Exhibit 10.52

 

 

 

SECURITY AGREEMENT

 

by

 

HERBALIFE INTERNATIONAL, INC.,

 

HERBALIFE LTD.,
WH INTERMEDIATE HOLDINGS LTD.,
HBL LTD.,
WH LUXEMBOURG HOLDINGS S.à.R.L.,
HLF LUXEMBOURG HOLDINGS S.à R.L.,
WH CAPITAL CORPORATION,
WH LUXEMBOURG INTERMEDIATE HOLDINGS S.à.R.L.,
THE SUBSIDIARY GUARANTORS,
as Pledgors

in favor of

MORGAN STANLEY & CO. INCORPORATED,
as Collateral Agent

Dated as of December 21, 2004

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I Definitions and Interpretation; Perfection Certificate

 

 

 

SECTION 1.01.

Definitions.

 

 

SECTION 1.02.

Interpretation

 

 

SECTION 1.03.

Perfection Certificate

 

 

 

 

 

ARTICLE II Grant of Security and Secured Obligations

 

 

SECTION 2.01.

Pledge

 

 

SECTION 2.02.

Certain Limited Exclusions

 

 

SECTION 2.03.

Secured Obligations; Continuing Liability.

 

 

 

 

 

ARTICLE III Perfection; Supplements; Further Assurances; Use of Security
Agreement Collateral

 

 

SECTION 3.01.

Delivery of Certificated Securities Collateral

 

 

SECTION 3.02.

Perfection of Uncertificated Securities Collateral

 

 

SECTION 3.03.

Financing Statements and Other Filings

 

 

SECTION 3.04.

Other Actions

 

 

SECTION 3.05.

Supplements; Further Assurances.

 

 

 

 

 

ARTICLE IV Representations, Warranties and Covenants

 

 

SECTION 4.01.

Title

 

 

SECTION 4.02.

Organization; Authority; Enforceability

 

 

SECTION 4.03.

Authorizations and Approvals

 

 

SECTION 4.04.

Perfected First-Priority Liens

 

 

SECTION 4.05.

Limitation on Liens

 

 

SECTION 4.06.

Other Financing Statements

 

 

SECTION 4.07.

Chief Executive Office; Change of Name; Jurisdiction of Organization.

 

 

SECTION 4.08.

Certain Provisions Concerning Securities Collateral.

 

 

SECTION 4.09.

Certain Provisions Concerning Intellectual Property.

 

 

SECTION 4.10.

Inspection and Verification

 

 

SECTION 4.11.

Payment of Taxes; Contesting Liens; Claims

 

 

SECTION 4.12.

Transfers and Other Liens

 

 

SECTION 4.13.

Insurance

 

 

SECTION 4.14.

Legend

 

 

 

 

 

ARTICLE V Remedies

 

 

SECTION 5.01.

Remedies

 

 

SECTION 5.02. [a05-8308_1ex10d52.htm#Section5_02__161505]

Notice of Sale [a05-8308_1ex10d52.htm#Section5_02__161505]

 

 

SECTION 5.03. [a05-8308_1ex10d52.htm#Section5_03__161517]

Waiver of Notice and Claims [a05-8308_1ex10d52.htm#Section5_03__161517]

 

 

SECTION 5.04. [a05-8308_1ex10d52.htm#Section5_04__161523]

Certain Sales of Security Agreement Collateral
[a05-8308_1ex10d52.htm#Section5_04__161523]

 

 

SECTION 5.05. [a05-8308_1ex10d52.htm#Section5_05__161530]

No Waiver; Cumulative Remedies. [a05-8308_1ex10d52.htm#Section5_05__161530]

 

 

 

 

 

ARTICLE VI Obligations Absolute; Waivers
[a05-8308_1ex10d52.htm#Articlevi_161531]

 

 

SECTION 6.01. [a05-8308_1ex10d52.htm#Section6_01_161533]

Liability of the Pledgors Absolute [a05-8308_1ex10d52.htm#Section6_01_161533]

 

 

SECTION 6.02. [a05-8308_1ex10d52.htm#Section6_02__161537]

General Waivers [a05-8308_1ex10d52.htm#Section6_02__161537]

 

 

SECTION 6.03. [a05-8308_1ex10d52.htm#Section6_03__161539]

California Waivers [a05-8308_1ex10d52.htm#Section6_03__161539]

 

 

 

 

 

ARTICLE VII Miscellaneous [a05-8308_1ex10d52.htm#Articlevii_161540]

 

 

SECTION 7.01. [a05-8308_1ex10d52.htm#Section7_01__161542]

Concerning Collateral Agent. [a05-8308_1ex10d52.htm#Section7_01__161542]

 

 

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SECTION 7.02. [a05-8308_1ex10d52.htm#Section7_02__161550]

Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact
[a05-8308_1ex10d52.htm#Section7_02__161550]

 

 

SECTION 7.03. [a05-8308_1ex10d52.htm#Section7_03__161551]

Expenses [a05-8308_1ex10d52.htm#Section7_03__161551]

 

 

SECTION 7.04. [a05-8308_1ex10d52.htm#Section7_04__161553]

Indemnity. [a05-8308_1ex10d52.htm#Section7_04__161553]

 

 

SECTION 7.05. [a05-8308_1ex10d52.htm#Section7_05__161556]

Continuing Security Interest; Assignment
[a05-8308_1ex10d52.htm#Section7_05__161556]

 

 

SECTION 7.06. [a05-8308_1ex10d52.htm#Section7_06__161558]

Termination; Release [a05-8308_1ex10d52.htm#Section7_06__161558]

 

 

SECTION 7.07. [a05-8308_1ex10d52.htm#Section7_07__161559]

Modification in Writing [a05-8308_1ex10d52.htm#Section7_07__161559]

 

 

SECTION 7.08. [a05-8308_1ex10d52.htm#Section7_08__161605]

Notices [a05-8308_1ex10d52.htm#Section7_08__161605]

 

 

SECTION 7.09. [a05-8308_1ex10d52.htm#Section7_09__161606]

Governing Law; Jurisdiction; Consent to Service of Process.
[a05-8308_1ex10d52.htm#Section7_09__161606]

 

 

SECTION 7.10. [a05-8308_1ex10d52.htm#Section7_10__161609]

WAIVER OF JURY TRIAL [a05-8308_1ex10d52.htm#Section7_10__161609]

 

 

SECTION 7.11. [a05-8308_1ex10d52.htm#Section7_11__161612]

Severability of Provisions [a05-8308_1ex10d52.htm#Section7_11__161612]

 

 

SECTION 7.12. [a05-8308_1ex10d52.htm#Section7_12__161614]

Execution in Counterparts [a05-8308_1ex10d52.htm#Section7_12__161614]

 

 

SECTION 7.13. [a05-8308_1ex10d52.htm#Section7_13__161615]

Business Days [a05-8308_1ex10d52.htm#Section7_13__161615]

 

 

SECTION 7.14. [a05-8308_1ex10d52.htm#Section7_14__161617]

No Credit for Payment of Taxes or Imposition
[a05-8308_1ex10d52.htm#Section7_14__161617]

 

 

SECTION 7.15. [a05-8308_1ex10d52.htm#Section7_15__161619]

No Claims Against Collateral Agent [a05-8308_1ex10d52.htm#Section7_15__161619]

 

 

SECTION 7.16. [a05-8308_1ex10d52.htm#Section7_16__161621]

No Release Under Agreements; No Liability of Collateral Agent or Secured Parties
[a05-8308_1ex10d52.htm#Section7_16__161621]

 

 

SECTION 7.17. [a05-8308_1ex10d52.htm#Section7_17__161622]

Obligations Absolute [a05-8308_1ex10d52.htm#Section7_17__161622]

 

 

SECTION 7.18. [a05-8308_1ex10d52.htm#Section7_18__161625]

Marshaling; Payments Set Aside [a05-8308_1ex10d52.htm#Section7_18__161625]

 

 

SECTION 7.19. [a05-8308_1ex10d52.htm#Section7_19__161626]

Release of Pledgors [a05-8308_1ex10d52.htm#Section7_19__161626]

 

 

 

 

 

EXHIBITS

 

 

Exhibit A [a05-8308_1ex10d52.htm#Exhibita_180424]

Form of Issuer Acknowledgment [a05-8308_1ex10d52.htm#Exhibita_180424]

 

 

ii

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SECURITY AGREEMENT

 

This SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”), dated as of December 21, 2004, is
made by HERBALIFE INTERNATIONAL, INC., a Nevada corporation (“Borrower”);
HERBALIFE LTD., a Cayman Islands exempted company with limited liability
(formerly known as WH Holdings (Cayman Islands) Ltd.) (“Holdings”); WH
INTERMEDIATE HOLDINGS LTD., a Cayman Islands exempted company with limited
liability and a direct, wholly-owned subsidiary of Holdings (“Parent”); HBL
LTD., a Cayman Islands exempted company with limited liability and a direct,
wholly-owned subsidiary of Parent (“Cayman III”); WH LUXEMBOURG HOLDINGS
S.à.R.L., a Luxembourg corporation and a direct, wholly-owned subsidiary of
Parent (“Luxembourg Holdings”); HLF LUXEMBOURG HOLDINGS, S.à.R.L., a Luxembourg
corporation and a direct, wholly-owned subsidiary of Luxembourg Holdings (“New
Lux”); WH CAPITAL CORPORATION, a Nevada corporation and a direct, wholly-owned
subsidiary of New Lux (“WH Capital”); WH LUXEMBOURG INTERMEDIATE HOLDINGS
S.à.R.L., a Luxembourg corporation and a direct, wholly-owned subsidiary of WH
Capital (“Luxembourg Intermediate Holdings”); EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON THE SIGNATURE PAGES HERETO OR FROM TIME TO TIME BECOMING A PARTY
HERETO BY EXECUTION OF A JOINDER AGREEMENT (together with Holdings, Parent,
Cayman III, Luxembourg Holdings, New Lux, WH Capital and Luxembourg Intermediate
Holdings, the “Guarantors”), as pledgors and collateral assignors (Borrower,
together with the Guarantors, in such capacities and together with any
successors in such capacities, the “Pledgors”), in favor of MORGAN STANLEY & CO.
INCORPORATED (“Morgan Stanley”), in its capacity as collateral agent for the
lending institutions from time to time party to the Credit Agreement (defined
below) (such lending institutions, collectively, the “Lenders”), as pledgee,
collateral assignee and secured party (in such capacities and together with any
successors in such capacities, “Collateral Agent”).

 

WITNESSETH:

 

WHEREAS, simultaneously herewith, Borrower, certain of the Guarantors, the
Lenders and Morgan Stanley, as Administrative Agent, have entered into that
certain Credit Agreement, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
whereby the Lenders have agreed to make certain Loans and to issue certain
Credit Agreement L/Cs (defined below) to or for the account of Borrower;

 

WHEREAS, in accordance with the Credit Agreement, it is contemplated that one or
more of the Pledgors may enter into one or more Hedging Agreements with one or
more of the Lenders or their respective Affiliates;

 

WHEREAS, in accordance with the Credit Agreement, each Guarantor has, among
other things, guaranteed the obligations of Borrower under the Credit Agreement
and the other Loan Documents (the “Guarantees”);

 

WHEREAS, each Guarantor will receive substantial benefits from the execution,
delivery and performance of the Loan Documents and each is, therefore, willing
to enter into this Agreement;

 

WHEREAS, each Pledgor is or will be the legal or beneficial owner of the rights
in the Security Agreement Collateral (defined below) to be pledged by it
hereunder;

 

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

 

WHEREAS, it is a condition precedent to the obligations of the Lenders to make
Loans under the Credit Agreement or to enter into Hedging Agreements, and of the
Issuing Bank to issue Credit Agreement L/Cs thereunder, that each Pledgor
execute and deliver the applicable Loan Documents, including this Agreement; and

 

WHEREAS, this Agreement is given by each Pledgor in favor of Collateral Agent
for its benefit and the benefit of the Lenders and any of their respective
Affiliates party to any Hedging Agreement (collectively, the “Secured Parties”)
to secure the payment and performance of all of the Secured Obligations (defined
below).

