Exhibit 10.4

EXECUTION VERSION

 

 

 

PLEDGE AND SECURITY AGREEMENT

By

HC2 HOLDINGS, INC.,

as Borrower

and

THE SUBSIDIARY GUARANTORS PARTY HERETO,

as Subsidiary Guarantors

and

JEFFERIES FINANCE LLC,

as Collateral Agent

 

 

Dated as of May 29, 2014

 

 

 

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TABLE OF CONTENTS

 

            Page  

ARTICLE I DEFINITIONS AND INTERPRETATION

     2   

SECTION 1.1.

     DEFINITIONS      2   

SECTION 1.2.

     PERFECTION CERTIFICATE      8   

ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS

     8   

SECTION 2.1.

     GRANT OF SECURITY INTEREST      8   

SECTION 2.2.

     FILINGS      9   

ARTICLE III PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES; USE OF PLEDGED
COLLATERAL

     10   

SECTION 3.1.

     DELIVERY OF CERTIFICATED SECURITIES COLLATERAL      10   

SECTION 3.2.

     PERFECTION OF UNCERTIFICATED SECURITIES COLLATERAL      10   

SECTION 3.3.

     FINANCING STATEMENTS AND OTHER FILINGS; MAINTENANCE OF PERFECTED SECURITY
INTEREST      11   

SECTION 3.4.

     OTHER ACTIONS      11   

SECTION 3.5.

     JOINDER OF ADDITIONAL SUBSIDIARY GUARANTORS      15   

SECTION 3.6.

     SUPPLEMENTS; FURTHER ASSURANCES      15   

ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS

     16   

SECTION 4.1.

     TITLE      16   

SECTION 4.2.

     VALIDITY OF SECURITY INTEREST      16   

SECTION 4.3.

     DEFENSE OF CLAIMS; TRANSFERABILITY OF PLEDGED COLLATERAL      16   

SECTION 4.4.

     OTHER FINANCING STATEMENTS      16   

SECTION 4.5.

     CHIEF EXECUTIVE OFFICE; CHANGE OF NAME; JURISDICTION OF ORGANIZATION, ETC.
     17   

SECTION 4.6.

     LOCATION OF INVENTORY AND EQUIPMENT      17   

SECTION 4.7.

     CORPORATE NAMES; PRIOR TRANSACTIONS      17   

SECTION 4.8.

     DUE AUTHORIZATION AND ISSUANCE      18   

SECTION 4.9.

     CONSENTS, ETC.      18   

SECTION 4.10.

     INFORMATION RELATING TO PLEDGED COLLATERAL      18   

SECTION 4.11.

     INSURANCE      18   

SECTION 4.12.

     PAYMENT OF TAXES; COMPLIANCE WITH LEGAL REQUIREMENTS; CONTESTING LIENS;
CHARGES      18   

 

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SECTION 4.13.

     ACCESS TO PLEDGED COLLATERAL, BOOKS AND RECORDS; OTHER INFORMATION      19
  

SECTION 4.14.

     PERFECTION CERTIFICATE      19   

ARTICLE V CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

     19   

SECTION 5.1.

     PLEDGE OF ADDITIONAL SECURITIES COLLATERAL      19   

SECTION 5.2.

     VOTING RIGHTS; DISTRIBUTIONS; ETC.      19   

SECTION 5.3.

     ORGANIZATIONAL DOCUMENTS.      21   

SECTION 5.4.

     DEFAULTS, ETC.      21   

SECTION 5.5.

     CERTAIN AGREEMENTS OF PLEDGORS AS ISSUERS AND HOLDERS OF EQUITY INTERESTS
     21   

ARTICLE VI CERTAIN PROVISIONS CONCERNING INTELLECTUAL PROPERTY COLLATERAL

     22   

SECTION 6.1.

     GRANT OF INTELLECTUAL PROPERTY LICENSE      22   

SECTION 6.2.

     REGISTRATION      22   

SECTION 6.3.

     NO VIOLATIONS OR PROCEEDINGS      22   

SECTION 6.4.

     PROTECTION OF COLLATERAL AGENT’S SECURITY      22   

SECTION 6.5.

     AFTER-ACQUIRED PROPERTY      23   

SECTION 6.6.

     LITIGATION      24   

ARTICLE VII TRANSFERS

     24   

SECTION 7.1.

     TRANSFERS OF PLEDGED COLLATERAL      24   

ARTICLE VIII REMEDIES

     24   

SECTION 8.1.

     REMEDIES      24   

SECTION 8.2.

     NOTICE OF SALE      26   

SECTION 8.3.

     WAIVER OF NOTICE AND CLAIMS; OTHER WAIVERS; MARSHALLING      26   

SECTION 8.4.

     STANDARDS FOR EXERCISING RIGHTS AND REMEDIES      27   

SECTION 8.5.

     CERTAIN SALES OF PLEDGED COLLATERAL      28   

SECTION 8.6.

     NO WAIVER; CUMULATIVE REMEDIES      29   

SECTION 8.7.

     CERTAIN ADDITIONAL ACTIONS REGARDING INTELLECTUAL PROPERTY      29   

ARTICLE IX APPLICATION OF PROCEEDS

     30   

SECTION 9.1.

     APPLICATION OF PROCEEDS      30   

 

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ARTICLE X MISCELLANEOUS

     30   

SECTION 10.1.

     CONCERNING COLLATERAL AGENT      30   

SECTION 10.2.

     COLLATERAL AGENT MAY PERFORM; COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT
     31   

SECTION 10.3.

     CONTINUING SECURITY INTEREST; ASSIGNMENT      32   

SECTION 10.4.

     TERMINATION; RELEASE; REINSTATEMENT      32   

SECTION 10.5.

     MODIFICATION IN WRITING      33   

SECTION 10.6.

     NOTICES      33   

SECTION 10.7.

     GOVERNING LAW, CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF
JURY TRIAL      33   

SECTION 10.8.

     SEVERABILITY OF PROVISIONS      34   

SECTION 10.9.

     EXECUTION IN COUNTERPARTS      35   

SECTION 10.10.

     BUSINESS DAYS      35   

SECTION 10.11.

     WAIVER OF STAY      35   

SECTION 10.12.

     NO CREDIT FOR PAYMENT OF TAXES OR IMPOSITION      35   

SECTION 10.13.

     NO CLAIMS AGAINST COLLATERAL AGENT      35   

SECTION 10.14.

     NO RELEASE      36   

SECTION 10.15.

     OVERDUE AMOUNTS      36   

SECTION 10.16.

     OBLIGATIONS ABSOLUTE      36   

 

ANNEX 1    Perfection Certificate SCHEDULE 1    Securities Collateral EXHIBIT 1
   Form of Securities Pledge Amendment EXHIBIT 2    Form of Joinder Agreement
EXHIBIT 3    Form of Copyright Security Agreement EXHIBIT 4    Form of Patent
Security Agreement EXHIBIT 5    Form of Trademark Security Agreement

 

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PLEDGE AND SECURITY AGREEMENT

This PLEDGE AND SECURITY AGREEMENT, dated as of May 29, 2014 (as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with the provisions hereof, this “Agreement”), made by HC2 Holdings,
Inc., a Delaware corporation (the “Borrower”), and the Subsidiary Guarantors
from time to time party hereto by execution of this Agreement or otherwise by
execution of a Joinder Agreement (the “Subsidiary Guarantors”), as pledgors,
assignors and debtors (the Borrower, together with the Subsidiary Guarantors, in
such capacities and together with any successors in such capacities, the
“Pledgors,” and each, a “Pledgor”), in favor of JEFFERIES FINANCE LLC, in its
capacity as collateral agent for the Secured Parties (as defined in the Credit
Agreement (as hereinafter defined)), as pledgee, assignee and secured party (in
such capacities and together with any successors in such capacities, the
“Collateral Agent”).

R E C I T A L S :

A. The Borrower, the Subsidiary Guarantors party thereto, Jefferies Finance LLC,
in its capacity as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”) and as collateral agent for the Secured Parties,
Jefferies LLC, as arranger and book manager, documentation agent and syndication
agent and the lending institutions and other entities from time to time party
thereto (the “Lenders”) have, in connection with the execution and delivery of
this Agreement, entered into that certain Credit Agreement, dated as of May 29,
2014 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”).

B. Each Subsidiary Guarantor has, pursuant to the Credit Agreement,
unconditionally guaranteed the Secured Obligations.

C. The Borrower and each Subsidiary Guarantor will receive substantial benefits
from the execution, delivery and performance of the Secured Obligations under
the Credit Agreement and the other Loan Documents and each is, therefore,
willing to enter into this Agreement.

D. This Agreement is given by each Pledgor in favor of the Collateral Agent for
the benefit of the Secured Parties (as hereinafter defined) to secure the
payment and performance of all of the Secured Obligations.

E. Each Pledgor is, or as to Pledged Collateral acquired by such Pledgor after
the date hereof will be, the legal and/or beneficial owner of the Pledged
Collateral pledged by it hereunder.

F. It is a condition to (i) the obligations of the Lenders to make the Loans
under the Credit Agreement and (ii) the performance of the obligations of the
Secured Parties under Permitted Hedging Agreements that constitute Secured
Obligations that each Pledgor execute and deliver the applicable Loan Documents,
including this Agreement.

 

PLEDGE AND SECURITY AGREEMENT

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A G R E E M E N T :

NOW THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor and the Collateral Agent hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1. Definitions.

(a) Unless otherwise defined herein or in the Credit Agreement, capitalized
terms used herein that are defined in the UCC shall have the meanings assigned
to them in the UCC.

(b) Terms used but not otherwise defined herein that are defined in the Credit
Agreement shall have the meanings given to them in the Credit Agreement.
Sections 1.03 and 1.06 of the Credit Agreement shall apply herein mutatis
mutandis.

(c) The following terms shall have the following meanings:

“Agreement” shall have the meaning assigned to such term in the Preamble hereof.

“Borrower” shall have the meaning assigned to such term in the Preamble hereof.

“Collateral Agent” shall have the meaning assigned to such term in the Preamble
hereof.

“Commodity Account Control Agreement” shall mean a control agreement in a form
that is reasonably satisfactory to the Collateral Agent establishing the
Collateral Agent’s Control with respect to any Commodity Account.

“Contracts” shall mean, collectively, with respect to each Pledgor, all sale,
service, performance, equipment or property lease contracts, agreements and
grants and all other contracts, agreements or grants (in each case, whether
written or oral, or third party or intercompany), between such Pledgor and any
third party, and all assignments, amendments, restatements, supplements,
extensions, renewals, replacements or modifications thereof.

“Control” shall mean (i) in the case of each Deposit Account, “control,” as such
term is defined in Section 9-104 of the UCC, (ii) in the case of any Security
Entitlement, “control,” as such term is defined in Section 8-106 of the UCC, and
(iii) in the case of any Commodity Contract, “control,” as such term is defined
in Section 9-106 of the UCC.

“Control Agreements” shall mean, collectively, each Deposit Account Control
Agreement, each Securities Account Control Agreement and each Commodity Account
Control Agreement.

 

PLEDGE AND SECURITY AGREEMENT

 

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“Copyrights” shall mean, collectively, with respect to each Pledgor, all
copyrights (whether protected by statutory or common law copyright, whether
established or registered in the United States or any other country or any
political subdivision thereof, whether registered or unregistered and whether
published or unpublished) and all copyright registrations and applications made
by such Pledgor, in each case, whether now owned or hereafter created or
acquired by or assigned to such Pledgor, including the copyrights, registrations
and applications listed on Schedule 14(c) to the Perfection Certificate,
together with any and all (i) rights and privileges arising under applicable
Legal Requirements with respect to such Pledgor’s use of such copyrights,
(ii) reissues, renewals, continuations and extensions thereof and amendments
thereto, (iii) income, fees, royalties, damages, claims and payments now or
hereafter due and/or payable with respect thereto, including damages and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to sue for past,
present or future infringements thereof.

“Copyright Security Agreement” shall mean an agreement substantially in the form
of Exhibit 3 hereto.

“Credit Agreement” shall have the meaning assigned to such term in Recital A
hereof.

“Deposit Account Control Agreement” shall mean a control agreement in a form
that is reasonably satisfactory to the Collateral Agent establishing the
Collateral Agent’s Control with respect to any Deposit Account.

“Deposit Accounts” shall mean, collectively, with respect to each Pledgor,
(i) all “deposit accounts” as such term is defined in the UCC and all accounts
and sub-accounts relating to any of the foregoing accounts and (ii) all cash,
funds, checks, notes and instruments from time to time on deposit in any of the
accounts or sub-accounts described in clause (i) of this definition, in each
case except any Excluded Assets and accounts consisting solely of zero balance
accounts for the purpose of managing local disbursements, payroll accounts,
withholding tax accounts and other fiduciary accounts.

