDGOR]

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

III-2

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

 

SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST

 

U.S. Copyright Registrations:

 

Title

 

Registration
No.

 

Date of Issue

 

Registered Owner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Copyright Registrations:

 

Country

 

Title

 

Registration
No.

 

Date of Issue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pending U.S. Copyright Registration Applications:

 

Title

 

Appl. No.

 

Date of
Application

 

Copyright Claimant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pending Foreign Copyright Registration Applications:

 

Country

 

Title

 

Appl. No.

 

Date of Application

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

III-A-1

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

 

EXHIBIT IV TO
SECURITY AGREEMENT

 

IP SUPPLEMENT

 

This IP SUPPLEMENT, dated as of           , is delivered pursuant to and
supplements (i) the Security Agreement, dated as
of                                  ,         (said Security Agreement, as it
may heretofore have been and as it may hereafter be further amended, restated,
supplemented or otherwise modified from time to time, being the “Security
Agreement”), among                               [Insert Company name], [Insert
Name of Pledgor] (“Pledgor”), the other Pledgors named therein, and [Insert name
of Lender], as Collateral Agent, and (ii) the [Grant of Trademark Security
Interest] [Grant of Patent Security Interest] [Grant of Copyright Security
Interest] dated as of                 ,        (the “Grant”) executed by
Pledgor.  Capitalized terms used herein not otherwise defined herein shall have
the meanings ascribed thereto in the Grant.

 

Pledgor grants to Collateral Agent a security interest in all of Pledgor’s
right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] set forth on Schedule A annexed hereto.  All
such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be
deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] and shall be hereafter subject to each of the terms and conditions
of the Security Agreement and the Grant.

 

IN WITNESS WHEREOF, Pledgor has caused this IP Supplement to be duly executed
and delivered by its duly authorized officer as
of                                .

 

 

[PLEDGOR]

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

V-1

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