 

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

 

ARTICLE I

Definitions and Interpretation; Perfection Certificate

 

SECTION 1.01.                                                          
Definitions.

 

(a)                                  The following capitalized terms have the
meanings assigned to them in the UCC:

 

“Account,” “Bank,” “Certificate of Title,” “Chattel Paper,” “Commercial Tort
Claim,” “Commodity Account,” “Commodity Contract,” “Commodity Intermediary,”
“Contract,” “Document,” “Electronic Chattel Paper,” “Entitlement Holder,”
“Entitlement Order,” “Equipment,” “Financial Asset,” “Fixtures,” “General
Intangible,” “Goods,” “Inventory,” “Investment Property,” “Letter-of-Credit
Right,” “Letter of Credit,” “Money,” “Proceeds,” “Record,” “Securities
Entitlement,” “Securities Intermediary,” “Supporting Obligation,” and “Tangible
Chattel Paper.”

 

(b)                                 Capitalized terms used in this Agreement
(including the preamble and recitals hereof) but not otherwise defined herein
have the meanings assigned to such terms in the Credit Agreement.  In this
Agreement:

 

“Agreement” has the meaning assigned to such term in the preamble hereof.

 

“Borrower” has the meaning assigned to such term in the preamble hereof.

 

“Charges” mean any and all property and other taxes, assessments and special
assessments, levies, fees and all governmental charges imposed on or assessed
against, and all claims (including landlords’, carriers’, mechanics’, workmen’s,
repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and
other claims arising by operation of law) against, all or any portion of the
Security Agreement Collateral.

 

“Collateral Account” shall mean account number 0-27-SBAAN-3 in the name of “MSCO
as Pledgee of Herbalife International, Inc., Collateral Account” maintained at
Citibank, N.A. and any successor or sub-account established and maintained at
Citibank N.A. (or a Lender that agrees to be an administrative sub-agent for the
Collateral Agent) in accordance with Article IX of the Credit Agreement, and all
funds from time to time on deposit in such

 

2

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account, including all Cash Equivalents, and all certificates and instruments
from time to time representing or evidencing such Cash Equivalents.

 

“Collateral Agent” has the meaning assigned to such term in the preamble hereof.

 

“Collateral Records” means books, records, ledger cards, files, correspondence,
customer lists, blueprints, technical specifications, manuals, computer
software, computer printouts, tapes, disks and related data processing software
and similar items that at any time evidence or contain information relating to
any of the Security Agreement Collateral or are otherwise necessary or helpful
in the collection thereof or realization thereupon.

 

“Collateral Support” means all property (real or personal) assigned,
hypothecated or otherwise securing any Security Agreement Collateral, including
any security agreement or other agreement granting a lien or security interest
in such real or personal property.

 

“Control Agreement” means an agreement in form and substance satisfactory to
Collateral Agent sufficient to establish control over any applicable Investment
Property (including any Securities Account or Commodity Account) or Deposit
Account.

 

“Copyrights” mean, collectively, with respect to each Pledgor, all copyrights
(whether statutory or common law and whether established or registered in the
United States or any other country) now owned or hereafter created or acquired
by or assigned to such Pledgor, whether published or unpublished, and all
copyright registrations and applications made by such Pledgor, including the
copyrights, registrations and applications listed in Section II.I of the
Perfection Certificate, together with any and all (a) rights and privileges
arising under applicable law with respect to such Pledgor’s use of any
copyrights, (b) reissues, renewals, continuations and extensions thereof,
(c) income, fees, royalties, damages, claims and payments now or hereafter due
or payable with respect thereto, including damages and payments for past,
present or future infringements thereof, (d) rights corresponding thereto
throughout the world and (e) rights to sue for past, present or future
infringements thereof.

 

“Credit Agreement” has the meaning assigned to such term in the recitals hereof.

 

“Credit Agreement L/C” has the meaning assigned to the term “Letter of Credit”
in the Credit Agreement.

 

“Deposit Account” means, collectively, with respect to each Pledgor, (a) all
“deposit accounts” as such term is defined in the UCC and in any event shall
include the L/C Sub-Account and all accounts and sub-accounts relating to any of
the foregoing accounts, and (b) all cash, funds, checks, notes and any
instruments from time to time on deposit in any of the accounts or sub-accounts
described in clause (a) of this definition.

 

“Distributions” 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 Equity Interests, 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 Equity Interests or Pledged
Intercompany Debt.

 

3

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“Documents Evidencing Goods” means all Documents evidencing, representing or
issued in connection with Goods.

 

“Guarantee” has the meaning assigned to such term in the recitals hereof.

 

“Guarantor” has the meaning assigned to such term in the preamble hereof.

 

“Indemnified Liabilities” has the meaning assigned to such term in
Section 7.04(a).

 

“Indemnitees” has the meaning assigned to such term in Section 7.04(a).

 

“Instruments” mean, collectively, with respect to each Pledgor, all
“instruments,” as such term is defined in Article 9, rather than Article 3, of
the UCC to the extent such instruments evidence any amounts payable under or in
connection with any item of Security Agreement Collateral or Mortgaged Real
Property or such instruments constitute Proceeds of any item of Security
Agreement Collateral or Mortgaged Real Property, and in any event shall include
all promissory notes, drafts, bills of exchange or acceptances.

 

“Insurance” means all insurance policies covering any or all of the Security
Agreement Collateral (regardless of whether Collateral Agent is the loss payee
thereof), and all key-man life insurance policies.

 

“Intellectual Property” means, collectively, with respect to each Pledgor,
(a) all Patents, (b) all Trademarks, (c) all Copyrights, (d) all Licenses and
(e) the goodwill connected with such Pledgor’s business including (i) all
goodwill connected with the use of and symbolized by any of the Intellectual
Property in which such Pledgor has any interest and (ii) all know-how, trade
secrets, customer and supplier lists, proprietary information, inventions,
methods, 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 or entity,
pricing and cost information, business and marketing plans and proposals,
consulting agreements, engineering contracts and such other assets that relate
to such goodwill.

 

“Intercompany Indebtedness” means Indebtedness (whether or not evidenced by a
writing) of any Company (including any Pledgor) payable to a Pledgor.

 

“Issuer” means any issuer of any Pledged Equity Interests.

 

“Lenders” has the meaning assigned to such term in the preamble hereof.

 

“Licenses” mean, collectively, with respect to each Pledgor, all license and
distribution agreements, covenants not to sue or any other agreement with any
other party with respect to any Patent, Trademark or Copyright, whether such
Pledgor is a licensor or licensee, distributor or distributee under any such
license or distribution agreement, including the license and distribution
agreements listed in Section II.I of the Perfection Certificate, together with
any and all (a) renewals, extensions, supplements and continuations thereof;
(b) income, fees, royalties, damages, claims and payments now and hereafter due
or payable thereunder and with respect thereto, including damages and payments
for past, present or future infringements or violations thereof; (c) rights to
sue for past, present and future infringements or violations thereof; and
(d) any other rights to use, exploit or practice any or all of the Patents,
Trademarks or Copyrights.

 

4

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“Material Contract” means any Contract or other arrangement that any Pledgor is
a party to and for which breach, nonperformance, cancellation or failure to
renew could reasonably be expected to have a Material Adverse Effect. 
Notwithstanding the foregoing, each agreement set forth in Schedule 3.08 of the
Credit Agreement shall constitute a Material Contract.

 

“Non-payment Contract” means any Contract or agreement to which any Pledgor is a
party other than a contract whereby the account debtor’s principal obligation is
a monetary obligation; provided that, Non-payment Contracts shall not include
Receivables.

 

“Operative Agreement” means (a) in the case of any limited liability company or
partnership or other noncorporate entity, any membership or partnership
agreement or other organizational agreement or document thereof and (b) in the
case of any corporation, any charter or certificate of incorporation and bylaws
thereof.

 

“Patents” mean, collectively, with respect to each Pledgor, all patents issued
or assigned to and all patent applications made by such Pledgor (whether
established or registered or recorded in the United States or any other
country), including the patents, patent applications and recordings listed in
Section II.I of the Perfection Certificate, together with any and all (a) rights
and privileges arising under applicable law with respect to such Pledgor’s use
of any patents; (b) inventions and improvements described and claimed therein;
(c) reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof; (d) income, fees, royalties, damages, claims and
payments now or hereafter due or payable thereunder and with respect thereto
including damages and payments for past, present or future infringements
thereof; (e) rights corresponding thereto throughout the world; and (f) rights
to sue for past, present or future infringements thereof.

 

“Pledged Equity Interests” mean, collectively, with respect to each Pledgor,
(a) the issued and outstanding Equity Interests of each person, including all
those listed in Section II.D of the Perfection Certificate; and (b) all rights,
privileges, authority and powers of such Pledgor in and to each such person or
under the Operative Agreements of each such person, and the certificates,
instruments and agreements representing the Pledged Equity Interests and any and
all interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Equity Interests, it being understood
that, subject to Section 5.11 of the Credit Agreement, Pledged Equity Interests
do not include any Equity Interests in excess of 66.0% of the Equity Interests
of any Non-Guarantor Subsidiary, provided that, such Non-Guarantor Subsidiary is
also a Foreign Subsidiary.

 

“Pledged Intercompany Debt” means, with respect to each Pledgor, all
Intercompany Indebtedness payable to such Pledgor by any Company, including all
Intercompany Indebtedness described in Section II.H of the Perfection
Certificate (and each other intercompany note hereafter acquired by such
Pledgor) and all Intercompany Notes, certificates, Instruments or agreements
evidencing such Intercompany Indebtedness, and all assignments, amendments,
restatements, supplements, extensions, renewals, replacements or modifications
thereof.

 

“Pledgor” has the meaning assigned to such term in the preamble hereof.

 

“Receivables” means all rights to payment, whether or not earned by performance,
for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, or services rendered or to be rendered, including all such rights
constituting or evidenced by any Account, Chattel Paper, Instrument, General
Intangible or Investment Related Property, together with all rights, if any, in
any Goods or other property giving rise to such right to payment

 

5

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and all Collateral Support and Supporting Obligations related thereto and all
Accounts, Chattel Paper, General Intangibles, Instruments and Receivables
Records.

 

“Receivables Records” means (a) all original copies of all documents,
instruments or other writings or electronic records or other Records evidencing
the Receivables; (b) all books, correspondence, credit or other files, Records,
ledger sheets or cards, invoices, and other papers relating to Receivables,
including all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of the Company or
any computer bureau or agent from time to time acting for the Company or
otherwise; (c) all evidences of the filing of financing statements and the
registration of other instruments in connection therewith, and amendments,
supplements or other modifications thereto, notices to other creditors or
secured parties, and certificates, acknowledgments, or other writings, including
lien-search reports, from filing or other registration officers; (d) all credit
information, reports and memoranda relating thereto; and (e) all other written
or nonwritten forms of information related in any way to the foregoing.