“Distributions” shall mean, collectively, with respect to each Pledgor, all
dividends, cash, options, warrants, rights, instruments, distributions, returns
of capital or principal, income, interest, profits and other property, interests
(debt or equity) or proceeds, including as a result of a split, revision,
reclassification or other like change of the Pledged Securities, from time to
time received, receivable or otherwise distributed to such Pledgor in respect of
or in exchange for any or all of the Pledged Securities or Intercompany Notes.

“Escrow Property” shall mean the Escrow Agreements, the Escrow Accounts and the
Escrow Amounts.

“Excluded Assets” shall mean the following assets of the Borrower and the
Subsidiary Guarantors:

(a) motor vehicles and other assets subject to certificates of title, letter of
credit rights (except to the extent perfection can be obtained by filing of UCC
financing statements);

 

PLEDGE AND SECURITY AGREEMENT

 

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(b) any lease, license or other similar agreement or any property subject to a
purchase money security interest or similar arrangement to the extent that a
grant of a security interest therein would violate or invalidate such lease,
license or similar agreement or purchase money arrangement or create a right of
termination in favor of any other party thereto (other than Borrower or a
Subsidiary Guarantor) after giving effect to the applicable anti-assignment
provisions of the UCC, other than proceeds and receivables thereof, the
assignment of which is expressly deemed effective under the UCC and other
applicable laws notwithstanding such prohibition;

(c) any “intent-to-use” application for registration of a Trademark filed
pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. § 1051, prior to the
filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an
“Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with
respect thereto, solely to the extent, if any, that, and solely during the
period, if any, in which, the grant of a security interest therein would impair
the validity or enforceability of any registration that issues from such
intent-to-use application under applicable federal law;

(d) any governmental licenses or state or local franchises, charters and
authorizations, to the extent security interests in such licenses, franchises,
charters or authorizations are prohibited or restricted thereby; and

(e) stock constituting 65% of the total voting power of all outstanding voting
stock (within the meaning of Treasury Regulation Section 1.956(c)(2)) of each
first-tier controlled foreign corporation (within the meaning of Section 957 of
the Code); provided that 100% of the equity interests not constituting voting
stock of any such Subsidiary shall not constitute Excluded Assets.

“General Intangibles” shall mean, collectively, with respect to each Pledgor,
all “general intangibles,” as such term is defined in the UCC, of such Pledgor
and, in any event, shall include (i) all of such Pledgor’s rights, title and
interest in, to and under all Contracts and insurance policies and coverages
(including all rights and remedies relating to monetary damages, including
indemnification rights and remedies, and claims for damages or other relief
pursuant to or in respect of any Contract), (ii) all know-how and warranties
relating to any of the Pledged Collateral or the Mortgaged Property, (iii) any
and all other rights, claims, choses-in-action and causes of action of such
Pledgor against any other person and the benefits of any and all collateral or
other security given by any other person in connection therewith, (iv) all
guarantees, endorsements and indemnifications on, or of, any of the Pledged
Collateral or any of the Mortgaged Property, (v) all lists, books, records,
correspondence, ledgers, printouts, files (whether in printed form or stored
electronically), tapes and other papers or materials containing information
relating to any of the Pledged Collateral or any of the Mortgaged Property,
including all customer or tenant lists, identification of suppliers, data,
plans, blueprints, specifications, designs, drawings, appraisals, recorded
knowledge, surveys, studies, engineering reports, test reports, manuals,
standards, processing standards, performance standards, catalogs, research data,
computer and automatic machinery software and programs and the like, field
repair data, accounting information pertaining to such Pledgor’s operations or
any of the Pledged Collateral or any of the Mortgaged Property and all media in
which or on which any of the information or knowledge or data or records may be
recorded or stored and all computer programs used for the

 

PLEDGE AND SECURITY AGREEMENT

 

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compilation or printout of such information, knowledge, records or data,
(vi) all licenses, consents, permits, variances, certifications, authorizations
and approvals, however characterized, now or hereafter acquired or held by such
Pledgor, including building permits, certificates of occupancy, environmental
certificates, industrial permits or licenses and certificates of operation,
(vii) all rights to reserves, payment intangibles, deferred payments, deposits,
refunds, indemnification of claims and claims for tax or other refunds against
any Governmental Authority and (viii) any and all of the Borrower’s rights,
title or interests in the Escrow Property.

“Goodwill” shall mean, collectively, with respect to each Pledgor, the goodwill
connected with such Pledgor’s business including all goodwill connected with
(i) the use of and symbolized by any Trademark or Intellectual Property License
with respect to any Trademark in which such Pledgor has any interest, (ii) all
know-how, trade secrets, customer and supplier lists, proprietary information,
inventions, methods, plans, policies, procedures, formulae, descriptions,
compositions, technical data, drawings, specifications, name plates, catalogs,
confidential information and the right to limit the use or disclosure thereof by
any person, pricing and cost information, business and marketing plans and
proposals, consulting agreements, engineering contracts and such other assets
which relate to such goodwill and (iii) all product lines of such Pledgor’s
business.

“Instruments” shall mean, collectively, with respect to each Pledgor, all
“instruments,” as such term is defined in Article 9, rather than Article 3, of
the UCC, and shall include all promissory notes, drafts, bills of exchange or
acceptances.

“Intellectual Property Collateral” shall mean, collectively, with respect to
each Pledgor, all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Patents, Trademarks, Copyrights,
Intellectual Property Licenses and Goodwill.

“Intellectual Property Licenses” shall mean, collectively, with respect to each
Pledgor, all license and distribution agreements with, and covenants not to sue,
any other party with respect to any Patent, Trademark or Copyright or any other
patent, trademark or copyright, whether such Pledgor is a licensor or licensee,
distributor or distributee under any such license or distribution agreement,
together with any and all (i) renewals, extensions, supplements and
continuations thereof, (ii) income, fees, royalties, damages, claims and
payments now and hereafter due and/or payable thereunder and with respect
thereto including damages and payments for past, present or future infringements
or violations thereof, (iii) rights to sue for past, present and future
infringements or violations thereof and (iv) other rights to use, exploit or
practice any or all of the Patents, Trademarks or Copyrights or any other
patent, trademark or copyright.

“Intercompany Notes” shall mean, with respect to each Pledgor, all intercompany
notes described in Schedule 12 to the Perfection Certificate, if any, and
intercompany notes hereafter acquired by such Pledgor and all certificates,
instruments or agreements evidencing such intercompany notes, and all
assignments, amendments, restatements, supplements, extensions, renewals,
replacements or modifications thereof to the extent permitted pursuant to the
terms hereof.

 

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“Investment Property” shall mean a security, whether certificated or
uncertificated, Security Entitlement, Securities Account, Commodity Contract or
Commodity Account, excluding, however, the Securities Collateral.

“Joinder Agreement” shall mean an agreement substantially in the form of
Exhibit 2 hereto.

“Legal Requirements” shall mean, as to any person, the Organizational Documents
of such person, and any treaty, law (including the common law), statute,
ordinance, code, rule, regulation, guidelines, license, permit requirement,
Order or determination of an arbitrator or a court or other Governmental
Authority, and the interpretation or administration thereof, in each case
applicable to or binding upon such person or any of its property or to which
such person or any of its property is subject.

“Patents” shall mean, collectively, with respect to each Pledgor, all patents
issued or assigned to, and all patent applications and registrations made by,
such Pledgor (whether established or registered or recorded in the United States
or any other country or any political subdivision thereof), together with any
and all (i) rights and privileges arising under applicable Legal Requirements
with respect to such Pledgor’s use of any patents, (ii) inventions and
improvements described and claimed therein, (iii) reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof and
amendments thereto, (iv) income, fees, royalties, damages, claims and payments
now or hereafter due and/or payable thereunder and with respect thereto
including damages and payments for past, present or future infringements
thereof, (v) rights corresponding thereto throughout the world and (vi) rights
to sue for past, present or future infringements thereof.

“Patent Security Agreement” shall mean an agreement substantially in the form of
Exhibit 4 hereto.

“Perfection Certificate” shall mean that certain perfection certificate dated
May 29, 2014, executed and delivered by each Pledgor in favor of the Collateral
Agent for the benefit of the Secured Parties and attached hereto as Annex 1, and
each other Perfection Certificate executed and delivered by the applicable
Pledgor in favor of the Collateral Agent for the benefit of the Secured Parties
contemporaneously with the execution and delivery of each Joinder Agreement
executed in accordance with Section 3.5 hereof, in each case, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the Credit Agreement or upon the reasonable request of
the Collateral Agent.

“Pledge Amendment” shall have the meaning assigned to such term in Section 5.1
hereof.

“Pledged Collateral” shall have the meaning assigned to such term in Section 2.1
hereof.

“Pledged Securities” shall mean, collectively, with respect to each Pledgor,
(i) all issued and outstanding Equity Interests of each issuer set forth on
Schedule 1 to this Agreement as being owned by such Pledgor and all options,
warrants, rights, agreements and additional Equity Interests of whatever class
of any such issuer acquired by such Pledgor (including by

 

PLEDGE AND SECURITY AGREEMENT

 

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issuance), together with all rights, privileges, authority and powers of such
Pledgor relating to such Equity Interests in each such issuer or under any
Organizational Document of each such issuer, and the certificates, instruments
and agreements representing such Equity Interests and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such Equity Interests, (ii) all Equity Interests of any issuer,
which Equity Interests are hereafter acquired by such Pledgor (including by
issuance) and all options, warrants, rights, agreements and additional Equity
Interests of whatever class of any such issuer acquired by such Pledgor
(including by issuance), together with all rights, privileges, authority and
powers of such Pledgor relating to such Equity Interests or under any
Organizational Document of any such issuer, and the certificates, instruments
and agreements representing such Equity Interests and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such Equity Interests, from time to time acquired by such Pledgor
in any manner, and (iii) all Equity Interests issued in respect of the Equity
Interests referred to in clauses (i) or (ii) upon any consolidation or merger of
any issuer of such Equity Interests.

“Pledgor” shall have the meaning assigned to such term in the Preamble hereof.

“Securities Account Control Agreement” shall mean a control agreement in a form
that is reasonably satisfactory to the Collateral Agent establishing the
Collateral Agent’s Control with respect to any Securities Account.

“Securities Act” shall have the meaning assigned to such term in Section 8.5(b)
hereof.

“Securities Collateral” shall mean, collectively, the Pledged Securities, the
Intercompany Notes and the Distributions.

“Subsidiary Guarantors” shall have the meaning assigned to such term in the
Preamble hereof.

“Trademarks” shall mean, collectively, with respect to each Pledgor, all
trademarks (including service marks), slogans, logos, certification marks, trade
dress, uniform resource locations (URL’s), domain names, corporate names and
trade names, whether registered or unregistered, owned by or assigned to such
Pledgor and all registrations and applications for the foregoing (whether
statutory or common law and whether established or registered in the United
States or any other country or any political subdivision thereof), together with
any and all (i) rights and privileges arising under applicable law with respect
to such Pledgor’s use of any trademarks, (ii) reissues, continuations,
extensions and renewals thereof and amendments thereto, (iii) income, fees,
royalties, damages and payments now and hereafter due and/or payable thereunder
and with respect thereto, including damages, claims and payments for past,
present or future infringements thereof, (iv) rights corresponding thereto
throughout the world and (v) rights to sue for past, present and future
infringements thereof.

“Trademark Security Agreement” shall mean an agreement substantially in the form
of Exhibit 5 hereto.

 

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“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York; provided, however, that, at any time, if by reason of
mandatory provisions of applicable Legal Requirements, any or all of the
attachment, perfection or priority of the Collateral Agent’s and the Secured
Parties’ security interest in any item or portion of the Pledged Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect, at such time, in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection or priority and for
purposes of definitions relating to such provisions.

SECTION 1.2. Perfection Certificate. The Collateral Agent and each Secured Party
agree that the Perfection Certificate and all descriptions of Pledged
Collateral, schedules, amendments and supplements thereto are and shall at all
times remain a part of this Agreement.

ARTICLE II

GRANT OF SECURITY AND SECURED OBLIGATIONS

SECTION 2.1. Grant of Security Interest. As collateral security for the payment
and performance in full of all the Secured Obligations, each Pledgor hereby
pledges and grants to the Collateral Agent for the ratable benefit of the
Secured Parties, a lien on and security interest in and to all of the right,
title and interest of such Pledgor in, to and under the following property,
wherever located, and whether now existing or hereafter arising or acquired from
time to time (collectively, the “Pledged Collateral”):

(i) all Accounts;

(ii) all Equipment, Goods, Inventory and Fixtures;

(iii) all Documents, Instruments and Chattel Paper;

(iv) all Letters of Credit and Letter-of-Credit Rights (whether or not the
Letter of Credit is evidenced by a writing);

(v) all Securities Collateral;

(vi) all Investment Property;

(vii) all Intellectual Property Collateral;

(viii) the Commercial Tort Claims described on Schedule 15 to the Perfection
Certificate;

(ix) all General Intangibles;

(x) all Money and all Deposit Accounts;

(xi) all Supporting Obligations;

(xii) all books and records relating to the Pledged Collateral;

 

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(xiii) to the extent not covered by clauses (i) through (xii) of this sentence,
choses in action and all other personal property of such Pledgor, whether
tangible or intangible;

(xiv) the Escrow Property to the extent the Borrower is determined to have any
right, title or interest in any of the Escrow Property; and

(xv) all Proceeds and products of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of, each of
the foregoing, and any and all Proceeds of any insurance (including, without
limitation, in connection with a Casualty Event with respect to any Mortgaged
Property, or with respect to improvements or Fixtures thereon, any and all
awards made for the taking by eminent domain, or by any proceedings or purchase
in lieu thereof, of any Mortgaged Property, or any improvements or Fixtures
thereon, including any awards resulting from any damage to any Mortgaged
Property, improvements or Fixtures for which compensation shall be given by any
Governmental Authority), indemnity, warranty or guaranty payable to such Pledgor
from time to time with respect to any of the foregoing.

Notwithstanding anything to the contrary contained in clauses (i) through
(xv) above, the security interest created by this Agreement shall not extend to,
and the term “Pledged Collateral” shall not include, any Excluded Assets.

SECTION 2.2. Filings. (a) Without limiting the obligations of each Pledgor
contained in Section 3.3, each Pledgor hereby irrevocably authorizes the
Collateral Agent at any time and from time to time to file in any relevant
jurisdiction any initial financing statements (including fixture filings),
continuation statements and amendments thereto that contain the information
required by Article 9 of the UCC of each applicable jurisdiction for the filing
of any financing statement, continuation statement or amendment relating to the
Pledged Collateral, including (i) whether such Pledgor is an organization, the
type of organization and any organizational identification number issued to such
Pledgor, (ii) any financing or continuation statements or other documents
without the signature of such Pledgor where permitted by law, including the
filing of a financing statement describing the Pledged Collateral as “all
assets” or “all assets now owned or hereafter acquired by the Pledgor or in
which Pledgor otherwise has rights” and (iii) in the case of a financing
statement filed as a fixture filing or covering Pledged Collateral constituting
minerals or the like to be extracted or timber to be cut, a sufficient
description of the real property to which such Pledged Collateral relates. Each
Pledgor agrees to provide all information described in the immediately preceding
sentence to the Collateral Agent promptly upon reasonable request by the
Collateral Agent. Such financing statements may describe the collateral in the
same manner as described herein or may contain a description of collateral that
describes such property in any other manner as the Collateral Agent may
determine, in its sole discretion, is necessary or advisable to ensure the
perfection or priority of the security interest in the collateral granted to the
Collateral Agent in connection herewith, including, describing such property as
“all assets whether now owned or hereafter acquired” or “all personal property
whether now owned or hereafter acquired” (regardless of whether any particular
asset comprised in the Pledged Collateral falls within the scope of Article 9 of
the UCC).

 

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(b) Without limiting the obligations of each Pledgor contained in Section 3.3,
each Pledgor hereby further authorizes the Collateral Agent to file filings with
the United States Patent and Trademark Office or the United States Copyright
Office (or any successor office or any similar office in any other country),
including this Agreement, the Trademark Security Agreement, any Copyright
Security Agreement and any Patent Security Agreement, or other documents for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
pledge and security interest granted by such Pledgor hereunder, without the
signature of such Pledgor, and naming such Pledgor, as debtor, and the
Collateral Agent, as secured party.

ARTICLE III

PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;

USE OF PLEDGED COLLATERAL

SECTION 3.1. Delivery of Certificated Securities Collateral. Each Pledgor
represents and warrants that, subject to Section 4.01(n) of the Credit
Agreement, all certificates, agreements or instruments representing or
evidencing the Securities Collateral in existence on the date hereof have been
delivered to the Collateral Agent in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in blank and
that the Collateral Agent has a valid, enforceable, perfected first priority
security interest therein (subject to Permitted Liens). Each Pledgor hereby
agrees that all certificates, agreements or instruments representing or
evidencing Securities Collateral acquired by such Pledgor after the date hereof
shall promptly (but in any event within thirty (30) days after receipt thereof
by such Pledgor) be delivered to and held by or on behalf of the Collateral
Agent pursuant hereto. All certificated Securities Collateral shall be in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time upon the occurrence and during the continuance of any
Event of Default, to endorse, assign or otherwise transfer to or to register in
the name of the Collateral Agent or any of its nominees or endorse for
negotiation any or all of the Securities Collateral, without any indication that
such Securities Collateral is subject to the security interest hereunder.

SECTION 3.2. Perfection of Uncertificated Securities Collateral. Each Pledgor
represents and warrants that the Collateral Agent has a valid, enforceable,
perfected first priority security interest (subject to Permitted Liens) in all
uncertificated Pledged Securities pledged by it hereunder that are in existence
on the date hereof. Each Pledgor hereby agrees that if any issuer of Pledged
Securities is organized in a jurisdiction that does not require the use of
certificates to evidence equity ownership or any of the Pledged Securities are
at any time not evidenced by certificates of ownership, then each applicable
Pledgor shall, to the extent permitted by applicable Legal Requirements, (i) if
reasonably necessary or reasonably desirable to perfect a first priority
security interest (subject to Permitted Liens) in such Pledged Securities, cause
such pledge to be recorded on the equityholder register or the books of the
issuer, cause the issuer to execute and deliver to the Collateral Agent an
acknowledgment of the pledge of such Pledged Securities, execute any customary
pledge forms or other documents necessary or appropriate to complete the pledge
and give the Collateral Agent the right to transfer such Pledged Securities
under the terms hereof and (ii) after the occurrence and during the continuance
of any Event of Default, upon request by the Collateral Agent, (A) use
commercially

 

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reasonable efforts to cause the Organizational Documents of each such issuer
that is a Subsidiary of the Borrower to be amended to provide that such Pledged
Securities shall be treated as “securities” for purposes of the UCC and
(B) cause such Pledged Securities to become certificated and delivered to the
Collateral Agent in accordance with the provisions of Section 3.1 hereof. Each
Pledgor hereby agrees that it shall not elect to treat or permit any of its
Subsidiaries to (x) treat its limited liability company membership interests or
partnership interests, as the case may be, as securities as contemplated by the
definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8
of UCC or (y) certificate its limited liability company membership interests or
partnership interests, as the case may be, unless it is required to do so
pursuant to the terms of the preceding sentence.

SECTION 3.3. Financing Statements and Other Filings; Maintenance of Perfected
Security Interest. Subject to Section 3.4, each Pledgor represents and warrants
that all filings, registrations and recordings necessary to perfect the security
interest granted by each Pledgor to the Collateral Agent in respect of the
Pledged Collateral shall be delivered to the Collateral Agent in completed and,
to the extent necessary or appropriate, duly executed form for filing in each
governmental, municipal or other office specified in Schedule 7 to the
Perfection Certificate no later than thirty (30) days after the date hereof (as
such period may be extended in the sole discretion of the Administrative Agent).
Each Pledgor agrees that at the sole cost and expense of the Pledgors, (i) such
Pledgor will maintain the security interest created by this Agreement in the
Pledged Collateral as a valid, enforceable, perfected first priority security
interest (subject only to Permitted Liens) and shall defend such security
interest against the claims and demands of all persons, (ii) such Pledgor shall
furnish to the Collateral Agent from time to time statements and schedules
further identifying and describing the Pledged Collateral and such other reports
in connection with the Pledged Collateral as the Collateral Agent may reasonably
request, all in reasonable detail and (iii) at any time and from time to time,
upon the written request of the Collateral Agent, such Pledgor shall promptly
and duly execute and deliver, and file and have recorded, such further
instruments and documents and take such further action as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and the rights and powers herein granted, including
(x) the filing of any financing statements, continuation statements and other
documents (including this Agreement) under the UCC (or other similar laws) in
effect in any jurisdiction with respect to the security interest created hereby
and (y) the execution and delivery of Control Agreements, all in form reasonably
satisfactory to the Collateral Agent and in such offices (including the United
States Patent and Trademark Office and the United States Copyright Office)
wherever required by applicable Legal Requirements to perfect (to the extent a
security interest in such Pledged Collateral may be so perfected under
applicable Legal Requirements), continue and maintain a valid, enforceable,
first priority security interest (subject to Permitted Liens) in the Pledged
Collateral as provided herein and to use commercially reasonable efforts to
preserve the other rights and interests granted to the Collateral Agent
hereunder, as against third parties, with respect to the Pledged Collateral.

SECTION 3.4. Other Actions. In order to further ensure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Collateral Agent’s security interest in the Pledged Collateral, each Pledgor
represents and warrants and covenants and agrees as follows, in each case at
such Pledgor’s own expense, to take the following actions with respect to the
following Pledged Collateral:

 

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(a) Instruments. As of the date hereof, no amounts payable under or in
connection with any of the Pledged Collateral are evidenced by any Instrument
other than such Instruments listed in Schedule 12 to the Perfection Certificate.
Each Instrument listed in Schedule 12 to the Perfection Certificate has been
properly endorsed, assigned and delivered to the Collateral Agent, accompanied
by instruments of transfer or assignment duly executed in blank. If any amount
then payable under or in connection with any of the Pledged Collateral shall be
evidenced by any Instrument, and such amount, together with all amounts payable
evidenced by any Instrument not previously delivered to the Collateral Agent
exceeds $500,000 in the aggregate for all Pledgors, the Pledgor acquiring such
Instrument shall promptly (but in any event within thirty (30) days) (as such
period may be extended in the sole discretion of the Administrative Agent)
endorse, assign and deliver the same to the Collateral Agent, accompanied by
such instruments of transfer or assignment duly executed in blank as the
Collateral Agent may from time to time specify; provided, however, that so long
as no Event of Default has occurred and is continuing, upon written request by
such Pledgor, the Collateral Agent shall promptly return such Instrument to such
Pledgor from time to time, to the extent necessary for collection in the
ordinary course of such Pledgor’s business. Each Pledgor hereby covenants and
agrees that it shall not assign or otherwise transfer for value any promissory
notes received at any time in connection with seller financing.

(b) Deposit Accounts. Subject to Section 5.14 of the Credit Agreement, (i) as of
the date hereof, no Pledgor has opened nor maintains any Deposit Accounts other
than the accounts listed in Schedule 16 to the Perfection Certificate, (ii) no
later than thirty (30) days after the date hereof (as such period may be
extended in the sole discretion of the Administrative Agent), each applicable
Pledgor and the relevant Bank(s) shall have executed and delivered a Deposit
Account Control Agreement with respect to each of the Deposit Accounts listed in
Schedule 16 to the Perfection Certificate other than Deposit Accounts having a
balance of not more than $100,000, individually and $500,000 in the aggregate
and (iii) no later than thirty (30) days after the date hereof (as such period
may be extended in the sole discretion of the Administrative Agent), the
Collateral Agent shall have a valid, enforceable, perfected first priority
security interest (subject to Permitted Liens) in such Deposit Accounts by
Control. No Pledgor shall hereafter establish and maintain any Deposit Account
unless (1) the applicable Pledgor shall have given the Collateral Agent notice
within thirty (30) days’ after the establishment of such new Deposit Account
with a Bank and (2) such Bank and such Pledgor shall have duly executed and
delivered to the Collateral Agent a Deposit Account Control Agreement (or an
amendment to an existing Deposit Account Control Agreement) with respect to such
Deposit Account. The Collateral Agent agrees with each Pledgor that the
Collateral Agent shall not give any instructions directing the disposition of
funds from time to time credited to any Deposit Account or withhold any
withdrawal rights from such Pledgor with respect to funds from time to time
credited to any Deposit Account unless an Event of Default has occurred and is
continuing or, after giving effect to any withdrawal, would occur. No Pledgor
has granted or shall grant Control of any Deposit Account to any person other
than the Collateral Agent.