 

“Secured Obligations” mean all obligations (whether or not constituting future
advances, obligatory or otherwise) of Borrower and all of the Guarantors from
time to time arising under or in respect of this Agreement, the Credit
Agreement, the Notes (if any), the Guarantee, the Credit Agreement L/Cs, the
other Loan Documents and all Hedging Agreements entered into with any Lender
(including the obligations to pay principal, interest and all other charges,
fees, expenses, commissions, reimbursements, premiums, indemnities and other
payments related to or in respect of the obligations contained in this
Agreement, the Credit Agreement, the Notes (if any), the Guarantee, the Credit
Agreement L/Cs, the other Loan Documents and all Hedging Agreements entered into
with any Lender), in each case whether (a) such obligations are direct or
indirect, secured or unsecured, joint or several, absolute or contingent,
reduced to judgment or not, liquidated or unliquidated, disputed or undisputed,
legal or equitable, due or to become due whether at stated maturity, by
acceleration or otherwise; (b) arising in the regular course of business or
otherwise; (c) for payment or performance; (d) discharged, stayed or otherwise
affected by any bankruptcy, insolvency, reorganization or similar proceeding
with respect to any Loan Party or any other person; or (e) now existing or
hereafter arising (including interest and other obligations arising or accruing
after the commencement of any bankruptcy, insolvency, reorganization or similar
proceeding with respect to any Loan Party or any other person, or that would
have arisen or accrued but for the commencement of such proceeding, even if such
obligation or the claim therefor is not enforceable or allowable in such
proceeding).

 

“Secured Parties” has the meaning assigned to such term in the recitals hereof.

 

“Securities Account” has the meaning assigned to such term in the UCC; provided
that, the Collateral Account shall be treated as a Securities Account.

 

“Securities Collateral” means, collectively, the Pledged Equity Interests, the
Pledged Intercompany Debt and the Distributions.

 

“Security Agreement Collateral” has the meaning assigned to such term in
Section 2.01.

 

“Software Embedded in Goods” means, with respect to any Goods, any computer
program embedded in such Goods and any supporting information provided in

 

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connection with a transaction relating to such program if (a) the program is
customarily considered part of such Goods or (b) by becoming the owner of such
Goods a person acquires a right to use such program in connection therewith.

 

“Trademarks” mean, collectively, with respect to each Pledgor, all trademarks
(including service marks), slogans, logos, certification marks, domain names,
trade dress, 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) including
the registrations and applications listed in Section II.I of the Perfection
Certificate, together with any and all (a) rights and privileges arising under
applicable law with respect to such Pledgor’s use of any trademarks;
(b) reissues, continuations, extensions and renewals thereof; (c) income, fees,
royalties, damages and payments now and hereafter due or payable thereunder and
with respect thereto, including damages, claims and payments for past, present
or future infringements thereof; (d) rights corresponding thereto throughout the
world; and (e) rights to sue for past, present and future infringements thereof.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided that, if by reason of mandatory provisions of law,
the perfection or the effect of perfection or nonperfection of the security
interest in any item or portion of the Security Agreement Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of New York, “UCC” also means the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or nonperfection.

 

SECTION 1.02.                                    Interpretation.  The rules of
interpretation specified in the Credit Agreement, including Sections 1.03 and
11.11 thereof, shall be applicable to this Agreement.  If any conflict or
inconsistency exists between this Agreement and the Credit Agreement, the Credit
Agreement shall govern.

 

SECTION 1.03.                                    Perfection Certificate. 
Collateral Agent and each Loan Party agree that the Perfection Certificate and
all descriptions of Security Agreement 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 2.01.                                    Pledge.  As collateral security
for the payment and performance in full of all the Secured Obligations, each
Pledgor hereby grants to Collateral Agent, for its benefit and for the benefit
of the Secured Parties, a security interest in and continuing lien on all
personal property of such Pledgor, including all of such Pledgor’s right, title
and interest in, to and under all of the following property, wherever located,
whether now owned or existing, or hereafter arising or acquired from time to
time (collectively, the “Security Agreement Collateral”):

 

(i)                                        all Accounts;

 

(ii)                                     all Chattel Paper;

 

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(iii)                                  all Commercial Tort Claims;

 

(iv)                                 all Deposit Accounts;

 

(v)                                    all Documents;

 

(vi)                                 all General Intangibles;

 

(vii)                              all Goods (including, in any event,
Equipment, Fixtures, Inventory, Documents Evidencing Goods and Software Embedded
in Goods);

 

(viii)                           all Instruments;

 

(ix)                                   all Insurance;

 

(x)                                      all Intellectual Property;

 

(xi)                                   all Investment Property and Financial
Assets;

 

(xii)                                all Letters of Credit and Letter-of-Credit
Rights;

 

(xiii)                             all Material Contracts and Non-payment
Contracts;

 

(xiv)                            all Money;

 

(xv)                               all Receivables;

 

(xvi)                            all Securities Collateral;

 

(xvii)                         all books and Records relating to any and/or all
of the foregoing;

 

(xviii)                      to the extent not otherwise included above, all
Collateral Records, Collateral Support and Supporting Obligations relating to
any and/or all of the foregoing; and

 

(xix)                              to the extent not otherwise included above,
all other personal property and all Proceeds and products of, accessions and
additions to, profits and rents from, and replacements for or in respect of any
of the foregoing;

 

it being understood that, subject to the other provisions hereof and of the
Credit Agreement, the foregoing grant of a security interest shall not diminish
any Pledgor’s exclusive right and license to use, or grant to other persons
license or sublicenses in, the Intellectual Property.

 

SECTION 2.02.                                    Certain Limited Exclusions. 
Notwithstanding anything herein to the contrary, in no event shall the security
interest granted under Section 2.01(a) attach to, and the Security Agreement
Collateral shall not include:

 

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(a)                                  any agreement to which any Pledgor is a
party to the extent that the collateral assignment thereof or the creation of a
security interest therein would constitute a breach of the terms of such
agreement, or would permit any party to such agreement to terminate such
agreement, in each case as entered into by the applicable Pledgor; provided
that, any of the agreements excluded in accordance with the foregoing shall
cease to be so excluded (x) to the extent such term is, or would be (in the case
of after-acquired property or changes to applicable law), rendered ineffective
under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant
jurisdiction (or any successor provision) or any other applicable law (including
the Bankruptcy Code) or principles of equity; or (y) if the applicable Pledgor
has obtained all of the consents of the other parties to such agreement
necessary for the collateral assignment of, or creation of a security interest
in, such agreement;

 

(b)                                 any property or asset hereafter acquired by
any Pledgor that is subject to a Lien permitted to be incurred pursuant to
Sections 6.02(g), (h), (i) and (k) of the Credit Agreement, solely to the extent
that the documents evidencing such Lien prohibit the grant of a security
interest in or Lien on such property or asset; provided that, upon such property
or asset no longer being subject to such Lien or prohibition, such property or
asset shall (without any act or delivery by any person) constitute Security
Agreement Collateral hereunder;

 

(c)                                  subject to Section 5.11 of the Credit
Agreement, no more than 66.0% of the Equity Interests of Parent, Cayman III,
Luxembourg Holdings, HIL or any Non-Guarantor Subsidiary, provided that, such
Non-Guarantor Subsidiary is also a Foreign Subsidiary; or

 

(d)                                 the Equity Interests of the Designated
Subsidiaries.

 

Collateral Agent agrees that, at any Pledgor’s reasonable request and expense,
it will provide such Pledgor confirmation that the assets described in this
Section 2.02 are in fact excluded from the Security Agreement Collateral.

 

SECTION 2.03.                                    Secured Obligations; Continuing
Liability.

 

(a)                                  Security for Obligations.  This Agreement
secures, and the Security Agreement Collateral is collateral security for, the
payment and performance in full when due of all the Secured Obligations.

 

(b)                                 Continuing Liability under Security
Agreement Collateral.  Notwithstanding anything herein to the contrary, (i) each
Pledgor shall remain liable under each of the obligations and agreements
included in the Security Agreement Collateral, including any obligations or
agreements relating to any Pledged Equity Interests, to perform all of the
obligations undertaken by it thereunder, all in accordance with the terms and
provisions thereof, and neither Collateral Agent nor any Secured Party shall
have any obligation or liability (x) under any of such agreements by reason of
this Agreement or any other document relating hereto, or (y) to make any inquiry
regarding the nature or sufficiency of any payment received by it, or have any
obligation to take any action to collect or enforce any rights under any
agreement included in the Security Agreement Collateral, including any
agreements relating to any Pledged Equity Interests; (ii) the exercise by
Collateral Agent of any of its rights hereunder shall not release any Pledgor
from any of its duties or obligations under the contracts and agreements
included in the Security Agreement Collateral; and (iii) nothing herein is
intended to or shall be a delegation of duties to Collateral Agent or any other
Secured Party.

 

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ARTICLE III

 

Perfection; Supplements; Further Assurances; Use of Security Agreement
Collateral

 

SECTION 3.01.                                    Delivery of Certificated
Securities Collateral.  All certificates, agreements or instruments representing
or evidencing the Securities Collateral, to the extent not previously delivered
to Collateral Agent, shall promptly upon receipt thereof by any Pledgor be
delivered to and held by or on behalf of 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 satisfactory to Collateral
Agent.  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 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.  In addition, Collateral Agent shall have the
right, at any time upon the occurrence and during the continuance of any Event
of Default, to exchange certificates representing or evidencing Securities
Collateral for certificates of smaller or larger denominations.

 

SECTION 3.02.                                    Perfection of Uncertificated
Securities Collateral.  If any Issuer of Pledged Equity Interests is organized
in a jurisdiction that does not permit the use of certificates to evidence
equity ownership, or if any of the Pledged Equity Interests are at any time not
evidenced by certificates of ownership, then each applicable Pledgor shall, to
the extent permitted by applicable law, record such pledge on the equityholder
register or the books of the Issuer, cause the Issuer to execute and deliver to
Collateral Agent an acknowledgment of the pledge of such Pledged Equity
Interests substantially in the form of Exhibit A annexed hereto and, upon
Collateral Agent’s request therefor, execute any customary pledge forms or other
documents necessary or appropriate to complete the pledge and give Collateral
Agent the right to transfer such Pledged Equity Interests under the terms hereof
and provide to Collateral Agent an opinion of counsel, in form and substance
satisfactory to Collateral Agent, confirming such pledge and perfection thereof.

 

SECTION 3.03.                                    Financing Statements and Other
Filings.  Each Pledgor represents and warrants to Collateral Agent that the only
filings, registrations and recordings necessary and appropriate to create,
preserve, protect, publish notice of and perfect the security interest granted
by each Pledgor to Collateral Agent (for the benefit of the Secured Parties)
pursuant to this Agreement in respect of the Security Agreement Collateral are
listed in Section III.B of the Perfection Certificate.  Each Pledgor agrees that
at any time and from time to time, at the sole cost and expense of the Pledgors,
it will execute and file and refile (in accordance with Section 3.04), or permit
Collateral Agent to file and refile, such financing statements, continuation
statements and other documents (including this Agreement), in form acceptable to
Collateral Agent, in such offices (including the United States Patent and
Trademark Office and the United States Copyright Office) as Collateral Agent may
deem necessary or appropriate, wherever required by law to perfect, continue and
maintain a valid, enforceable, first-priority security interest in the Security
Agreement Collateral as provided herein and to preserve the other rights and
interests granted to Collateral Agent hereunder, as against third parties, with
respect to any Security Agreement Collateral.