(c) Securities Accounts and Commodity Accounts. (i) Subject to Section 5.14 of
the Credit Agreement, (1) as of the date hereof, no Pledgor has opened nor
maintains any Securities Accounts or Commodity Accounts other than those listed
in Schedule 16 to the Perfection Certificate, (2) no later than thirty (30) days
after the date hereof (as such period may be extended in the sole discretion of
the Administrative Agent), each applicable Pledgor and the

 

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relevant Securities Intermediary or Commodity Intermediary shall have executed
and delivered a Securities Account Control Agreement or Commodity Account
Control Agreement, as applicable, for each Securities Account or Commodity
Account listed in Schedule 16 to the Perfection Certificate, or the Pledgors
shall have closed such accounts, (3) no later than thirty (30) days after the
date hereof (as such period may be extended in the sole discretion of the
Administrative Agent), the Collateral Agent shall have a valid, enforceable,
perfected first priority security interest (other than Permitted Liens) in such
Securities Accounts and Commodity Accounts by Control and (4) as of the date
hereof, no Pledgor holds, owns or has any interest in any certificated
securities or uncertificated securities other than those constituting Pledged
Securities and those maintained in Securities Accounts or Commodity Accounts
listed on Schedule 16 to the Perfection Certificate or in respect of which the
Collateral Agent has Control. If any Pledgor shall at any time hold or acquire
any certificated securities constituting Investment Property with a fair market
value, individually or in the aggregate, in excess of $500,000, such Pledgor
shall promptly (and in any event within thirty (30) days of acquiring such
security) (a) endorse, assign and deliver the same to the Collateral Agent,
accompanied by such instruments of transfer or assignment duly executed in
blank, all in form and substance reasonably satisfactory to the Collateral Agent
or (b) deliver such securities into a Securities Account with respect to which a
Control Agreement is in effect in favor of the Collateral Agent. If any
securities now or hereafter acquired by any Pledgor constituting Investment
Property and having a fair market value, individually or in the aggregate, in
excess of $500,000 are uncertificated and are issued to such Pledgor or its
nominee directly by the issuer thereof, such Pledgor shall promptly (and in any
event within thirty (30) days of acquiring such security (as such period may be
extended in the sole discretion of the Administrative Agent)) notify the
Collateral Agent thereof and pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (a) cause the issuer to
agree to comply with Entitlement Orders or other instructions from the
Collateral Agent as to such securities, without further consent of any Pledgor
or such nominee, (b) cause a Security Entitlement with respect to such
uncertificated security to be held in a Securities Account with respect to which
the Collateral Agent has Control or (c) arrange for the Collateral Agent to
become the registered owner of the securities. No Pledgor shall hereafter
establish and maintain any Securities Account or Commodity Account with any
Securities Intermediary or Commodity Intermediary unless (1) the applicable
Pledgor shall have given the Collateral Agent notice within thirty (30) days’
after establishment of such new Securities Account or Commodity Account with
such Securities Intermediary or Commodity Intermediary and (2) such Securities
Intermediary or Commodity Intermediary, as the case may be, and such Pledgor
shall have duly executed and delivered a Control Agreement with respect to such
Securities Account or Commodity Account, as the case may be. Each Pledgor shall
accept any cash and Investment Property in trust for the benefit of the
Collateral Agent and within ten (10) days of actual receipt thereof, deposit any
and all cash and Investment Property received by it into a Deposit Account or
Securities Account subject to the Collateral Agent’s Control. The Collateral
Agent agrees with each Pledgor that the Collateral Agent shall not give any
Entitlement Orders or instructions or directions to any issuer of uncertificated
securities, Securities Intermediary or Commodity Intermediary, and shall not
withhold its consent to the exercise of any withdrawal or dealing rights by such
Pledgor, unless an Event of Default has occurred and is continuing or, after
giving effect to any such investment and withdrawal rights, would occur. The
provisions of this Section 3.4(c) shall not apply to any Financial Assets
credited to a Securities Account for which the Collateral Agent is the
Securities Intermediary. No Pledgor shall grant Control over any Investment
Property to any person other than the Collateral Agent.

 

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(ii) As between the Collateral Agent and the Pledgors, the Pledgors shall bear
the investment risk with respect to the Investment Property and Pledged
Securities, and the risk of loss of, damage to, or the destruction of the
Investment Property and Pledged Securities, whether in the possession of, or
maintained as a Security Entitlement or deposit by, or subject to the Control
of, the Collateral Agent, a Securities Intermediary, a Commodity Intermediary,
any Pledgor or any other person; provided, however, that nothing contained in
this Section 3.4(c) shall release or relieve any Securities Intermediary or
Commodity Intermediary of its duties and obligations to the Pledgors or any
other person under any Control Agreement or under applicable Legal Requirements.
Each Pledgor shall promptly pay all Charges and fees of whatever kind or nature
with respect to the Investment Property and Pledged Securities pledged by it
under this Agreement. In the event any Pledgor shall fail to make such payment
contemplated in the immediately preceding sentence, the Collateral Agent may do
so for the account of such Pledgor and the Pledgors shall promptly reimburse and
indemnify the Collateral Agent from all costs and expenses incurred by the
Collateral Agent under this Section 3.4(c) in accordance with Section 10.03 of
the Credit Agreement.

(d) Letter-of-Credit Rights. If any Pledgor is at any time a beneficiary under a
Letter of Credit now or hereafter issued in favor of such Pledgor, other than a
Letter of Credit that is a “supporting obligation” (as defined in Section 9-102
of the UCC) with respect to other Pledged Collateral in which the Collateral
Agent has a valid, enforceable, perfected first priority security interest
(subject to Permitted Liens), such Pledgor shall promptly (and in any event
within thirty (30) days of becoming a beneficiary thereunder) notify the
Collateral Agent thereof and such Pledgor shall, at the request of the
Collateral Agent, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, use its commercially reasonable efforts to
either (i) arrange for the issuer and any confirmer or other nominated person of
such Letter of Credit to consent to an assignment to the Collateral Agent of the
proceeds of any drawing under the Letter of Credit or (ii) arrange for the
Collateral Agent to become the transferee beneficiary of such Letter of Credit,
with the Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the Letter of Credit are to be applied as provided in the Credit
Agreement. The actions in the preceding sentence shall not be required to the
extent that the amount of any such Letter of Credit, together with the aggregate
amount of all other Letters of Credit for which the actions described above in
clauses (i) and (ii) have not been taken, does not exceed $500,000 in the
aggregate for all Pledgors.

(e) Commercial Tort Claims. As of the date hereof, each Pledgor hereby
represents and warrants that it holds no Commercial Tort Claims other than those
listed in Schedule 15 to the Perfection Certificate. If any Pledgor shall at any
time hold or acquire a Commercial Tort Claim, such Pledgor shall promptly notify
the Collateral Agent in writing signed by such Pledgor of the brief details
thereof and grant to the Collateral Agent in such 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 the
Collateral Agent. The requirement in the preceding sentence shall not apply to
the extent that the amount of such Commercial Tort Claim, together with the
amount of all other Commercial Tort Claims held by any Pledgor in which the
Collateral Agent does not have a security interest, does not exceed $500,000 in
the aggregate for all Pledgors.

 

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SECTION 3.5. Joinder of Additional Subsidiary Guarantors. The Pledgors shall
cause each Subsidiary of the Borrower which, from time to time, after the date
hereof shall be required to pledge any assets to the Collateral Agent for the
benefit of the Secured Parties pursuant to the Credit Agreement, to execute and
deliver to the Collateral Agent (i) a Joinder Agreement substantially in the
form of Exhibit 2 hereto and (ii) a Perfection Certificate, in each case, within
thirty (30) days (as such period may be extended in the sole discretion of the
Administrative Agent) of the date on which it was acquired or created, as
applicable, and upon such execution and delivery, such Subsidiary shall
constitute a “Subsidiary Guarantor” and a “Pledgor” for all purposes hereunder
with the same force and effect as if originally named as a Subsidiary Guarantor
and Pledgor herein. The execution and delivery of such Joinder Agreement shall
not require the consent of any Pledgor hereunder. The rights and obligations of
each Pledgor hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Guarantor and Pledgor as a party to this
Agreement or any other Loan Document.

SECTION 3.6. Supplements; Further Assurances. Each Pledgor shall take such
further actions, and execute and/or deliver to the Collateral Agent such
additional financing statements, amendments, assignments, agreements,
supplements, powers and instruments, as the Collateral Agent may in its
reasonable judgment deem necessary or appropriate in order to create, perfect,
preserve and protect the security interest in the Pledged Collateral as provided
herein and the rights and interests granted to the Collateral Agent hereunder,
to carry into effect the purposes hereof or better to assure and confirm the
validity, enforceability and priority of the Collateral Agent’s security
interest in the Pledged Collateral or permit the Collateral Agent to exercise
and enforce its rights, powers and remedies hereunder with respect to any
Pledged Collateral, including the filing of financing statements, continuation
statements and other documents (including this Agreement) under the UCC (or
other similar laws) in effect in any jurisdiction with respect to the security
interest created hereby and the execution and delivery of Control Agreements,
all in form reasonably satisfactory to the Collateral Agent and in such offices
(including the United States Patent and Trademark Office and the United States
Copyright Office) wherever required by Legal Requirements to perfect, continue
and maintain the validity, enforceability and priority of the security interest
in the Pledged Collateral as provided herein and to preserve the other rights
and interests granted to the Collateral Agent hereunder, as against third
parties, with respect to the Pledged Collateral. Without limiting the generality
of the foregoing, each Pledgor shall make, execute, endorse, acknowledge, file
or refile and/or deliver to the Collateral Agent from time to time upon
reasonable request by the Collateral Agent such schedules, confirmatory
assignments, supplements, additional security agreements, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments as the Collateral Agent shall reasonably
request. If an Event of Default has occurred and is continuing, the Collateral
Agent may institute and maintain, in its own name or in the name of any Pledgor,
such suits and proceedings as the Collateral Agent may be advised by counsel
shall be necessary or expedient to prevent any impairment of the security
interest in in the Pledged Collateral or the perfection or priority thereof. All
of the foregoing shall be at the sole cost and expense of the Pledgors.

 

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ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

Each Pledgor represents, warrants and covenants as follows:

SECTION 4.1. Title. Except for the security interest granted to the Collateral
Agent for the ratable benefit of the Secured Parties pursuant to this Agreement
and Permitted Liens, such Pledgor owns or has rights and, as to Pledged
Collateral acquired by it from time to time after the date hereof, will own or
have rights in each item of Pledged Collateral pledged by it hereunder, free and
clear of any and all Liens or claims of others. In addition, no Liens or claims
exist on the Securities Collateral, other than as permitted by Section 6.02 of
the Credit Agreement and any rights or obligations set forth in the
Organizational Documents for any Pledged Securities issued by a Joint Venture.

SECTION 4.2. Validity of Security Interest. The security interest in and Lien on
the Pledged Collateral granted to the Collateral Agent for the ratable benefit
of the Secured Parties hereunder constitutes (a) a legal and valid security
interest in all the Pledged Collateral securing the payment and performance of
the Secured Obligations, and (b) subject to the filings and other actions
described in Schedule 6 to the Perfection Certificate (to the extent required to
be listed on the schedules to the Perfection Certificate as of the date this
representation is made or deemed made), a valid, enforceable, perfected first
priority security interest (other than Permitted Liens) in all the Pledged
Collateral. Each such filing and action shall be made or taken or shall be
caused to be made or taken by the Borrower promptly following the Closing Date.
The security interest and Lien granted to the Collateral Agent for the ratable
benefit of the Secured Parties pursuant to this Agreement in and on the Pledged
Collateral will at all times constitute a valid, enforceable, perfected,
continuing first priority security interest therein, prior to all other Liens on
the Pledged Collateral, subject only to Permitted Liens.

SECTION 4.3. Defense of Claims; Transferability of Pledged Collateral. Each
Pledgor shall, at its own cost and expense, defend title to the Pledged
Collateral pledged by it hereunder and the security interest therein and Lien
thereon granted to the Collateral Agent and the priority thereof required
hereunder against all claims and demands of all persons, at its own cost and
expense, at any time claiming any interest therein adverse to the Collateral
Agent or any other Secured Party other than Permitted Liens. There is no
agreement, order, judgment or decree that restricts the transferability of any
of the Pledged Collateral or otherwise impairs or conflicts with any Pledgor’s
obligations or the rights of the Collateral Agent hereunder, and no Pledgor
shall enter into any agreement or take any other action, that would restrict the
transferability of any of the Pledged Collateral or otherwise impair or conflict
with any Pledgor’s obligations or the rights of the Collateral Agent hereunder.

SECTION 4.4. Other Financing Statements. No Pledgor has filed, nor authorized
any third party to file (nor will there be), any valid or effective financing
statement (or similar statement, instrument of registration or public notice
under the law of any jurisdiction) covering or purporting to cover any interest
of any kind in the Pledged Collateral, except such as have been filed in favor
of the Collateral Agent pursuant to this Agreement or in favor of any holder of
a Permitted Lien with respect to such Permitted Lien or financing

 

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statements and other statements and instruments or public notices relating to
the termination statements listed on Schedule 9(a) to the Perfection
Certificate. So long as any of the Secured Obligations remain unpaid and
unperformed, no Pledgor shall execute, authorize or permit to be filed in any
public office any financing statement (or similar statement, instrument of
registration or public notice under the law of any jurisdiction) relating to any
Pledged Collateral, except financing statements and other statements and
instruments filed or to be filed in respect of and covering the security
interests granted by such Pledgor to the Collateral Agent pursuant to this
Agreement or the holder(s) of the Permitted Liens.

SECTION 4.5. Chief Executive Office; Change of Name; Jurisdiction of
Organization, etc. Such Pledgor shall, (i) unless it shall have given the
Collateral Agent not less than thirty (30) days’ prior written notice (in the
form of an Officers’ Certificate), not change its name, identity, legal
structure (whether by merger, consolidation, change in corporate form or
otherwise), type of organization or jurisdiction of organization, place of
business or, if more than one, chief executive office, or mailing address or
organizational identification number if it has one and (ii) take all actions
necessary or advisable to maintain the continuous validity, perfection and the
same or better priority of the Collateral Agent’s security interest in the
Pledged Collateral granted or intended to be granted hereunder, which in the
case of any merger or other change in organizational structure shall include
delivering a written notice (in the form of an Officers’ Certificate) upon
completion of such merger or other change in organizational structure confirming
the grant of the security interest under this Agreement. If such Pledgor does
not have an organizational identification number and later obtains one, such
Pledgor shall promptly notify the Collateral Agent of such organizational
identification number. The Collateral Agent may rely on opinions of counsel as
to whether any or all UCC financing statements of the Pledgors need to be
amended as a result of any of the changes described in this Section 4.5. The
Collateral Agent shall not be liable or responsible to any party for any failure
to maintain a valid, enforceable, perfected security interest with the priority
required hereunder in such Pledgor’s property constituting Pledged Collateral.
The Collateral Agent shall have no duty to inquire about such changes, the
parties acknowledging and agreeing that it would not be feasible or practical
for the Collateral Agent to search for information on such changes if such
information is not provided by any Pledgor.

SECTION 4.6. Location of Inventory and Equipment. As of the date hereof, all
Equipment having a value in excess of $500,000 and all non-real property
Inventory of such Pledgor is located at the chief executive office or such other
location listed on Schedule 2(d) to the Perfection Certificate. Within 30 days
(as such period may be extended in the sole discretion of the Administrative
Agent) of such relocation, such Pledgor shall give the Collateral Agent notice
(in the form of an Officer’s Certificate), clearly describing such new location
within the continental United States and providing such other information in
connection therewith as the Collateral Agent may reasonably request; provided
that in no event shall any Equipment or Inventory be moved to any location other
than one that is listed on Schedule 2(d) to the Perfection Certificate.

SECTION 4.7. Corporate Names; Prior Transactions. Except as set forth in
Schedules 1(a), (b) and (c) to the Perfection Certificate, such Pledgor has not,
during the past five (5) years, been known by or used any other corporate name
or been a party to any merger or consolidation, or acquired all or substantially
all of the assets of any person, or acquired any of its property or assets out
of the ordinary course of business.

 

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SECTION 4.8. Due Authorization and Issuance. All of the Pledged Securities
existing on the date hereof have been, and to the extent any Pledged Securities
are hereafter issued, such Pledged Securities will be, upon such issuance, duly
authorized, validly issued and fully paid and non-assessable to the extent
applicable. As of the date hereof, there is no amount or other obligation owing
by any Pledgor to any issuer of the Pledged Securities in exchange for or in
connection with the issuance of the Pledged Securities or any Pledgor’s status
as a partner or a member of any issuer of the Pledged Securities.

SECTION 4.9. Consents, etc. No consent of any party (including equityholders or
creditors of such Pledgor) and no consent, authorization, approval, license or
other action by, and no notice to or filing with, any Governmental Authority or
regulatory body or other person is required for the exercise by the Collateral
Agent of (i) the voting or other rights provided for in this Agreement or
(ii) the remedies in respect of the Pledged Collateral pursuant to this
Agreement. In the event that the Collateral Agent desires to exercise any
remedies, voting or consensual rights or attorney-in-fact powers set forth in
this Agreement and determines it necessary to obtain any approvals or consents
of any Governmental Authority or regulatory body or any other person therefor,
then, upon the reasonable request of the Collateral Agent, such Pledgor agrees
to assist and aid the Collateral Agent to obtain as soon as practicable any
necessary approvals or consents for the exercise of any such remedies, rights
and powers.

SECTION 4.10. Information Relating to Pledged Collateral. All information set
forth herein, including the schedules annexed hereto, and all information
contained in any documents, schedules and lists heretofore delivered to any
Secured Party, including the Perfection Certificate and the schedules thereto,
in connection with this Agreement, in each case, relating to the Pledged
Collateral, is, as modified or supplemented by any other information so
delivered on or prior to the date hereof, taken as a whole, accurate and
complete in all material respects. The Pledged Collateral described on the
schedules to the Perfection Certificate constitutes all of the property of such
type of Pledged Collateral owned or held by the Pledgors.

SECTION 4.11. Insurance. In the event that the proceeds of any insurance claim
are paid to any Pledgor after the Collateral Agent has exercised its right to
foreclose after an Event of Default, such net cash proceeds shall be paid to the
Collateral Agent to satisfy any deficiency remaining after such foreclosure. The
Collateral Agent shall retain its interest in the insurance policies and
coverages required to be maintained pursuant to the Credit Agreement during any
redemption period.

SECTION 4.12. Payment of Taxes; Compliance with Legal Requirements; Contesting
Liens; Charges. Each Pledgor may at its own expense contest the validity, amount
or applicability of any Charges so long as the contest thereof shall be
conducted in accordance with, and permitted pursuant to the provisions of, the
Credit Agreement. Notwithstanding the foregoing sentence, (i) no contest of any
such obligation may be pursued by such Pledgor if such contest would expose the
Collateral Agent or any other Secured Party to (A) any possible criminal
liability or (B) any civil liability for failure to comply with such obligations
unless such Pledgor shall have furnished a bond or other security therefor
satisfactory to the Collateral

 

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Agent, or such Secured Party, as the case may be, and (ii) if at any time
payment or performance of any obligation contested by such Pledgor pursuant to
this Section 4.12 shall become necessary to prevent the imposition of remedies
because of non-payment, such Pledgor shall pay or perform the same in sufficient
time to prevent the imposition of remedies in respect of such default or
prospective default.

SECTION 4.13. Access to Pledged Collateral, Books and Records; Other
Information. Each Pledgor shall permit representatives of the Collateral Agent
or any Secured Party upon reasonable notice to visit and inspect any of its
properties in accordance with the terms of Section 5.07 of the Credit Agreement.

SECTION 4.14. Perfection Certificate. Each of the certifications set forth in
the Perfection Certificate shall apply herein mutatis mutandis as if such
certification was a representation and warranty made by the Pledgors in this
Article IV.

ARTICLE V

CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL

SECTION 5.1. Pledge of Additional Securities Collateral. Each Pledgor shall,
upon obtaining any Pledged Securities or Intercompany Notes of any person (other
than Excluded Assets) in an aggregate amount in excess of $500,000, accept the
same in trust for the benefit of the Collateral Agent and promptly (but in any
event within thirty (30) days thereafter) deliver to the Collateral Agent a
pledge amendment, duly executed by such Pledgor, in substantially the form of
Exhibit 1 hereto (each, a “Pledge Amendment”), and deliver to the Collateral
Agent the certificates and other documents required under Section 3.1 and
Section 3.2 hereof in respect of the additional Pledged Securities or
Intercompany Notes which are to be pledged pursuant to this Agreement, and
confirming the attachment of the Lien hereby created on and in respect of such
additional Pledged Securities or Intercompany Notes. Each Pledgor hereby
authorizes the Collateral Agent to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Securities or Intercompany Notes listed on
any Pledge Amendment delivered to the Collateral Agent shall for all purposes
hereunder be considered Pledged Collateral.

SECTION 5.2. Voting Rights; Distributions; etc.

(a) So long as no Event of Default shall have occurred and be continuing:

(i) Each Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Securities Collateral or any part thereof
for any purpose not inconsistent with the terms or purposes hereof, the Loan
Documents or any other document evidencing the Secured Obligations; provided,
however, that no Pledgor shall in any event exercise such rights in any manner
that is disadvantageous to any Agent or Lender in any material respect.

 

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(ii) Each Pledgor shall be entitled to receive and retain, and to utilize free
and clear of the Lien hereof, any and all Distributions, but only if and to the
extent made in accordance with the provisions of the Credit Agreement; provided,
however, that any and all such Distributions consisting of rights or interests
in the form of Pledged Securities shall be promptly (and in any event within
thirty (30) days after receipt thereof (as such period may be extended in the
sole discretion of the Administrative Agent)) delivered to the Collateral Agent
to hold as Pledged Collateral and shall, if received by any Pledgor, be received
in trust for the benefit of the Collateral Agent, be segregated from the other
property or funds of such Pledgor and be forthwith delivered to the Collateral
Agent as Pledged Collateral in the same form as so received (with any necessary
or reasonably requested endorsement).

(b) So long as no Event of Default shall have occurred and be continuing, the
Collateral Agent shall be deemed without further action or formality to have
granted to each Pledgor all necessary consents relating to voting rights and
shall, if necessary, upon written request of any Pledgor and at the sole cost
and expense of the Pledgors, from time to time execute and deliver (or cause to
be executed and delivered) to such Pledgor all such instruments as such Pledgor
may reasonably request in order to permit such Pledgor to exercise the voting
and other rights which it is entitled to exercise pursuant to Section 5.2(a)(i)
hereof and to receive the Distributions which it is authorized to receive and
retain pursuant to Section 5.2(a)(ii) hereof.

(c) Upon the occurrence and during the continuance of any Event of Default, upon
prior written notice by the Collateral Agent to such Pledgor, if such notice is
permitted by applicable Legal Requirements (failing which the following shall
occur automatically without the need for notice):

(i) All rights of each Pledgor to exercise the voting and other consensual
rights it would otherwise be entitled to exercise pursuant to Section 5.2(a)(i)
hereof shall immediately cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall thereupon have the sole right to
exercise such voting and other consensual rights until the applicable Event of
Default is no longer continuing, in which case the Collateral Agent’s rights
under this Section 5.2(c)(i) shall cease to be effective, subject to revesting
in the event of a subsequent Event of Default that is continuing.

(ii) All rights of each Pledgor to receive Distributions which it would
otherwise be authorized to receive and retain pursuant to Section 5.2(a)(ii)
hereof shall immediately cease and all such rights shall thereupon become vested
in the Collateral Agent, which shall thereupon have the sole right to receive
and hold as Pledged Collateral such Distributions until the applicable Event of
Default is no longer continuing, in which case the Collateral Agent’s rights
under this Section 5.2(c)(ii) shall cease to be effective, subject to revesting
in the event of a subsequent Event of Default that is continuing.

(d) Upon the occurrence and during the continuation of an Event of Default, each
Pledgor shall, at its sole cost and expense, from time to time execute and
deliver to the Collateral Agent appropriate instruments as the Collateral Agent
may reasonably request in order to permit the Collateral Agent to exercise the
voting and other rights which it may be entitled to exercise pursuant to
Section 5.2(c)(i) hereof and to receive all Distributions which it may be
entitled to receive under Section 5.2(c)(ii) hereof.

 

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(e) All Distributions which are received by any Pledgor contrary to the
provisions of Section 5.2(a)(ii) hereof shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of such
Pledgor and shall immediately be paid over to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary or reasonably
requested endorsement).

SECTION 5.3. Organizational Documents. As of the date hereof, each Pledgor has
delivered to the Collateral Agent true, correct, and complete copies of the
Organizational Documents of such Pledgor. As of the date hereof, the
Organizational Documents of the Pledgors are in full force and effect, have not
as of the date hereof been amended or modified except as disclosed in writing to
the Collateral Agent, and there is no existing default by any party thereunder
or any event which, with the giving of notice or passage of time or both, would
constitute a default under any Organizational Documents. No Pledgor will
terminate or agree to terminate any Organizational Documents or make any
amendment or modification to any Organization Documents if such termination,
agreement to terminate, amendment or modification could reasonably be expected
to have a Material Adverse Effect.

SECTION 5.4. Defaults, etc. As of the date hereof, (i) no Pledgor is in default
in the payment of any portion of any mandatory capital contribution, if any,
required to be made under any agreement to which such Pledgor is a party
relating to the Pledged Securities pledged by it, and such Pledgor is not in
violation of any other provisions of any such agreement to which such Pledgor is
a party, or otherwise in default or violation thereunder, (ii) no Securities
Collateral pledged by any Pledgor is subject to any defense, offset or
counterclaim, nor have any of the foregoing been asserted or alleged against
such Pledgor by any person with respect thereto and (iii) there are no
certificates, instruments, documents or other writings (other than (x) the
Organizational Documents of such Pledgor and (y) certificates representing such
Pledged Securities that have been delivered to the Collateral Agent) which
evidence any Pledged Securities of such Pledgor.

SECTION 5.5. Certain Agreements of Pledgors as Issuers and Holders of Equity
Interests.