 

SECTION 3.04.                                    Other Actions.  To further
ensure the attachment, perfection and priority of, and the ability of Collateral
Agent to enforce, Collateral Agent’s

 

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security interest in the Security Agreement Collateral, each Pledgor
acknowledges and agrees as follows:

 

(a)                                  UCC Financing Statements.  Each Pledgor
hereby irrevocably authorizes Collateral Agent at any time and from time to time
to file in any relevant jurisdiction any 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 or amendment, including (i) whether the
Pledgor is an organization, the type of organization and any organizational
identification number issued to such Pledgor and (ii) in the case of a financing
statement filed as a fixture filing, a sufficient description of the real
property to which such Security Agreement Collateral relates.  The Pledgor
agrees to provide such information to Collateral Agent promptly upon request. 
Such financing statements or amendments may describe the Security Agreement
Collateral as “all assets” or “all personal property, whether now owned or
hereafter acquired,” or in any other manner that Collateral Agent, in its sole
discretion, deems necessary, advisable or prudent to ensure the perfection of
the security interests granted hereunder.  Each Pledgor hereby ratifies its
authorization for Collateral Agent to file in any relevant jurisdiction any
financing statements or amendments thereto if filed prior to the date hereof.

 

(b)                                 Intellectual Property Filings.  Each Pledgor
hereby irrevocably authorizes Collateral Agent to file documents with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) for the purpose of
perfecting, confirming, continuing, enforcing or protecting the security
interest granted by each Pledgor hereunder and naming any Pledgor or the
Pledgors as debtors and Collateral Agent for its benefit and the benefit of the
Lenders as secured party.

 

(c)                                  Instruments and Tangible Chattel Paper.  If
any amount payable under or in connection with any of the Security Agreement
Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the
Pledgor acquiring such Instrument or Tangible Chattel Paper shall forthwith
endorse, assign and deliver the same to Collateral Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as Collateral Agent
may from time to time specify.

 

(d)                                 Deposit Accounts.  Each Pledgor shall notify
Collateral Agent of any Deposit Account such Pledgor has opened no later than 30
days after such Deposit Account is opened and (unless waived in writing by
Collateral Agent in its sole discretion) either (i) pursuant to a Control
Agreement cause the depository Bank to agree to comply at any time with
instructions from Collateral Agent to such depository Bank directing the
disposition of funds from time to time credited to such Deposit Account, without
further consent of such Pledgor or any other person, or (ii) arrange for
Collateral Agent to become the customer of the Bank with respect to the Deposit
Account, with the Pledgor being permitted, so long as no Default or Event of
Default exists and is continuing, to exercise rights to withdraw funds from such
Deposit Account pursuant to an agreement in form and substance satisfactory to
Collateral Agent.  The preceding sentence shall not apply to Deposit Accounts
for which Collateral Agent is the depository.  Each Pledgor represents and
warrants to Collateral Agent that, as of the date hereof, it maintains no
Deposit Accounts other than (i) those set forth in Section II.F of the
Perfection Certificate or (ii) those for which the applicable Pledgor has
provided notice thereof to Collateral Agent pursuant to the preceding sentence. 
Each such Deposit Account is subject to a Control Agreement that is in full
force and effect.

 

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(e)                                  Investment Property.

 

(i)             If any Pledgor shall at any time hold or acquire any
certificated securities constituting Investment Property, such Pledgor shall
promptly endorse, assign and deliver the same to Collateral Agent, accompanied
by such instruments of transfer or assignment duly executed in blank, all in
form and substance satisfactory to Collateral Agent.  If any securities now or
hereafter acquired by any Pledgor constituting Investment Property are
uncertificated and are issued to such Pledgor or its nominee directly by the
issuer thereof, such Pledgor shall promptly notify Collateral Agent thereof and
such Pledgor shall either (A) pursuant to a Control Agreement cause the issuer
to agree to comply with instructions from Collateral Agent as to such
securities, without further consent of any Pledgor, such nominee or any other
person, or (B) arrange for Collateral Agent to become the registered owner of
the securities.  If any securities constituting Investment Property, whether
certificated or uncertificated, or other Investment Property now or hereafter
acquired by any Pledgor is held by such Pledgor or its nominee through a
Securities Intermediary or Commodity Intermediary, such Pledgor shall promptly
notify Collateral Agent thereof and, unless waived in writing by Collateral
Agent in its sole discretion, either (A) pursuant to a Control Agreement cause
such Securities Intermediary or Commodity Intermediary, as the case may be, to
agree to comply with Entitlement Orders or other instructions from Collateral
Agent to such Securities Intermediary as to such securities or other Investment
Property, or to apply any value distributed on account of any Commodity Contract
as directed by Collateral Agent to such Commodity Intermediary, as the case may
be, in each case without further consent of any Pledgor, such nominee or any
other person, or (B) in the case of Financial Assets constituting Investment
Property or other Investment Property held through a Securities Intermediary,
arrange for Collateral Agent to become the Entitlement Holder with respect to
such Investment Property, with the Pledgor being permitted, so long as no
Default or Event of Default has occurred and is continuing, to exercise rights
to withdraw or otherwise deal with such Investment Property pursuant to an
agreement in form and substance satisfactory to Collateral Agent.  The preceding
sentence shall not apply to any Financial Assets credited to a Securities
Account for which Collateral Agent is the Securities Intermediary.  Each Pledgor
represents and warrants to Collateral Agent that, as of the date hereof, such
Pledgor maintains no Securities Accounts or Commodity Accounts with any
Securities Intermediary or Commodity Intermediary other than (i) as set forth in
Section II.E of the Perfection Certificate or (ii) those for which the
applicable Pledgor has provided notice thereof to Collateral Agent pursuant to
the preceding sentence.  Subject to the provisions of this Section 3.04(e)(i),
each such Securities Account or Commodities Account is subject to a Control
Agreement that is in full force and effect.

 

(ii)          As between Collateral Agent and the Pledgors, the Pledgors shall
bear the investment risk with respect to the Investment Property, and the risk
of loss of, damage to, or the destruction of the Investment Property, whether in
the possession of, or maintained as a Security Entitlement by, or subject to the
control of, Collateral Agent, a Securities Intermediary, Commodities
Intermediary, the Pledgor or any other person; provided that, nothing contained
in this Section 3.04(e)(ii) shall release or relieve any Securities

 

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Intermediary or Commodities Intermediary of its duties and obligations to the
Pledgors or any other person under any Control Agreement or under applicable
law.  Each Pledgor shall promptly pay all Charges and fees of whatever kind or
nature with respect to the Investment Property pledged by it or this Agreement. 
In the event any Pledgor shall fail to make such payment contemplated in the
immediately preceding sentence, Collateral Agent may do so for the account of
such Pledgor and the Pledgors shall promptly reimburse and indemnify Collateral
Agent from all costs and expenses incurred by Collateral Agent under this
Section 3.04(e)(ii) in accordance with Section 7.03.

 

(f)                                    Electronic Chattel Paper and Transferable
Records.  If any amount payable under or in connection with any of the Security
Agreement Collateral shall be evidenced by any Electronic Chattel Paper or any
“transferable record,” as that term is defined in Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Pledgor acquiring such Electronic Chattel Paper or
transferable record shall promptly notify Collateral Agent thereof and, at the
request of Collateral Agent, shall take such action as Collateral Agent may
request to vest in Collateral Agent control under UCC Section 9-105 of such
Electronic Chattel Paper or control under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be,
Section 16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record.  Collateral Agent agrees with such
Pledgor that Collateral Agent will arrange, pursuant to procedures satisfactory
to Collateral Agent and so long as such procedures will not result in Collateral
Agent’s loss of control, for the Pledgor to make alterations to the Electronic
Chattel Paper or transferable record permitted under UCC Section 9-105 or, as
the case may be, Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act of Section 16 of the Uniform Electronic Transactions Act
for a party in control to allow without loss of control, unless an Event of
Default has occurred and is continuing or would occur after taking into account
any action by such Pledgor with respect to such Electronic Chattel Paper or
transferable record.

 

(g)                                 Letter-of-Credit Rights.  If any Pledgor is
at any time a beneficiary under a Letter of Credit in excess of $1.0 million now
or hereafter issued in favor of such Pledgor, such Pledgor shall promptly notify
Collateral Agent thereof and, at the request of Collateral Agent, such Pledgor
shall, pursuant to an agreement in form and substance satisfactory to Collateral
Agent, either (i) arrange for the issuer and any confirmer of such Letter of
Credit to consent to an assignment to Collateral Agent of the proceeds of any
drawing under the Letter of Credit or (ii) arrange for Collateral Agent to
become the transferee beneficiary of the Letter of Credit.

 

(h)                                 Commercial Tort Claims.  If any Pledgor
shall at any time hold or acquire a Commercial Tort Claim relating to any of the
Security Agreement Collateral and such Pledgor, in the exercise of its
reasonable business judgment, elects to pursue such commercial tort claim, such
Pledgor shall promptly notify Collateral Agent in writing signed by such Pledgor
of the brief details thereof and grant to Collateral Agent in such writing a
security interest therein and in the Proceeds thereof, all in accordance with
this Agreement, with such writing to be in form and substance satisfactory to
Collateral Agent.

 

(i)                                     Motor Vehicles.  Upon the request of
Collateral Agent, each Pledgor shall deliver to Collateral Agent originals of
the Certificates of Title or certificates of ownership for the motor vehicles
(and any other Equipment covered by Certificates of Title or ownership owned by
it) with Collateral Agent listed as lienholder therein.

 

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SECTION 3.05.                                Supplements; Further Assurances.

 

(a)                                  The Pledgors shall cause each person that,
from time to time after the date hereof, shall be required to pledge any assets
to Collateral Agent for the benefit of the Secured Parties pursuant to the
provisions of the Credit Agreement, to execute and deliver to Collateral Agent a
Joinder Agreement and, upon such execution and delivery, such person shall
constitute a “Guarantor” and a “Pledgor” for all purposes hereunder with the
same force and effect as if originally named as a 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 Guarantor and Pledgor as a party to this Agreement.

 

(b)                                 Upon obtaining any Pledged Equity Interests
or Pledged Intercompany Debt of any person, each Pledgor shall accept the same
in trust for the benefit of Collateral Agent and forthwith deliver to Collateral
Agent a Perfection Certificate Supplement, and the certificates and other
documents required under this Article III in respect of the additional Pledged
Equity Interests, Pledged Intercompany Debt or other possessory Security
Agreement Collateral that is to be pledged pursuant to this Agreement, and
confirming the attachment of the Lien hereby created on and in respect of such
additional Pledged Equity Interests or Pledged Intercompany Debt.

 

(c)                                  Each Pledgor agrees to take such further
actions, and to execute and deliver to Collateral Agent such additional
assignments, agreements, supplements, powers and instruments, as Collateral
Agent may in its reasonable judgment deem necessary or appropriate, to perfect,
preserve and protect the security interest in the Security Agreement Collateral
as provided herein and the rights and interests granted to Collateral Agent
hereunder, to carry into effect the purposes hereof or to better assure and
confirm unto Collateral Agent or permit Collateral Agent to exercise and enforce
its rights, powers and remedies hereunder with respect to any Security Agreement
Collateral.  By way of example, such actions may include appearing in and
defending any action or proceeding, at Collateral Agent’s request, that may
affect such Pledgor’s title to or Collateral Agent’s security interest in all or
any part of the Security Agreement Collateral.  Upon the reasonable request of
Collateral Agent, each Pledgor shall further make, execute, endorse,
acknowledge, file or refile or deliver to Collateral Agent from time to time
such lists, descriptions and designations of the Security Agreement Collateral,
copies of warehouse receipts, receipts in the nature of warehouse receipts,
bills of lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, supplements, additional security agreements, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments.  If a Default has occurred and is continuing,
Collateral Agent may institute and maintain, in its own name or in the name of
any Pledgor, such suits and proceedings as Collateral Agent deems necessary or
expedient to prevent any impairment of the security interest in or the
perfection thereof in the Security Agreement Collateral.  All of the foregoing
shall be at the sole cost and expense of the Pledgors.

 

(d)                                 For the avoidance of doubt, the Pledgors and
Collateral Agent acknowledge that this Agreement is intended to grant to
Collateral Agent, for the benefit of the Secured Parties, a security interest in
and continuing Lien on the Security Agreement Collateral, and does not
constitute a present assignment of ownership rights, a transfer of ownership or
title to any Security Agreement Collateral, except as otherwise provided herein
following the occurrence and during the continuance of an Event of Default. 
Unless an Event of Default shall have occurred and be continuing, Collateral
Agent agrees from time to time to deliver, upon written request of any Pledgor
and at such Pledgor’s sole cost and expense (including reasonable

 

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expenses of counsel to, among other things, review the effect thereof on
Collateral Agent’s security interest granted hereunder), any and all
instruments, certificates or other documents, in a form reasonably requested by
such Pledgor, necessary or appropriate in the reasonable judgment of such
Pledgor to enable such Pledgor to continue to exploit, license, use and protect
the Security Agreement Collateral in accordance with the terms hereof and of the
Credit Agreement.

 

ARTICLE IV

 

Representations, Warranties and Covenants

 

Each Pledgor represents, warrants and covenants as follows:

 

SECTION 4.01.                                    Title.  Except for the security
interest granted to Collateral Agent for its benefit and for the benefit of the
Secured Parties pursuant to this Agreement and Permitted Liens, such Pledgor
owns the rights in each item of Security Agreement Collateral pledged by it
hereunder, and with regard to each item of Security Agreement Collateral now
existing or hereafter acquired, will continue to own or have such rights, in
each case free and clear of any and all Liens or claims of others.  No effective
financing statement or other public notice with respect to all or any part of
the Security Agreement Collateral is on file or of record in any public office,
except such as have been filed in favor of Collateral Agent pursuant to this
Agreement, are permitted by the Credit Agreement, or for which proper
termination statements have been delivered to Collateral Agent for filing.  No
person other than Collateral Agent has control or possession of all or any part
of the Security Agreement Collateral, except as permitted hereby or by the
Credit Agreement.

 

SECTION 4.02.                                    Organization; Authority;
Enforceability.  Such Pledgor (a) is duly organized or incorporated and validly
existing under the laws of the jurisdiction of its organization or
incorporation, (b) has all requisite power and authority enter into this
Agreement and to carry out the obligations hereunder, and (c) has duly executed
and delivered this Agreement.  This Agreement and each other document,
statement, or instrument relating hereto, when executed and delivered by such
Pledgor, will constitute, a legal, valid and binding obligation of such Pledgor,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

 

SECTION 4.03.                                    Authorizations and Approvals. 
No authorization, approval or other action by, and no notice to or filing with,
any Governmental Authority is required for either (i) the pledge or grant by
such Pledgor of the Liens purported to be created in favor of Collateral Agent
hereunder, or (ii) the exercise by Collateral Agent of any rights or remedies in
respect of any Security Agreement Collateral, in each case except for the
filings and registrations contemplated under the Security Documents and as may
be required in connection with the disposition of any Securities Collateral (by
laws generally affecting the offering and sale of securities) or by laws
pertaining to Intellectual Property.

 

SECTION 4.04.                                    Perfected First-Priority
Liens.  The security interests granted pursuant to this Agreement (a) upon
completion of the filings specified in Section III.B of the Perfection
Certificate and completion of the actions described in Article III, will
constitute valid perfected security interests in all of the Security Agreement
Collateral located in the United States in favor of Collateral Agent as
collateral security for the Secured Obligations, enforceable

 

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in accordance with the terms hereof against all creditors of such Pledgor and
any persons purporting to purchase any Security Agreement Collateral from such
Pledgor; and (b) are prior to all other Liens on the Security Agreement
Collateral in existence on the date hereof except for Permitted Liens that have
priority over the Liens on the Security Agreement Collateral by operation of
law.

 

SECTION 4.05.                                    Limitation on Liens.  Such
Pledgor shall, at its own cost and expense, defend title to the Security
Agreement Collateral pledged by it hereunder and the security interest therein
and Lien thereon granted to Collateral Agent and the priority thereof against
all claims and demands of all persons, at its own cost and expense, at any time
claiming (except to the extent related to a Permitted Lien) any interest therein
adverse to Collateral Agent or any other Secured Party.

 

SECTION 4.06.                                    Other Financing Statements.  So
long as any of the Secured Obligations remain unpaid, or the Commitments of the
Lenders to make any Loan or to issue any Credit Agreement L/Cs shall not have
expired or been sooner terminated, such Pledgor shall not execute, authorize or
permit to be filed in any public office any financing statement (or similar
statement or instrument of registration under the law of any jurisdiction) or
statements relating to any Security Agreement Collateral, except, in each case,
financing statements filed or to be filed in respect of and covering the
security interests granted by such Pledgor to the holder of Permitted Liens.

 

SECTION 4.07.                                    Chief Executive Office; Change
of Name; Jurisdiction of Organization.

 

(a)                                  Such Pledgor’s exact legal name, type and
jurisdiction of organization or incorporation, federal taxpayer and
organizational identification numbers of such Pledgor (if applicable) is set
forth in Section I.A of the Perfection Certificate, and its chief executive
office is set forth in Section I.D of the Perfection Certificate.  Such Pledgor
has not done in the last five years business under any other name (including any
trade name or fictitious business name) except for those names set forth in
Sections I.B and I.C of the Perfection Certificate, and shall not (a) change its
corporate name, (b) establish any other location where Security Agreement
Collateral is maintained, (c) change its identity or type of organization or
corporate structure, or (d) change its federal taxpayer identification number or
organizational identification number (including by merging with or into any
other entity, reorganizing, dissolving, liquidating, reincorporating or
incorporating in any other jurisdiction) unless (A) it shall have given
Collateral Agent not less than 30 days’ prior written notice of its intention so
to do, clearly describing such change and providing such other information in
connection therewith as Collateral Agent may request, and (B) with respect to
such change, such Pledgor shall have taken all action that Collateral Agent
deems necessary or desirable to maintain the perfection and priority of the
security interest of Collateral Agent for the benefit of the Secured Parties in
the Security Agreement Collateral intended to be granted hereby, including using
commercially reasonable efforts to obtain waivers of landlord’s or
warehousemen’s liens with respect to such new location, if applicable.  Each
Pledgor agrees to promptly provide Collateral Agent with certified
organizational documents reflecting any of the changes described in the
preceding sentence.

 

(b)                                 Such Pledgor agrees to maintain, at its own
cost and expense, such complete and accurate records with respect to the
Security Agreement Collateral owned by it as is consistent with its current
practices and in accordance with such prudent and standard practices used in
industries that are the same as or similar to those in which such Pledgor is
engaged, but in

 

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any event to include complete accounting records as required by the Credit
Agreement, and, at such time or times as Collateral Agent may request, promptly
to prepare and deliver to Collateral Agent a duly certified schedule or
schedules in form and detail satisfactory to Collateral Agent showing in summary
form the identity, amount and location of any and all Security Agreement
Collateral (except Security Agreement Collateral in the possession or control of
Collateral Agent).

 

SECTION 4.08.                                Certain Provisions Concerning
Securities Collateral.

 

(a)                                  Such Pledgor has delivered to Collateral
Agent true, correct and complete copies of the Operative Agreements, which are
in full force and effect and have not as of the date hereof been amended or
modified except as permitted by the Credit Agreement.  Such Pledgor shall
deliver to Collateral Agent a copy of any notice of default given or received by
it under any Operative Agreement within ten days after such Pledgor gives or
receives such notice.

 

(b)                                 Such Pledgor is not 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 Equity Interests 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, except where such default or
noncompliance, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.  No Securities Collateral pledged by
such 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 as of the date hereof, there are no certificates,
instruments, documents or other writings (other than the Operative Agreements
and certificates, if any, delivered to Collateral Agent) that evidence any
Pledged Equity Interests of such Pledgor.

 

(c)                                  So long as no Event of Default shall have
occurred and be continuing (and Borrower or such Pledgor has not received
written notice relating to such Event of Default from Collateral Agent):

 

(i)             Such 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
Credit Agreement, or any other Loan Document evidencing the Secured Obligations;
provided that, such Pledgor shall not in any event exercise such rights in any
manner that would reasonably be expected to have an adverse effect on the value
of the Security Agreement Collateral or the Lien and security interest intended
to be granted to Collateral Agent hereunder;

 

(ii)          Such 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 that, any and all such Distributions consisting of rights or
interests in the form of certificated securities shall be forthwith delivered to
Collateral Agent to hold as Security Agreement Collateral and shall, if received
by such Pledgor, be received in trust for the benefit of Collateral Agent, be
segregated from the other property or funds of such Pledgor and be promptly
delivered to Collateral Agent as Security Agreement Collateral in the same form
as so received (with any necessary endorsement); and

 

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(iii)       Without further action or formality, Collateral Agent shall be
deemed to have granted to such Pledgor all necessary consents relating to voting
rights and shall, if necessary, upon written request of such 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 to permit such Pledgor to exercise the voting and
other rights that it is entitled to exercise pursuant to Section 4.08(c)(i) and
to receive the Distributions that it is authorized to receive and retain
pursuant to Section 4.08(c)(ii).

 

(d)                                 Upon the occurrence and during the
continuance of any Event of Default (and once Borrower or any Pledgor has
received written notice relating to such Event of Default from Collateral
Agent):

 

(i)             All rights of such Pledgor to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to
Section 4.08(c)(i) without any action or the giving of any notice shall cease,
and all such rights shall thereupon become vested in Collateral Agent, which
shall thereupon have the sole right to exercise such voting and other consensual
rights; and

 

(ii)          All rights of such Pledgor to receive Distributions that it would
otherwise be authorized to receive and retain pursuant to
Section 4.08(c)(ii) shall cease and all such rights shall thereupon become
vested in Collateral Agent, who shall thereupon have the sole right to receive
and hold as Security Agreement Collateral such Distributions;

 

provided that, the rights described in clauses (i) and (ii) above shall revert
back to such Pledgor following the cure or waiver of such Event of Default.

 

(e)                                  Such Pledgor shall, at its sole cost and
expense, from time to time execute and deliver to Collateral Agent appropriate
instruments as Collateral Agent may request to permit Collateral Agent to
exercise the voting and other rights that it may be entitled to exercise
pursuant to Section 4.08(d)(i) and to receive all Distributions that it may be
entitled to receive under Section 4.08(d)(ii).

 

(f)                                    All Distributions that are received by
such Pledgor contrary to the provisions of Section 4.08(d)(ii) shall be received
in trust for the benefit of Collateral Agent, shall be segregated from other
funds of such Pledgor and shall promptly be paid over to Collateral Agent as
Security Agreement Collateral in the same form as so received (with any
necessary endorsement).

 

SECTION 4.09.                                    Certain Provisions Concerning
Intellectual Property.

 

(a)                                  Such Pledgor agrees that it will not, nor
will it knowingly permit or authorize any of its licensees to, do any act, or
omit to do any act, whereby any issued Patent may become invalidated, dedicated
to the public, or unenforceable, and agrees that it shall continue to mark any
products covered by a Patent with the relevant Patent Number or indication that
such product is subject to a pending Patent application as necessary and
sufficient to establish and preserve its maximum rights under applicable patent
laws, except where the failure to so mark would not be reasonably likely to
result in a Material Adverse Effect.

 

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(b)                                 Such Pledgor (either itself or through its
licensees or its sublicensees) will, for each material Trademark, (i) maintain
such Trademark in full force free from any claim of abandonment or invalidity
for nonuse, (ii) not materially diminish the value of such Trademark or the
goodwill associated therewith, (iii) display such Trademark with notice of
federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law, except where the
failure to display with such notice would not be reasonably likely to result in
a Material Adverse Effect, and (iv) not knowingly use or knowingly permit the
use of such Trademark in violation of any third party rights.