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

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

 

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ARTICLE VI

CERTAIN PROVISIONS CONCERNING

INTELLECTUAL PROPERTY COLLATERAL

SECTION 6.1. Grant of Intellectual Property License. For the purpose of enabling
the Collateral Agent, during the continuance of an Event of Default, to exercise
rights and remedies under Article VIII hereof at such time as the Collateral
Agent shall be lawfully entitled to exercise such rights and remedies, and for
no other purpose, each Pledgor hereby grants to the Collateral Agent, to the
extent licensable, exercisable solely upon the occurrence and during the
continuance of any Event of Default, an irrevocable, non-exclusive worldwide
license (exercisable without payment of royalty or other compensation to such
Pledgor) subject, in the case of Trademarks, to sufficient rights to quality
control and inspection in favor of such Grantor to avoid the risk of
invalidation of such Trademarks, to use, assign, license, sublicense or
otherwise dispose of the Intellectual Property Collateral now owned or hereafter
acquired by such Pledgor (excluding, for the avoidance of doubt, any
Intellectual Property License that by its terms is prohibited from being so
licensed to the extent constituting Excluded Assets), wherever the same may be
located. Such license shall include access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout hereof.

SECTION 6.2. Registration. Except pursuant to Permitted Liens and licenses
entered into by any Pledgor in the ordinary course of business, on and as of the
date hereof (i) each Pledgor is the sole and exclusive owner and/or possesses
the right to use any Copyright, Patent or Trademark listed on Schedules 14(a),
(b) and (c) to the Perfection Certificate, and (ii) all registrations listed on
Schedules 14(a), (b) and (c) to the Perfection Certificate are, to the knowledge
of each Pledgor, valid and in full force and effect.

SECTION 6.3. No Violations or Proceedings. On and as of the date hereof,
(i) there is no violation, dilution, misappropriation or infringement by others
of any right of such Pledgor with respect to any Copyright, Patent or Trademark
listed on Schedules 14(a), (b) and (c) to the Perfection Certificate,
respectively, pledged by it under the name of such Pledgor that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect, (ii) such Pledgor is not violating, diluting, misappropriating or
infringing upon any Intellectual Property of any other person other than such
violation, dilution, misappropriation or infringement that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect
and (iii) no proceedings have been instituted or are pending against such
Pledgor or threatened, and no such claim against such Pledgor has been received
by such Pledgor since December 31, 2013 alleging any such violation that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

SECTION 6.4. Protection of Collateral Agent’s Security. On a continuing basis,
each Pledgor shall, at its sole cost and expense, (i) promptly following its
becoming aware thereof, notify the Collateral Agent of (A) any materially
adverse determination in any proceeding in the United States Patent and
Trademark Office or the United States Copyright Office with respect to any
material Patent, Trademark or Copyright or (B) the institution of any proceeding
or any adverse determination in any federal, state, local or foreign court or

 

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administrative body regarding such Pledgor’s claim of ownership in or right to
use any of the Intellectual Property Collateral material to the use and
operation of the Pledged Collateral or any Mortgaged Property, its right to
register such Intellectual Property Collateral or its right to keep and maintain
such registration in full force and effect, (ii) in its reasonable business
judgment, maintain and protect the Intellectual Property Collateral material to
the use and operation of the Pledged Collateral or any Mortgaged Property as
presently used and operated and as contemplated by the Credit Agreement,
(iii) in its reasonable business judgment, not permit to lapse or become
abandoned any Intellectual Property Collateral material to the use and operation
of the Pledged Collateral or any Mortgaged Property as presently used and
operated and as contemplated by the Credit Agreement, and not settle or
compromise any pending or future litigation or administrative proceeding with
respect to such Intellectual Property Collateral without the prior written
consent of the Collateral Agent, (iv) upon such Pledgor obtaining knowledge
thereof, promptly notify the Collateral Agent in writing of any event that may
be reasonably expected to materially and adversely affect the value or utility
of the Intellectual Property Collateral, (v) diligently keep adequate records
respecting the Intellectual Property Collateral and (vi) furnish to the
Collateral Agent from time to time upon the Collateral Agent’s reasonable
request therefor reasonably detailed statements and amended schedules further
identifying and describing the Intellectual Property Collateral and such other
materials evidencing or reports pertaining to any Intellectual Property
Collateral as the Collateral Agent may from time to time reasonably request.

SECTION 6.5. After-Acquired Property. If any Pledgor shall at any time before
the Secured Obligations have been paid and performed in full (other than
contingent indemnification obligations that, pursuant to the provisions of the
Credit Agreement or the Security Documents, survive the termination thereof),
(i) obtain any rights to any additional Intellectual Property Collateral,
(ii) become entitled to the benefit of any additional Intellectual Property
Collateral or any renewal or extension thereof, including any reissue, division,
continuation, or continuation-in-part of any Intellectual Property Collateral,
or any improvement on any Intellectual Property Collateral, or (iii) file a
Statement of Use or an Amendment to Allege Use with respect to any
“intent-to-use” Trademark application that, prior to such filing, was an
Excluded Asset, the provisions hereof shall automatically apply thereto and any
such item enumerated in the preceding clauses (i), (ii) or (iii) with respect to
such Pledgor shall automatically constitute Intellectual Property Collateral as
if such would have constituted Intellectual Property Collateral at the time of
execution hereof and be subject to the Lien and security interest created by
this Agreement without further action by any party (excluding any Intellectual
Property Collateral that constitutes Excluded Assets). Each Pledgor shall
promptly provide to the Collateral Agent written notice of any of the foregoing
and confirm the attachment of the Lien and security interest created by this
Agreement to any rights described in clauses (i), (ii) and (iii) above by
execution of an instrument in form reasonably acceptable to the Collateral Agent
and the filing of any instruments or statements as shall be reasonably necessary
or reasonably requested by the Collateral Agent to create, preserve, protect or
perfect the Collateral Agent’s security interest in such Intellectual Property
Collateral to the extent such Intellectual Property Collateral may be perfected
under applicable Legal Requirements. Further, each Pledgor authorizes the
Collateral Agent to modify this Agreement by amending Schedule 7 to the
Perfection Certificate to include any Intellectual Property Collateral of such
Pledgor acquired or arising after the date hereof.

 

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SECTION 6.6. Litigation. Unless there shall occur and be continuing any Event of
Default, each Pledgor shall, in its reasonable business judgment, have the right
to commence and prosecute in its own name, as the party in interest, for its own
benefit and at the sole cost and expense of the Pledgors, such applications for
protection of the Intellectual Property Collateral and suits, proceedings or
other actions to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value or other damage as are necessary to protect the
Intellectual Property Collateral. Upon the occurrence and during the continuance
of any Event of Default, the Collateral Agent shall have the right but shall in
no way be obligated to file applications for protection of the Intellectual
Property Collateral and/or bring such suit in the name of any Pledgor, the
Collateral Agent or the Secured Parties to enforce the Intellectual Property
Collateral and any license thereunder. In the event of such suit, each Pledgor
shall, at the reasonable request of the Collateral Agent, do any and all lawful
acts and execute any and all documents requested by the Collateral Agent in aid
of such enforcement and the Pledgors shall promptly reimburse and indemnify the
Collateral Agent for all costs and expenses incurred by the Collateral Agent in
the exercise of its rights under this Section 6.6 in accordance with
Section 10.03 of the Credit Agreement. In the event that the Collateral Agent
shall elect not to bring such suit to enforce the Intellectual Property
Collateral, each Pledgor agrees, at the reasonable request of the Collateral
Agent, to take all actions necessary, whether by suit, proceeding or other
action, to prevent the infringement, counterfeiting, unfair competition,
dilution, diminution in value of or other damage to any of the Intellectual
Property Collateral by others and for that purpose agrees to diligently maintain
any suit, proceeding or other action against any person so infringing necessary
to prevent such infringement.

ARTICLE VII

TRANSFERS

SECTION 7.1. Transfers of Pledged Collateral. No Pledgor shall sell, convey,
assign or otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral pledged by it hereunder except as expressly permitted by the
Credit Agreement.

ARTICLE VIII

REMEDIES

SECTION 8.1. Remedies. Upon the occurrence and during the continuance of any
Event of Default, the Collateral Agent may from time to time exercise in respect
of the Pledged Collateral, in addition to the other rights and remedies provided
for herein or otherwise available to it, the following remedies:

(i) Personally, or by agents or attorneys, immediately take possession of the
Pledged Collateral or any part thereof, from any Pledgor or any other person who
then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon any Pledgor’s premises where any of the
Pledged Collateral is located, remove such Pledged Collateral, remain present at
such premises to receive copies of all communications and remittances relating
to the Pledged Collateral and use in connection with such removal and possession
any and all services, supplies, aids and other facilities of any Pledgor;

 

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(ii) Demand, sue for, collect or receive any money or property at any time
payable or receivable in respect of the Pledged Collateral including instructing
the obligor or obligors on any agreement, instrument or other obligation
constituting part of the Pledged Collateral to make any payment required by the
terms of such agreement, instrument or other obligation directly to the
Collateral Agent, and in connection with any of the foregoing, compromise,
settle, extend the time for payment and make other modifications with respect
thereto; provided, however, that in the event that any such payments are made
directly to any Pledgor, such Pledgor shall segregate all amounts received
pursuant thereto in trust for the benefit of the Collateral Agent and shall
promptly (but in no event later than three (3) Business Days after receipt
thereof) pay such amounts to the Collateral Agent;

(iii) Sell, assign, grant a license to use or otherwise liquidate, or direct any
Pledgor to sell, assign, grant a license to use or otherwise liquidate, any and
all investments made in whole or in part with the Pledged Collateral or any part
thereof, and take possession of the proceeds of any such sale, assignment,
license or liquidation;

(iv) Take possession of the Pledged Collateral or any part thereof, by directing
any Pledgor in writing to deliver the same to the Collateral Agent at any place
or places so designated by the Collateral Agent, in which event such Pledgor
shall at its own expense: (A) forthwith cause the same to be moved to the place
or places designated by the Collateral Agent and therewith delivered to the
Collateral Agent, (B) store and keep any Pledged Collateral so delivered to the
Collateral Agent at such place or places pending further action by the
Collateral Agent and (C) while the Pledged Collateral shall be so stored and
kept, provide such security and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition. Each
Pledgor’s obligation to deliver the Pledged Collateral as contemplated in this
Section 8.1(iv) is of the essence hereof. Upon application to a court of equity
having jurisdiction, the Collateral Agent shall be entitled to a decree
requiring specific performance by any Pledgor of such obligation;

(v) Withdraw all moneys, instruments, securities and other property in any bank,
financial securities, deposit or other account of any Pledgor constituting
Pledged Collateral for application to the Secured Obligations as provided in
Article X hereof;

(vi) Retain and apply the Distributions to the Secured Obligations as provided
in Article IX hereof;

(vii) Exercise any and all rights as beneficial and legal owner of the Pledged
Collateral, including perfecting assignment of and exercising any and all
voting, consensual and other rights and powers with respect to any Pledged
Collateral; and

 

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(viii) Exercise all rights and remedies of a secured party on default under the
UCC (whether or not the UCC applies to the affected Pledged Collateral), and the
Collateral Agent may also in its sole discretion, without notice except as
specified in Section 8.2 hereof, sell, assign, transfer or grant a license to
use the Pledged Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, broker’s board or at any of the Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at
such price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Collateral Agent or any other Secured Party or any
of their respective Affiliates may be the purchaser, licensee, assignee or
recipient of the Pledged Collateral or any part thereof at any such sale and
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Pledged Collateral sold,
assigned or licensed at such sale, to use and apply any of the Secured
Obligations owed to such person as a credit on account of the purchase price of
the Pledged Collateral or any part thereof payable by such person at such sale.
Each purchaser, assignee, licensee or recipient at any such sale shall acquire
the property sold, assigned or licensed absolutely free from any claim or right
on the part of any Pledgor, and each Pledgor hereby waives, to the fullest
extent permitted by applicable Legal Requirements, all rights of redemption,
stay and/or appraisal which it now has or may at any time in the future have
under any Legal Requirements now existing or hereafter enacted. The Collateral
Agent shall not be obligated to make any sale of the Pledged Collateral or any
part thereof regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Pledgor hereby
waives, to the fullest extent permitted by applicable Legal Requirements, any
claims against the Collateral Agent arising by reason of the fact that the price
at which the Pledged Collateral or any part thereof may have been sold, assigned
or licensed at such a private sale was less than the price which might have been
obtained at a public sale, even if the Collateral Agent accepts the first offer
received and does not offer such Pledged Collateral to more than one offeree.

SECTION 8.2. Notice of Sale. Each Pledgor acknowledges and agrees that, to the
extent notice of sale or other disposition of the Pledged Collateral or any part
thereof shall be required by any Legal Requirement, ten (10) days’ prior notice
to such Pledgor of the time and place of any public sale or of the time after
which any private sale or other intended disposition is to take place shall be
commercially reasonable notification of such matters unless the Pledged
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market (in which case no such prior notice
shall be required). No notification need be given to any Pledgor if it has
signed, after the occurrence of an Event of Default, a statement renouncing or
modifying any right to notification of sale or other intended disposition.

SECTION 8.3. Waiver of Notice and Claims; Other Waivers; Marshalling.

(a) Each Pledgor hereby waives, to the fullest extent permitted by applicable
Legal Requirements, notice or judicial hearing in connection with the Collateral
Agent’s taking possession or the Collateral Agent’s disposition of the Pledged
Collateral or any part thereof, including any and all prior notice and hearing
for any prejudgment remedy or remedies and any

 

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such right which such Pledgor would otherwise have under any Legal Requirements,
and each Pledgor hereby further waives, to the fullest extent permitted by
applicable Legal Requirements: (i) all damages occasioned by such taking of
possession, (ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral Agent’s
rights hereunder and (iii) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable Legal
Requirements. The Collateral Agent shall not be liable for any incorrect or
improper payment made pursuant to this Article VIII except to the extent
resulting solely from the Collateral Agent’s gross negligence or willful
misconduct as finally judicially determined by a court of competent
jurisdiction. Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity or otherwise against such Pledgor and against any and all persons
claiming or attempting to claim the Pledged Collateral so sold, optioned or
realized upon, or any part thereof, from, through or under such Pledgor.

(b) Each Pledgor hereby waives demand, notice, protest, notice of acceptance of
this Agreement, notice of Credit Extensions, Pledged Collateral received or
delivered or any other action taken in reliance hereon and all other demands and
notices of any description.

(c) The Collateral Agent shall not be required to marshal any present or future
collateral security (including the Pledged Collateral) for, or other assurances
of payment of, the Secured Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order. To
the maximum extent permitted by applicable Legal Requirements, each Pledgor
hereby agrees that it will not invoke any Legal Requirement relating to the
marshalling of collateral and hereby irrevocably waives the benefits of all such
Legal Requirements.

SECTION 8.4. Standards for Exercising Rights and Remedies. To the extent that
applicable Legal Requirements impose duties on the Collateral Agent to exercise
remedies in a commercially reasonable manner, each Pledgor acknowledges and
agrees that it is not commercially unreasonable for the Collateral Agent (i) to
fail to incur expenses reasonably deemed significant by the Collateral Agent to
prepare Pledged Collateral for disposition or otherwise to fail to complete raw
material or work in process into finished goods or other finished products for
disposition, (ii) to fail to obtain third party consents for access to Pledged
Collateral to be disposed of, or to obtain or, if not required by other Legal
Requirements, to fail to obtain consents for Governmental Authorities or third
parties for the collection or disposition of Pledged Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against account
debtors or other persons obligated on Pledged Collateral or to fail to remove
liens or encumbrances on or any adverse claims against Pledged Collateral,
(iv) to exercise collection remedies against account debtors and other persons
obligated on Pledged Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of
Pledged Collateral through publications or media of general circulation, whether
or not the Pledged Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as any Pledgor, for expressions of
interest in acquiring all or any portion of the Pledged Collateral, (vii) to
hire one or more professional auctioneers to assist in the disposition of
Pledged Collateral, whether or not the collateral is of a specialized nature,
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dispose of Pledged Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Pledged Collateral or that have
the reasonable capability of doing so, or that match buyers and sellers of
assets, (ix) to dispose of assets in wholesale rather than retail markets,
(x) to disclaim or modify disposition warranties, (xi) to purchase insurance or
credit enhancements to insure the Collateral Agent against risks of loss,
collection or disposition of Pledged Collateral or to provide to the Collateral
Agent a guaranteed return from the collection or disposition of Pledged
Collateral, or (xii) to the extent deemed appropriate by the Collateral Agent,
to obtain the services of other brokers, investment bankers, consultants and
other professionals to assist the Collateral Agent in the collection or
disposition of any of the Pledged Collateral. The Pledgors acknowledge that the
purpose of this Section 8.4 is to provide non-exhaustive indications of what
actions or omissions by the Collateral Agent would fulfill the Collateral
Agent’s duties under the UCC or other Legal Requirements of the State or any
other relevant jurisdiction in the Collateral Agent’s exercise of remedies
against the Pledged Collateral and that other actions or omissions by the
Collateral Agent shall not be deemed to fail to fulfill such duties solely on
account of not being indicated in this Section 8.4. Without limiting the
foregoing, nothing contained in this Section 8.4 shall be construed to grant any
rights to any Pledgor or to impose any duties on the Collateral Agent that would
not have been granted or imposed by this Agreement or by applicable Legal
Requirements in the absence of this Section 9.4.

SECTION 8.5. Certain Sales of Pledged Collateral.

(a) Each Pledgor recognizes that, by reason of certain prohibitions contained in
Legal Requirements, the Collateral Agent may be compelled, with respect to any
sale of all or any part of the Pledged Collateral, to limit purchasers to those
who meet the requirements of such Governmental Authority. Each Pledgor
acknowledges that any such sales may be at prices and on terms less favorable to
the Collateral Agent than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
restricted sale shall be deemed to have been made in a commercially reasonable
manner and that, except as may be required by applicable Legal Requirements, the
Collateral Agent shall have no obligation to engage in public sales.

(b) Each Pledgor recognizes that, by reason of certain prohibitions contained in
the Securities Act of 1933, as amended (the “Securities Act”), and applicable
state or foreign securities laws, the Collateral Agent may be compelled, with
respect to any sale or disposition of all or any part of the Securities
Collateral and Investment Property, to limit purchasers to persons who will
agree, among other things, to acquire such Securities Collateral or Investment
Property for their own account, for investment and not with a view to the
distribution or resale thereof. Each Pledgor acknowledges that any such private
sales may be at prices and on terms less favorable to the Collateral Agent than
those obtainable through a public sale without such restrictions (including a
public offering made pursuant to a registration statement under the Securities
Act), and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner and that
the Collateral Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Securities Collateral or Investment Property
for the period of time necessary to permit the issuer thereof to register it for
a form of public sale requiring registration under the Securities Act or under
applicable state or foreign securities laws, even if such issuer would agree to
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(c) If the Collateral Agent determines to exercise its right to sell any or all
of the Securities Collateral or Investment Property, upon written request, the
applicable Pledgor shall, and shall cause each issuer of Securities Collateral
and Investment Property to be sold hereunder to, from time to time furnish to
the Collateral Agent all such information as the Collateral Agent may reasonably
request in order to determine the number and nature or interest of securities or
other instruments included in the Securities Collateral or Investment Property
which may be sold by the Collateral Agent as exempt transactions under the
Securities Act and the rules of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.

(d) Each Pledgor further agrees that a breach of any of the covenants contained
in this Section 8.5 will cause irreparable injury to the Collateral Agent and
the other Secured Parties, that the Collateral Agent and the other Secured
Parties have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 8.5 shall be
specifically enforceable against such Pledgor, and such Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants.

SECTION 8.6. No Waiver; Cumulative Remedies.

(a) No failure on the part of the Collateral Agent to exercise, no course of
dealing with respect to, and no delay on the part of the Collateral Agent in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power,
privilege or remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right, power, privilege or remedy; nor shall the
Collateral Agent be required to look first to, enforce or exhaust any other
security, collateral or guaranties. All rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies provided by
applicable Legal Requirements, in equity or otherwise.

(b) In the event that the Collateral Agent shall have instituted any proceeding
to enforce any right, power, privilege or remedy under this Agreement or any
other Loan Document by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case, the Pledgors, the Collateral Agent and each other Secured Party shall be
restored to their respective former positions and rights hereunder with respect
to the Pledged Collateral, and all rights, remedies, privileges and powers of
the Collateral Agent and the other Secured Parties shall continue as if no such
proceeding had been instituted.

SECTION 8.7. Certain Additional Actions Regarding Intellectual Property. If any
Event of Default shall have occurred and be continuing, upon the written demand
of the Collateral Agent, each Pledgor shall execute and deliver to the
Collateral Agent an assignment or assignments of the registered Intellectual
Property Collateral or such other documents as are necessary or appropriate to
carry out the intent and purposes hereof; provided, however, that if the Event
of Default is no longer continuing, the Collateral Agent shall promptly execute
and deliver to each Pledgor such reassignments or other documents necessary to
place such Pledgors in control and ownership of such Intellectual Property
Collateral.

 

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ARTICLE IX

APPLICATION OF PROCEEDS

SECTION 9.1. Application of Proceeds. The proceeds received by the Collateral
Agent in respect of any sale of, collection from or other realization upon all
or any part of the Pledged Collateral pursuant to the exercise by the Collateral
Agent of its remedies shall be applied, together with any other sums then held
by the Collateral Agent pursuant to this Agreement, in accordance with the
Credit Agreement.

ARTICLE X

MISCELLANEOUS

SECTION 10.1. Concerning Collateral Agent.

(a) The Collateral Agent has been appointed as collateral agent pursuant to the
Credit Agreement. The actions of the Collateral Agent hereunder are subject to
the provisions of the Credit Agreement. The Collateral Agent shall have the
right hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including the
release or substitution of the Pledged Collateral), in accordance with this
Agreement and the Credit Agreement. Each Secured Party, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize upon
any of the Pledged Collateral hereunder, it being understood and agreed by such
Secured Party that all rights and remedies hereunder may be exercised solely by
the Collateral Agent for the benefit of the Secured Parties in accordance with
the terms of this Agreement. The Collateral Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be liable for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith. The Collateral Agent may resign and a successor Collateral Agent
may be appointed in the manner provided in the Credit Agreement. Upon the
acceptance of any appointment as the Collateral Agent by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this Agreement.
After any retiring Collateral Agent’s resignation, the provisions hereof shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Agreement while it was the Collateral Agent.

(b) 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, the Collateral Agent shall have no duty as to any Pledged
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Pledged Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equivalent to that which
the Collateral Agent, in its individual capacity, accords its own property
consisting of similar instruments or interests; provided that neither the
Collateral Agent nor any of the other Secured Parties nor any of their
respective directors, officers, employees or agents shall have responsibility
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taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to any Securities Collateral, whether or not the
Collateral Agent or any other Secured Party has or is deemed to have knowledge
of such matters, (ii) failing to demand, collect or realize upon all or part of
the Pledged Collateral or for any delay in doing so or (iii) failing to take any
necessary steps to preserve rights against any person with respect to any
Pledged Collateral.

(c) The Collateral Agent shall be entitled to rely upon any written notice,
statement, certificate, order or other document or any telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person, and, with respect to all matters pertaining to this
Agreement and its duties hereunder, upon advice of counsel selected by it.

(d) The Collateral Agent may rely on advice of counsel as to whether any or all
UCC financing statements of the Pledgors need to be amended as a result of any
of the changes described in Section 5.11(a) of the Credit Agreement. If any
Pledgor fails to provide information to the Collateral Agent about such changes
on a timely basis, the Collateral Agent shall not be liable or responsible to
any party for any failure to maintain a perfected security interest in such
Pledgor’s property constituting Pledged Collateral, for which the Collateral
Agent needed to have information relating to such changes. The Collateral Agent
shall have no duty to inquire about such changes if any Pledgor does not inform
the Collateral Agent of such changes, the parties acknowledging and agreeing
that it would not be feasible or practical for the Collateral Agent to search
for information on such changes if such information is not provided by any
Pledgor.

SECTION 10.2. Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact. If any Pledgor shall fail to perform any covenants contained
in this Agreement (including such Pledgor’s covenants to (i) pay the premiums in
respect of all required insurance policies hereunder, (ii) pay Charges,
(iii) make repairs, (iv) discharge Liens or (v) pay or perform any obligations
of such Pledgor under any Pledged Collateral) or if any representation or
warranty on the part of any Pledgor contained herein shall be breached, the
Collateral Agent may (but shall not be obligated to) do the same or cause it to
be done or remedy any such breach, and may expend funds for such purpose;
provided, however, that the Collateral Agent shall in no event be bound to
inquire into the validity of any tax, lien, imposition or other obligation which
such Pledgor fails to pay or perform as and when required hereby and which such
Pledgor does not contest in accordance with the provisions of the Credit
Agreement. Any and all amounts so expended by the Collateral Agent shall be paid
by the Pledgors in accordance with the provisions of Section 10.03 of the Credit
Agreement. Neither the provisions of this Section 10.2 nor any action taken by
the Collateral Agent pursuant to the provisions of this Section 10.2 shall
prevent any such failure to observe any covenant contained in this Agreement nor
any breach of representation or warranty from constituting an Event of Default.
Each Pledgor hereby appoints the Collateral Agent its attorney-in-fact, with
full power and authority in the place and stead of such Pledgor and in the name
of such Pledgor, or otherwise, from time to time in the Collateral Agent’s
discretion to take any action and to execute any instrument consistent with the
terms of the Credit Agreement, this Agreement and the other Loan Documents which
the Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof (but the Collateral Agent shall not be obligated to and shall have no
liability to such Pledgor or any third party for failure to so do or take
action). The foregoing grant of authority is a power of attorney coupled with an
interest and such appointment shall be irrevocable for the term hereof. Each
Pledgor hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof.