 

(c)                                  Such Pledgor (either itself or through
licensees) will, for each work covered by a material Copyright, continue to
publish, reproduce, display, adopt and distribute the work with appropriate
copyright notice as necessary and sufficient to establish and preserve its
maximum rights under applicable copyright laws, except where the failure to
include notice would not be reasonably likely to result in a Material Adverse
Effect.

 

(d)                                 Such Pledgor shall notify Collateral Agent
promptly if it knows or has reason to know that any Intellectual Property may
become, or knows of circumstances that would cause any Intellectual Property to
become:  (i) abandoned, lost or dedicated to the public; (ii) invalid or
unenforceable; or (iii) subject to any adverse determination or development
regarding such Pledgor’s ownership of any Intellectual Property, its right to
register the same, or to keep and maintain the same.

 

(e)                                  Such Pledgor will take all reasonable steps
in the United States Patent and Trademark Office, United States Copyright Office
or any office or agency in any political subdivision of the United States,
Canada or in any other country, to maintain and pursue each application relating
to the Intellectual Property (and to obtain the relevant grant or registration)
and to maintain each issued Patent and each registration of the Trademarks and
Copyrights, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and to
initiate opposition, interference and cancellation proceedings against third
parties, in each case where necessary for the operation of such Pledgor’s
business as presently conducted and as contemplated by the Credit Agreement.

 

(f)                                    In the event that such Pledgor knows that
any Security Agreement Collateral consisting of Intellectual Property material
to the conduct of such Pledgor’s business has been or is about to be infringed,
misappropriated or diluted by a third party, such Pledgor promptly shall notify
Collateral Agent and shall promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, or take such other actions as are appropriate
under the circumstances to protect such Security Agreement Collateral, except
where the failure to so notify or take such actions would not be reasonably
likely to result in a Material Adverse Effect.

 

(g)                                 Upon the occurrence of an Event of Default,
such Pledgor shall use its commercially reasonable efforts to obtain all
requisite consents or approvals by the licensor of each License to effect the
assignment of all of such Pledgor’s right, title and interest thereunder to the
Security Agreement Collateral Agent or its designee.

 

(h)                                 Solely for the purpose of enabling
Collateral Agent to exercise its rights and remedies upon the occurrence of an
Event of Default, such Pledgor hereby grants to Collateral Agent, to the extent
assignable, an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to such Pledgor) to use, license or sublicense any
of the Intellectual Property now owned or hereafter acquired by such Pledgor,
wherever the

 

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same may be located, including in such license 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 thereof.

 

(i)                                     It shall promptly (but in no event more
than 45 days after any Pledgor obtains knowledge thereof) report to Collateral
Agent (i) the filing of any application to register any Intellectual Property
with the United States Patent and Trademark Office, the United States Copyright
Office, or any state registry or foreign counterpart of the foregoing (whether
such application is filed by such Pledgor or through any agent, employee,
licensee, or designee thereof); and (ii) the registration of any Intellectual
Property by any such office.

 

(j)                                     It shall, promptly upon the reasonable
request of Collateral Agent, execute and deliver to Collateral Agent any
document required to acknowledge, confirm, register, record, or perfect
Collateral Agent’s security interest granted hereunder in any part of the
Intellectual Property, whether now owned or hereafter acquired.

 

(k)                                  Except with the prior consent of Collateral
Agent or as permitted under the Credit Agreement, such Pledgor shall not execute
any financing statement or other document or instrument, and there will not be
on file in any public office any effective financing statement or other document
or instruments, except financing statements or other documents or instruments
filed or to be filed in favor of Collateral Agent, and such Pledgor shall not
sell, assign, transfer, license, grant any option in, or create any Lien, claim,
security interest or other encumbrance on or with respect to the Intellectual
Property, or suffer to exist any effective Lien, claim, security interest or
other encumbrance on or with respect to the Intellectual Property, except for
the security interest created by and under this Security Agreement and Permitted
Liens as otherwise permitted by the Credit Agreement.

 

(l)                                     It shall hereafter use commercially
reasonable efforts so as not to permit the inclusion in any contract to which it
hereafter becomes a party of any provision that would materially impair or
prevent the creation of a security interest in, or the assignment of, such
Pledgor’s rights and interests in any property included within the definitions
of any Intellectual Property acquired under such contracts.

 

SECTION 4.10.                                    Inspection and Verification. 
Collateral Agent or any representative designated by Collateral Agent shall have
the same access and inspection rights as granted to the Administrative Agent by
the Companies pursuant to Section 5.07 of the Credit Agreement; provided that,
upon the occurrence and during the continuance of an Event of Default,
Collateral Agent and its representatives shall at all times have the right to
enter any premises of such Pledgor and inspect any property of such Pledgor
where any of the Security Agreement Collateral of such Pledgor is located for
the purpose of inspecting the same, observing its use, protecting its interests
therein, or otherwise exercising the remedies provided under Article V.  For the
avoidance of doubt, in respect of Accounts or Security Agreement Collateral in
the possession of any third person, upon the occurrence and during the
continuance of an Event of Default, Collateral Agent or any designated
representative shall have the right to contact such account debtors or third
persons in possession of such Security Agreement Collateral for verification
purposes.  Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any other Secured
Party.

 

SECTION 4.11.                                    Payment of Taxes; Contesting
Liens; Claims.  Such Pledgor represents and warrants that all Charges imposed on
or assessed against the Security Agreement Collateral have been paid and
discharged except to the extent such Charges (a)

 

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constitute a Permitted Lien or a Lien not yet due and payable or (b) are being
contested in good faith by appropriate proceedings and for which such Pledgor
shall have set aside on its books adequate reserves in accordance with GAAP. 
Notwithstanding the foregoing, such Pledgor may at its own expense contest the
validity, amount or applicability of any Charges so long as the contest thereof
shall satisfy the Contested Collateral Lien Conditions.  Notwithstanding the
foregoing provisions of this Section 4.11, no contest of any such obligation may
be pursued by such Pledgor if such contest would expose Collateral Agent or any
other Secured Party to any possible criminal liability.

 

SECTION 4.12.                                    Transfers and Other Liens. 
Such Pledgor shall not sell, convey, assign or otherwise dispose of, or grant
any option with respect to, any of the Security Agreement Collateral pledged by
it hereunder except as permitted by the Credit Agreement.  Such Pledgor shall
not make or permit to be made an assignment for security, pledge or
hypothecation of the Security Agreement Collateral or shall grant any other Lien
in respect of the Security Agreement Collateral, except as permitted by
Section 6.02 of the Credit Agreement.

 

SECTION 4.13.                                    Insurance.  Such Pledgor, at
its own expense, shall maintain or cause to be maintained, insurance covering
physical loss or damage to the Inventory and Equipment in accordance with
Section 5.04 of the Credit Agreement.  Such Pledgor irrevocably makes,
constitutes and appoints Collateral Agent (and all officers, employees or agents
designated by Collateral Agent) as such Pledgor’s true and lawful agent (and
attorney-in-fact) for the purposes, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Security
Agreement Collateral under policies of insurance, endorsing the name of such
Pledgor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto.  In the event that such Pledgor at any time or
times fails to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or in part relating thereto, Collateral
Agent may, without waiving or releasing any obligation or liability of any
Pledgor hereunder or any Event of Default, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as Collateral Agent deems advisable.  All sums
disbursed by Collateral Agent in connection with this Section 4.13, including
reasonable attorneys’ fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by the Pledgors to Collateral Agent and
shall be additional Secured Obligations.

 

SECTION 4.14.                                    Legend.  Such Pledgor shall
legend, in form and manner satisfactory to Collateral Agent, its Chattel Paper
and its books, records, and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Chattel Paper has been assigned to
Collateral Agent for the benefit of the Secured Parties and that Collateral
Agent has a security interest therein.

 

ARTICLE V

Remedies

 

SECTION 5.01.                                    Remedies.  Upon the occurrence
and during the continuance of any Event of Default, Collateral Agent may from
time to time exercise in respect of the Security Agreement Collateral, in
addition to the other rights and remedies provided for herein or otherwise
available to it:

 

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(a)                                  Personally, or by agents or attorneys,
immediately take possession of the Security Agreement 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 on any Pledgor’s premises where any of the Security Agreement Collateral
is located, remove such Security Agreement Collateral, remain present at such
premises to receive copies of all communications and remittances relating to the
Security Agreement Collateral and use in connection with such removal and
possession any and all services, supplies, aids and other facilities of any
Pledgor;

 

(b)                                 Demand, sue for, collect or receive any
money or property at any time payable or receivable in respect of the Security
Agreement Collateral including instructing the obligor or obligors on any
agreement, instrument or other obligation constituting part of the Security
Agreement Collateral to make any payment required by the terms of such
agreement, instrument or other obligation directly to 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 that, in the
event that any such payments are made directly to any Pledgor, prior to receipt
by any such obligor of such instruction, such Pledgor shall segregate all
amounts received pursuant thereto in trust for the benefit of Collateral Agent
and shall promptly (but in no event later than one Business Day after receipt
thereof) pay such amounts into the Collateral Account;

 

(c)                                  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 Security Agreement Collateral or any part thereof, and take possession
of the proceeds of any such sale, assignment, license or liquidation;

 

(d)                                 Take possession of the Security Agreement
Collateral or any part thereof by directing any Pledgor in writing to deliver
the same to Collateral Agent at any place or places so designated by Collateral
Agent, in which event such Pledgor shall at its own expense:  (i) forthwith
cause the same to be moved to the place or places designated by Collateral Agent
and there delivered to Collateral Agent, (ii) store and keep any Security
Agreement Collateral so delivered to Collateral Agent at such place or places
pending further action by Collateral Agent and (iii) while the Security
Agreement 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
Security Agreement Collateral as contemplated in this Section 5.01(d) is of the
essence hereof.  Upon application to a court of equity having jurisdiction,
Collateral Agent shall be entitled to a decree requiring specific performance by
any Pledgor of such obligation;

 

(e)                                  Withdraw all moneys, instruments,
securities and other property in any bank, financial securities, deposit or
other account of any Pledgor constituting Security Agreement Collateral for
application to the Secured Obligations as provided in Article IX of the Credit
Agreement;

 

(f)                                    Retain and apply the Distributions to the
Secured Obligations as provided in the Credit Agreement;

 

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

 

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(h)                                 All the rights and remedies of a secured
party on default under the UCC, and Collateral Agent may also in its sole
discretion, without notice except as specified in Section 5.02, sell, assign or
grant a license to use the Security Agreement 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 Collateral Agent’s offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and on such other terms as
Collateral Agent deems commercially reasonable.  Collateral Agent or any other
Secured Party or any of their respective Affiliates may be the purchaser,
licensee, assignee or recipient of any or all of the Security Agreement
Collateral 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 Security Agreement 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 any Security Agreement Collateral 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 law, all rights of redemption, stay
and appraisal that it now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.  Collateral Agent
shall not be obligated to make any sale of Security Agreement Collateral
regardless of notice of sale having been given.  Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.  Each Pledgor hereby waives, to the
fullest extent permitted by law, any claims against Collateral Agent arising by
reason of the fact that the price at which any Security Agreement Collateral may
have been sold, assigned or licensed at such a private sale was less than the
price that might have been obtained at a public sale, even if Collateral Agent
accepts the first offer received and does not offer such Security Agreement
Collateral to more than one offeree.

 

(i)                                     Upon the written demand of Collateral
Agent, each Pledgor shall execute and deliver to Collateral Agent an assignment
or assignments of the registered Intellectual Property and such other documents
as are necessary or appropriate to carry out the intent and purposes hereof.

 

SECTION 5.02.                                                           Notice
of Sale.  Each Pledgor acknowledges and agrees that, to the extent notice of
sale shall be required by law, ten days’ 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.  No notification need be given to any Pledgor if
it has signed, during the occurrence of an Event of Default, a statement
renouncing or modifying any right to notification of sale or other intended
disposition.

 

SECTION 5.03.                                                           Waiver
of Notice and Claims.  Each Pledgor hereby waives, to the fullest extent
permitted by applicable law, notice or judicial hearing in connection with
Collateral Agent’s taking possession or Collateral Agent’s disposition of any of
the Security Agreement Collateral, including any and all prior notice and
hearing for any prejudgment remedy or remedies and any such right that such
Pledgor would otherwise have under law, and each Pledgor hereby further waives,
to the fullest extent permitted by applicable law:  (a) all damages occasioned
by such taking of possession, (b) all other requirements as to the time, place
and terms of sale or other requirements with respect to the enforcement of
Collateral Agent’s rights hereunder and (c) all rights of redemption, appraisal,
valuation, stay, extension and moratorium now or hereafter in force under any
applicable law.  Collateral Agent shall not be liable for any incorrect or
improper payment made pursuant to this Article V in the absence of gross
negligence

 

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or willful misconduct.  Any sale of, or the grant of options to purchase, or any
other realization on, any Security Agreement 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 against such Pledgor and against any and all persons claiming or
attempting to claim the Security Agreement Collateral so sold, optioned or
realized on, or any part thereof, from, through or under such Pledgor.

 

SECTION 5.04.                                                           Certain
Sales of Security Agreement Collateral.  Each Pledgor recognizes that, by reason
of certain prohibitions contained in the Securities Act, and applicable state
securities laws, Collateral Agent may be compelled, with respect to any sale of
all or any part of the Securities Collateral, to limit purchasers to persons who
will agree, among other things, to acquire such Securities Collateral 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 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 Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Securities Collateral 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 securities laws, even if such
issuer would agree to do so.

 

SECTION 5.05.                                                           No
Waiver; Cumulative Remedies.

 

(a)                                  No failure on the part of Collateral Agent
to exercise, no course of dealing with respect to, and no delay on the part of
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 or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy; nor shall
Collateral Agent be required to look first to, enforce or exhaust any other
security, collateral or guarantees.  The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law.

 

(b)                                 In the event that Collateral Agent shall
have instituted any proceeding to enforce any right, power or remedy under this
Agreement 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 Collateral Agent, then and in every such case, the Pledgors,
Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Security
Agreement Collateral, and all rights, remedies and powers of Collateral Agent
and the other Secured Parties shall continue as if no such proceeding had been
instituted.

 

ARTICLE VI

 

Obligations Absolute; Waivers

 

SECTION 6.01.                                                          
Liability of the Pledgors Absolute.  Each Pledgor agrees that its obligations
hereunder are irrevocable, absolute, independent, unconditional, and shall not
be affected by any circumstance that constitutes a legal or equitable discharge
of a pledgor or surety, except for payment in full of the Secured Obligations. 
In furtherance of the foregoing and without limiting the generality thereof,
each Pledgor agrees as follows:

 

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(a)                                  the obligations of each Pledgor hereunder
are independent of the obligations of each other Pledgor and each guarantor of
the obligations of the Loan Parties, and separate actions may be brought and
prosecuted against such Pledgor whether or not any action is brought against any
other Pledgor or guarantor, and whether or not such other Pledgor or guarantor
is joined in any such actions;

 

(b)                                 payment by any Loan Party of a portion of
the Secured Obligations shall in no way limit, affect, modify or abridge such
Pledgor’s grant hereunder securing any portion of the Secured Obligations that
has not been paid.  By way of example and without limiting the generality of the
foregoing, if Collateral Agent is awarded a judgment in any suit brought to
enforce any Loan Party’s covenant to pay a portion of the Secured Obligations,
such judgment shall not be deemed to release such Pledgor from its grant
hereunder securing the portion of the Secured Obligations that is not the
subject of such suit, and such judgment shall not, except to the extent
satisfied by such Pledgor, limit, affect, modify or abridge any other Pledgor’s
grant hereunder securing the Secured Obligations;

 

(c)                                  upon such terms as Collateral Agent deems
appropriate, without obligation to give notice or demand, without affecting the
validity or enforceability hereof, and without giving rise to any reduction,
limitation, impairment, discharge or termination of the security interests
granted hereunder or such Pledgor’s liability hereunder, Collateral Agent may,
from time to time, (i) renew, extend, accelerate, increase the rate of interest
on, or otherwise change the time, place and manner or terms of payment of any of
the Secured Obligations in accordance with the terms of the other Loan
Documents; (ii) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, any of the
Secured Obligations or any agreement relating thereto, or subordinate the
payment of the same to the payment of any other obligations; (iii) request and
accept other pledges as security for any of the Secured Obligations, and take
and hold security for the payment hereof or any of the Secured Obligations;
(iv) release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration, any security
for payment of any of the Secured Obligations, any guarantees of any of the
Secured Obligations, or any other obligation of any person (including any other
Pledgor) with respect to any of the Secured Obligations; (v) enforce and apply
any security now or hereafter held by it in respect hereof or any of the Secured
Obligations, and direct the order or manner of sale thereof, or exercise any
other right or remedy that it may have against any such security, including
foreclosure on any such security in accordance with one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is economically
reasonable, and even though such action operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Pledgor
against any other Loan Party, or any security for any of the Secured
Obligations; and (vi) exercise any other rights available to it under the Loan
Documents; and

 

(d)                                 this Agreement and such Pledgor’s
obligations hereunder shall be valid and enforceable, and shall not be subject
to any reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of all the Secured Obligations), including
the occurrence of any of the following (whether or not such Pledgor shall have
had notice or knowledge of any of them):  (i) any failure or omission to assert
or enforce, any agreement or election not to assert or enforce, or any stay or
enjoining by order of any court, by operation of law or otherwise, of the
exercise or enforcement of any claim or demand, or any right, power or remedy
(whether arising under the Loan Documents, at law, in equity, or otherwise) with
respect to the Secured Obligations or any agreement related thereto, or with
respect to any other guarantee of or security for the payment of the Secured
Obligations; (ii) any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the

 

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terms or provisions (including provisions relating to events of default) hereof,
any of the other Loan Documents, any agreement or instrument executed pursuant
thereto, or any guarantee or other security for the Secured Obligations or any
agreement relating thereto at any time being found to be illegal, invalid or
unenforceable in any respect; (iv) the application of payments received form any
source (other than payments received pursuant to the other Loan Documents or
from the proceeds of any security for the Secured Obligations, except to the
extent such security also serves as collateral for Indebtedness other than the
Secured Obligations); (v) consent of Collateral Agent or any other Secured Party
to the change, reorganization or termination of the corporate structure or
existence of any Loan Party or any Subsidiary thereof, and to any corresponding
restructuring of the Secured Obligations; (vi) any failure to perfect or
continue perfection of a security interest in any collateral that secures any of
the Secured Obligations; (vii) any defenses, set-offs or counterclaims that any
Loan Party may allege or assert against Collateral Agent or any other Secured
Party in respect of the Secured Obligations, including failure of consideration,
breach of warranty, payment, statute of frauds, statute of limitations, accord
and satisfaction, and usury; and (viii) any other act, thing or omission, or
delay to do any other act or thing, that in any manner and to any extent may
vary such Pledgor’s risk as a grantor of security securing the Secured
Obligations.

 

SECTION 6.02.                                                           General
Waivers.  Each Pledgor hereby waives, for the benefit of Collateral Agent and
the Secured Parties:  (a) all rights to require Collateral Agent or any other
Secured Party, as a condition to exercising Collateral Agent’s rights hereunder
against the Security Agreement Collateral, to (i) proceed against any other Loan
Party, any other pledgor (including any other Pledgor) of security securing any
of the Secured Obligations, or any other person, (ii) proceed against or exhaust
any security held from any other Loan Party, any such other pledgor or any other
person, (iii) proceed against or have resort to any balance of any Deposit
Account or credit on the books of Collateral Agent or any other Secured Party in
favor of any other Loan Party or any other person, or (iv) pursue any other
remedy whatsoever in the capacity of secured party; (b) any defense arising by
reason of incapacity, lack of authority, or any disability or other defenses of
any other Loan Party, including any defense based on or arising from the lack of
validity or enforceability of any of the Secured Obligations or any agreement or
instrument relating thereto, or by reason of the cessation of the liability of
any other Loan Party from any cause other than the payment in full of all the
Secured Obligations; (c) any defense based on any statute or rule of law that
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal; (d) any defense based
on errors or omissions by Collateral Agent or any other Secured Party in the
administration of any of the Secured Obligations, except behavior that amounts
to bad faith, gross negligence or willful misconduct; (e) any principles or
provisions of law, statutory or otherwise, that are or may be in conflict with
the terms hereof, and any legal or equitable discharge of such Pledgor’s
obligations hereunder; (f) the benefit of any statute of limitations affecting
such Pledgor’s counterclaims; (g) promptness, diligence and any requirement that
Collateral Agent or any other Secured Party protect, secure, perfect or insure
any security interest or Lien or any property subject thereto; (h) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance hereof, notices of
default hereunder, notices of any renewal, extension or modification of any of
the Secured Obligations or any agreement related thereto, notices of any
extension of credit to any other Loan party and notices of any of the matters
referred to in Section 6.01, and any right to consent to any thereof; and
(i) any defenses or benefits that may be derived from or afforded by law that
limit the liability of or exonerate pledgors or sureties, or that may conflict
with the terms hereof.

 

SECTION 6.03.                                                          
California Waivers.  For purposes of this Section 6.03 only, references to the
“principal” include each Loan Party and references to the “creditor”

 

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include each Secured Party.  In accordance with Section 2856 of the California
Civil Code, each Pledgor waives all rights and defenses (i) available to such
Pledgor by reason of Sections 2787 through 2855, 2899, and 3433 of the
California Civil Code, including all rights or defenses such Pledgor may have by
reason of protection afforded to the principal with respect to any of the
Secured Obligations, or to any other person liable for any of the Secured
Obligations, in either case in accordance with the antideficiency or other laws
of the State of California limiting or discharging the principal’s Indebtedness
or such person’s obligations, including Sections 580a, 580b, 580d and 726 of the
California Code of Civil Procedure; and (ii) arising out of an election of
remedies by the creditor, even though such election, such as a nonjudicial
foreclosure with respect to security for any Secured Obligation (or any
obligation of any other person of any of the Secured Obligations), has destroyed
such Pledgor’s right of subrogation and reimbursement against the principal (or
such other person), by operation of Section 580d of the California Code of Civil
Procedure or otherwise.  No other provision of this Agreement shall be construed
as limiting the generality of any of the covenants and waivers set forth in this
Section 6.03.  As provided below, this Agreement shall be governed by, and shall
be construed and enforced in accordance with the laws of the State of New York. 
This Section 6.03 is included solely out of an abundance of caution, and shall
not be construed to mean that any of the above-referenced provisions of
California law are in any way applicable to this Agreement or to any of the
Secured Obligations.

 

ARTICLE VII

 

Miscellaneous

 

SECTION 7.01.                                                          
Concerning Collateral Agent.

 

(a)                                  Collateral Agent has been appointed as
Collateral Agent pursuant to Article X of the Credit Agreement.  The actions of
Collateral Agent hereunder are subject to the provisions of the Credit
Agreement.  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
Security Agreement Collateral), in accordance with this Agreement and the Credit
Agreement.  Collateral Agent may employ agents and attorneys-in-fact in
connection herewith.  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 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 Collateral Agent.