 

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SECTION 10.3. Continuing Security Interest; Assignment. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall (i) be
binding upon the Pledgors, their respective successors and assigns and
(ii) inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent and the other Secured Parties
and each of their respective successors, transferees and assigns. No other
persons (including any other creditor of any Pledgor) shall have any interest
herein or any right or benefit with respect hereto. Without limiting the
generality of the foregoing clause (ii), any Secured Party may assign or
otherwise transfer any obligations held by it secured by this Agreement to any
other person, and such other person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party, herein or otherwise,
subject however, to the provisions of the Credit Agreement and, in the case of a
Secured Party that is a party to a Permitted Hedging Agreement, such Permitted
Hedging Agreement. Each of the Pledgors agrees that its obligations hereunder
and the security interest created hereunder shall continue to be effective or be
reinstated, as applicable, if at any time payment, or any part thereof, of all
or any part of the Secured Obligations is rescinded or must otherwise be
restored by the Secured Party upon the bankruptcy or reorganization of any
Pledgor or otherwise.

SECTION 10.4. Termination; Release; Reinstatement. This Agreement shall
terminate and the Pledged Collateral shall be released from the Lien of this
Agreement when the Commitments have been terminated and the principal of and
interest and premium (if any) on each Loan, all Fees and all other expenses or
amounts payable under any Loan Document shall have been paid in full. Upon
termination hereof, the security interests granted hereby shall terminate and
all rights to the Pledged Collateral shall revert to the applicable Pledgor or
to such other person as may be entitled thereto pursuant to any Order or other
applicable Legal Requirements. Upon termination hereof or any release of Pledged
Collateral in accordance with the provisions of the Credit Agreement, the
Collateral Agent shall promptly, upon the written request and at the sole cost
and expense of the Pledgors, assign, transfer and deliver to the Pledgors,
against receipt and without recourse to or warranty by the Collateral Agent
except that the Collateral Agent has not assigned or otherwise transferred its
security interest in the Pledged Collateral, such of the Pledged Collateral to
be released (in the case of a release) as may be in possession or control of the
Collateral Agent and as shall not have been sold or otherwise applied pursuant
to the terms hereof, and, with respect to any other Pledged Collateral, with
such endorsements or proper documents and instruments (including UCC-3
termination statements or releases) acknowledging the termination hereof or the
release of such Pledged Collateral, as the case may be. Each Pledgor agrees
that, if any payment made by any Loan Party or other Person and applied to the
Secured Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to
be refunded or repaid, or the proceeds of any Collateral are required to be
returned by any Secured Party to such Loan Party, its estate, trustee, receiver
or any other party, including any Pledgor, under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, any Lien or other Collateral securing such liability shall be and
remain in full force and effect, as fully as if such payment had never been
made. If, prior to any of the foregoing, any Lien or other Collateral securing
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been released or terminated by virtue of the foregoing, such Lien, other
Collateral or provision shall be reinstated in full force and effect and such
prior release, termination, cancellation or surrender shall not diminish,
release, discharge, impair or otherwise affect the obligations of any such
Pledgor in respect of any Lien or other Collateral securing such obligation or
the amount of such payment.

SECTION 10.5. Modification in Writing. No amendment, modification, supplement,
termination or waiver of or to any provision hereof, nor consent to any
departure by any Pledgor therefrom, shall be effective unless the same shall be
made in accordance with the terms of the Credit Agreement and unless in writing
and signed by the Collateral Agent. Any amendment, modification or supplement of
or to any provision hereof, any waiver of any provision hereof and any consent
to any departure by any Pledgor from the terms of any provision hereof in each
case shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement or any other document evidencing the Secured Obligations, no
notice to or demand on any Pledgor in any case shall entitle any Pledgor to any
other or further notice or demand in similar or other circumstances.

SECTION 10.6. Notices. Unless otherwise provided herein or in the Credit
Agreement, any notice or other communication herein required or permitted to be
given shall be given in the manner and become effective as set forth in the
Credit Agreement, as to any Pledgor, addressed to it at the address of the
Borrower set forth in the Credit Agreement and as to the Collateral Agent,
addressed to it at the address set forth in the Credit Agreement, or in each
case at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section 10.6.

SECTION 10.7. Governing Law, Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial.

(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

(b) EACH PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF 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,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT, OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR,
TO THE EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, IN SUCH FEDERAL COURT.
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR

 

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PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE SHALL AFFECT ANY RIGHT THAT
THE COLLATERAL AGENT, ANY OTHER AGENT OR ANY LENDER OR OTHER SECURED PARTY MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

(c) EACH PLEDGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT
REFERRED TO IN SECTION 10.7(b). EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

(d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT, IN THE
MANNER PROVIDED FOR NOTICES (OTHER THAN TELECOPY) IN SECTION 10.6. NOTHING IN
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO
THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

(e) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT, THE TRANSACTIONS OR THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.7.

SECTION 10.8. Severability of Provisions. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

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SECTION 10.9. Execution in Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
such counterparts together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page of this Agreement by telecopy or
other electronic transmission shall be effective as delivery of a manually
executed counterpart of this Agreement.

SECTION 10.10. Business Days. In the event any time period or any date provided
in this Agreement ends or falls on a day other than a Business Day, then such
time period shall be deemed to end and such date shall be deemed to fall on the
immediately preceding Business Day, and performance herein may be made on such
Business Day, with the same force and effect as if made on such other day.

SECTION 10.11. Waiver of Stay. Each Pledgor covenants that in the event that
such Pledgor or any property or assets of such Pledgor shall hereafter become
the subject of a voluntary or involuntary proceeding under the Bankruptcy Code
or such Pledgor shall otherwise be a party to any federal or state bankruptcy,
insolvency, moratorium or similar proceeding to which the provisions relating to
the automatic stay under Section 362 of the Bankruptcy Code or any similar
provision in any such Legal Requirement is applicable, then, in any such case,
whether or not the Collateral Agent has commenced foreclosure proceedings under
this Agreement, such Pledgor shall not, and each Pledgor hereby expressly waives
its right to (to the extent it may lawfully do so) at any time insist upon,
plead or in any whatsoever, claim or take the benefit or advantage of any such
automatic stay or such similar provision as it relates to the exercise of any of
the rights and remedies (including any foreclosure proceedings) available to the
Collateral Agent as provided in this Agreement, in any other Security Document
or any other document evidencing the Secured Obligations. Each Pledgor further
covenants that it will not hinder, delay or impede the execution of any power
granted herein to the Collateral Agent, but will suffer and permit the execution
of every such power as though no law relating to any stay or similar provision
had been enacted.

SECTION 10.12. No Credit for Payment of Taxes or Imposition. Such Pledgor shall
not be entitled to any credit against the principal, premium, if any, or
interest payable under the Credit Agreement, and such Pledgor shall not be
entitled to any credit against any other sums which may become payable under the
terms thereof or hereof, by reason of the payment of any Tax on the Pledged
Collateral or any part thereof.

SECTION 10.13. No Claims Against Collateral Agent. Nothing contained in this
Agreement shall constitute any consent or request by the Collateral Agent,
express or implied, for the performance of any labor or services or the
furnishing of any materials or other property in respect of the Pledged
Collateral or any part thereof, nor as giving any Pledgor any right, power or
authority to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against the Collateral Agent in respect thereof
or any claim that any Lien based on the performance of such labor or services or
the furnishing of any such materials or other property is prior to the Lien
hereof.

 

PLEDGE AND SECURITY AGREEMENT

 

35

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SECTION 10.14. No Release. Nothing set forth in this Agreement or any other Loan
Document, nor the exercise by the Collateral Agent of any of the rights or
remedies hereunder, shall relieve any Pledgor from the performance of any term,
covenant, condition or agreement on such Pledgor’s part to be performed or
observed under or in respect of any of the Pledged Collateral or from any
liability to any person under or in respect of any of the Pledged Collateral or
shall impose any obligation on the Collateral Agent or any other Secured Party
to perform or observe any such term, covenant, condition or agreement on such
Pledgor’s part to be so performed or observed or shall impose any liability on
the Collateral Agent or any other Secured Party for any act or omission on the
part of such Pledgor relating thereto or for any breach of any representation or
warranty on the part of such Pledgor contained in this Agreement, the Credit
Agreement or the other Loan Documents, or under or in respect of the Pledged
Collateral or made in connection herewith or therewith. Anything herein to the
contrary notwithstanding, neither the Collateral Agent nor any other Secured
Party shall have any obligation or liability under any contracts, agreements and
other documents included in the Pledged Collateral by reason of this Agreement,
nor shall the Collateral Agent or any other Secured Party be obligated to
perform any of the obligations or duties of any Pledgor thereunder or to take
any action to collect or enforce any such contract, agreement or other document
included in the Pledged Collateral hereunder. The obligations of each Pledgor
contained in this Section 10.14 shall survive the termination hereof and the
discharge of such Pledgor’s other obligations under this Agreement, the Credit
Agreement and the other Loan Documents.

SECTION 10.15. Overdue Amounts. Until paid, all amounts due and payable under
this Agreement shall constitute Secured Obligations and shall, upon demand by
the Required Lenders, bear interest, whether before or after judgment, at the
Default Rate.

SECTION 10.16. Obligations Absolute. All obligations of each Pledgor hereunder
shall be absolute and unconditional irrespective of:

(i) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or the like of any other Pledgor;

(ii) any lack of validity or enforceability of any Loan Document, or any other
agreement or instrument relating thereto, against any Pledgor;

(iii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Secured Obligations, or any other amendment or waiver
of or any consent to any departure from any Loan Document or any other agreement
or instrument relating thereto;

(iv) any pledge, exchange, release or non-perfection or loss of priority of any
other collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Secured Obligations;

(v) any exercise, non-exercise or waiver of any right, remedy, power or
privilege under or in respect hereof, any Loan Document except as specifically
set forth in a waiver granted pursuant to the provisions of Section 10.5 hereof;
or

(vi) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, any Pledgor.

 

PLEDGE AND SECURITY AGREEMENT

 

36

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

 

BORROWER: HC2 Holdings, Inc. By:  

/s/ Mesfin Demise

  Name: Mesfin Demise   Title: Chief Financial Officer

 

PLEDGE AND SECURITY AGREEMENT

 

37

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SUBSIDIARY GUARANTORS:

 

PTGi International Holding Inc. By  

/s/ Mesfin Demise

  Name:   

Mesfin Demise

  Title:     

Chief Financial Officer

PTGi International, Inc. By  

/s/ Mesfin Demise

  Name:   

Mesfin Demise

  Title:     

Chief Financial Officer

Arbinet Corporation By  

/s/ Mesfin Demise

  Name:   

Mesfin Demise

  Title:     

Chief Financial Officer

 

PLEDGE AND SECURITY AGREEMENT

 

38

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COLLATERAL AGENT: JEFFERIES FINANCE LLC By:  

/s/ J. Paul McDonnell

Name:   J. Paul McDonnell Title:   Managing Director

 

PLEDGE AND SECURITY AGREEMENT

 

39

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SCHEDULE 1

SECURITIES COLLATERAL

 

Pledgor

  

Issuer

   Number of Shares     Number of
Shares or
Interests      Percentage
Pledged  

HC2 Holdings, Inc.

   HC2 Holdings 2, Inc.      100        100         100 %     PTGi International
Holding, Inc.      100        100         100 %     Schuff International, Inc.
     4,183,385 1      2,500,000         64.48 % 

PTGi International Holding, Inc.

   Arbinet Corporation      1,000        Unknown         100 %     PTGi IHC,
Inc.      100        100         100 %     Lingo Holdings, Inc.      1,000     
  1,000         100 %     PTGi International, Inc.      1,000        100        
100 %     St. Thomas & San Juan Telephone Company, Inc.      1,000       
130,000         65 % 

PTGi International, Inc.

   Stubbs, Ltd      Unknown        1         65 %     Primus Telecommunications
El Salvador SA de C.V.      Unknown        Unknown         65 % 

Arbinet Corporation

   Arbinet Communications, Inc.      10,000        Unknown         100 %    
Arbinet Services, Inc.      10,000        Unknown         100 %    
Arbinet-thexchange HK Limited      1,000        1         65 %     PTGi
International Carrier Services, Inc.      10,000        100         100 %    
Arbinet-thexchange Ltd      100        1         65 %     Arbinet Managed
Services, Inc.      10,000        100         100 %     Arbinet Digital Media
Corporation      10,000        100         100 %     ANIP, Inc.      1,000     
  Unknown         100 % 

 

1  This number represents the shares outstanding as of May 26, 2014 (10,038,707
issued minus 5,855,322 Treasury = 4,202,933).