 

(b)                                 Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Security
Agreement Collateral in its possession if such Security Agreement Collateral is
accorded treatment substantially equivalent to that which Collateral Agent, in
its individual capacity, accords its own property consisting of similar
instruments or interests, it being understood that neither Collateral Agent nor
any of the Secured Parties shall have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other matters relating to any Securities Collateral, whether or not
Collateral Agent or any other Secured Party has or is deemed to have knowledge

 

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of such matters, or (ii) taking any necessary steps to preserve rights against
any person with respect to any Security Agreement Collateral.

 

(c)                                  Collateral Agent shall be entitled to rely
on 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, on advice of counsel
selected by it.

 

(d)                                 With respect to any of its rights and
obligations as a Lender, Collateral Agent shall have and may exercise the same
rights and powers hereunder.  The term “Lenders,” “Lender” or any similar terms
shall, unless the context clearly otherwise indicates, include Collateral Agent
in its individual capacity as a Lender.  Collateral Agent may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or other
business with such Pledgor or any Affiliate of such Pledgor to the same extent
as if Collateral Agent were not acting as Collateral Agent.

 

(e)                                  If any item of Security Agreement
Collateral also constitutes collateral granted to Collateral Agent under any
other deed of trust, mortgage, security agreement, pledge or instrument of any
type, in the event of any conflict between the provisions hereof and the
provisions of such other deed of trust, mortgage, security agreement, pledge or
instrument of any type in respect of such collateral, Collateral Agent, in its
sole discretion, shall select which provision or provisions shall control.

 

SECTION 7.02.                                                          
Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact.  If
an Event of Default shall have occurred and be continuing, Collateral Agent may
(but shall not be obligated to) remedy or cause to be remedied any such breach,
and may expend funds for such purpose; provided that, Collateral Agent shall in
no event be bound to inquire into the validity of any tax, lien, imposition or
other obligation that such Pledgor fails to pay or perform as and when required
hereby and that such Pledgor does not contest in accordance with the provision
of Section 6.02 of the Credit Agreement.  Any and all amounts so expended by
Collateral Agent shall be paid by the Pledgors in accordance with the provisions
of Section 7.03.  Neither the provisions of this Section 7.02 nor any action
taken by Collateral Agent pursuant to the provisions of this Section 7.02 shall
prevent any such failure by any Pledgor to observe any covenant contained in
this Agreement nor any breach of warranty from constituting an Event of
Default.  Each Pledgor hereby appoints Collateral Agent its attorney-in-fact,
with full authority in the place and stead of such Pledgor and in the name of
such Pledgor, or otherwise, from time to time during the continuance of an Event
of Default in Collateral Agent’s discretion to take any action and to execute
any instrument consistent with the terms hereof and the other Loan Documents
that Collateral Agent may deem necessary or advisable to accomplish the purposes
hereof.  The foregoing grant of authority is an irrevocable 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.

 

SECTION 7.03.                                                          
Expenses.  Each Pledgor will promptly pay to Collateral Agent the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and the fees and expenses of any experts and agents, that Collateral
Agent may incur in connection with this Agreement, including all costs and
expenses relating to (a) any and all filings and other actions taken to ensure
the attachment, perfection and priority of, and the ability of Collateral Agent
to enforce, Collateral Agent’s security interest in the Security

 

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Agreement Collateral; (b) any action, suit or other proceeding affecting the
Security Agreement Collateral or any part thereof commenced, in which action,
suit or proceeding Collateral Agent is made a party or participates or in which
the right to use the Security Agreement Collateral or any part thereof is
threatened, or in which it becomes necessary in the judgment of Collateral Agent
to defend or uphold the Lien hereof (including any action, suit or proceeding to
establish or uphold the compliance of the Security Agreement Collateral with any
requirements of any Governmental Authority or law); (c) the collection of the
Secured Obligations; (d) the enforcement and administration hereof; (e) the
custody or preservation of, or the sale of, collection from, or other
realization on, any of the Security Agreement Collateral; (f) the exercise or
enforcement of any of the rights of Collateral Agent or any Secured Party
hereunder; or (g) the failure by any Pledgor to perform or observe any of the
provisions hereof.  All amounts expended by Collateral Agent and payable by any
Pledgor under this Section 7.03 shall be due upon demand therefor (together with
interest thereon accruing at the default rate during the period from and
including the date on which such funds were so expended to the date of
repayment) and shall be part of the Secured Obligations.  Each Pledgor’s
obligations under this Section 7.03 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 7.04.                                                          
Indemnity.

 

(a)                                  Indemnity.  Each Pledgor agrees to
indemnify, defend and hold harmless Collateral Agent and each of the other
Secured Parties, and the officers, directors, employees, agents and Affiliates
of Collateral Agent and each of the other Secured Parties (collectively, the
“Indemnitees”) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs (including
settlement costs), expenses or disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding,
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement or any
other Loan Document (including any misrepresentation by any Pledgor in this
Agreement or any other Loan Document) (the “Indemnified Liabilities”); provided
that, no Pledgor shall have any obligation to an Indemnitee hereunder with
respect to Indemnified Liabilities if it has been determined by a final decision
of a court of competent jurisdiction that such Indemnified Liabilities arose
from the gross negligence or willful misconduct of that Indemnitee.  To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each Pledgor shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.

 

(b)                                 Survival.  The obligations of the Pledgors
contained in this Section 7.04 shall survive the termination hereof and the
discharge of the Pledgors’ other obligations under this Agreement, any Hedging
Agreement and under the other Loan Documents.

 

(c)                                  Reimbursement.  Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Security Agreement Collateral.

 

SECTION 7.05.                                                          
Continuing Security Interest; Assignment.  This Agreement shall create a
continuing security interest in the Security Agreement Collateral and shall
(a) remain in full force and effect until the payment in full of all Secured
Obligations, (b) be

 

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binding on the Pledgors, their respective successors and assigns, and (b) inure,
together with the rights and remedies of the Lender hereunder, to the benefit of
Collateral Agent and the other Secured Parties and each of their respective
permitted 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 (b), any Secured Party may assign or otherwise transfer any Indebtedness
held by it that is 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 other Loan Documents and any Hedging Agreement to which such
Secured Party is a party.

 

SECTION 7.06.                                                          
Termination; Release.  Upon payment in full of all the Secured Obligations, or
upon any partial release of Security Agreement Collateral in accordance with the
other Loan Documents, the security interests granted hereby shall terminate
hereunder and of record, and all rights to the Security Agreement Collateral
shall revert to the Pledgors, it being understood that in the case any such
partial release, the security interests granted hereby shall terminate hereunder
and of record only with respect to such Security Agreement Collateral subject to
such partial release.  Upon any such termination, Collateral Agent shall, at the
Pledgors’ expense, execute and deliver to the Pledgors such documents, and take
such other actions, as the Pledgors reasonably request to evidence such
termination.

 

SECTION 7.07.                                                          
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 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 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 7.08.                                                          
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,
if to any Pledgor, addressed to it at the address of Borrower set forth in the
Credit Agreement, and if to 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 7.08.

 

SECTION 7.09.                                                          
Governing Law; Jurisdiction; Consent to Service of Process.

 

(a)                                  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK (INCLUDING
SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), EXCEPT TO THE EXTENT, IN ACCORDANCE WITH CHOICE-OF-LAW PRINCIPLES, THAT
THE PERFECTION OF THE SECURITY INTERESTS GRANTED HEREUNDER, OR REMEDIES
HEREUNDER IN RESPECT OF

 

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ANY ITEM OR TYPE OF SECURITY AGREEMENT COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.

 

(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 law, in such federal court.  Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement or any other Loan Document shall
affect any right that Collateral Agent or any 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 that 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 in
any court referred to in Section 7.09(b).  Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by 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 the manner provided for notices in
Section 7.08.  Nothing in this Agreement  will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.

 

SECTION 7.10.                                                           WAIVER
OF JURY TRIAL.  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,
OR THE TRANSACTIONS CONTEMPLATED HEREBY (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 7.10.

 

SECTION 7.11.                                                          
Severability of Provisions.  Any provision hereof that 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.

 

SECTION 7.12.                                                          
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

 

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executed and delivered shall be deemed to be an original, but all such
counterparts together shall constitute one and the same agreement.

 

SECTION 7.13.                                                           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 next succeeding
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 7.14.                                                           No
Credit for Payment of Taxes or Imposition.  Each 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 that may become payable under the terms thereof or
hereof, by reason of the payment of any Tax on the Security Agreement Collateral
or any part thereof.

 

SECTION 7.15.                                                           No
Claims Against Collateral Agent.  Nothing contained in this Agreement shall
constitute any consent or request by 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 Security Agreement 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 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.

 

SECTION 7.16.                                                           No
Release Under Agreements; No Liability of Collateral Agent or Secured Parties. 
Nothing set forth in this Agreement shall relieve the Pledgor from the
performance of any term, covenant, condition or agreement on the Pledgor’s part
to be performed or observed under or in respect of any of the Security Agreement
Collateral, or from any liability to any person under or in respect of any of
the Security Agreement Collateral, or shall impose any obligation on Collateral
Agent or any other Secured Party to perform or observe any such term, covenant,
condition or agreement on the Pledgor’s part to be so performed or observed, or
shall impose any liability on Collateral Agent or any other Secured Party for
any act or omission on the part of the Pledgor relating thereto or for any
breach of any Hedging Agreement, any representation or warranty on the part of
the Pledgor contained in this Agreement, Credit Agreement or the other Security
Documents, or under or in respect of the Security Agreement Collateral or made
in connection herewith or therewith.  The obligations of the Pledgor contained
in this Section 7.16 shall survive the termination hereof and the discharge of
the Pledgor’s other obligations under this Agreement, the Credit Agreement, any
Hedging Agreement and the other Security Documents.

 

SECTION 7.17.                                                          
Obligations Absolute.  Subject to Section 7.09 of the Credit Agreement, all
obligations of each Pledgor hereunder shall be absolute and unconditional
irrespective of:

 

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

 

(b)                                 any lack of validity or enforceability of
the Credit Agreement, any Hedging Agreement or any other Loan Document, or any
other agreement or instrument relating thereto;

 

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(c)                                  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 the Credit
Agreement, any other Loan Document, any Hedging Agreement or any other agreement
or instrument relating thereto;

 

(d)                                 any pledge, exchange, release or
nonperfection 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, except to the extent that any such amendment, waiver or consent
expressly relieves such Pledgor of any obligations;

 

(e)                                  any exercise, nonexercise or waiver of any
right, remedy, power or privilege under or in respect hereof, the Credit
Agreement, any Hedging Agreement or any other Loan Document except as
specifically set forth in a waiver granted pursuant to the provisions of
Section 5.03; or

 

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

 

SECTION 7.18.                                                          
Marshaling; Payments Set Aside.  Collateral Agent shall not be under any
obligation to marshal any assets in favor of any Pledgor or any other person or
against or in payment of ay or all of the Secured Obligations.

 

SECTION 7.19.                                                           Release
of Pledgors.  If any Pledgor is released from its Guarantee in accordance with
the provisions of the Credit Agreement, then Collateral Agent shall (at the
expense of Borrower) take all action necessary to release its security interest
in that portion of the Security Agreement Collateral owned by such Pledgor, and
shall release such Pledgor from its obligations hereunder (other than
obligations intended to survive the termination hereof), in each case subject to
and in accordance with Section 7.09 of the Credit Agreement.

 

[Signature Pages Follow]

 

33

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

 

 

 

HERBALIFE INTERNATIONAL, INC.,

 

a Nevada corporation, as a Pledgor

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett R. Chapman

 

 

Title: General Counsel & Secretary

 

 

 

 

 

 

 

WH CAPITAL CORPORATION,

 

a Nevada corporation, as a Pledgor

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett R. Chapman

 

 

Title: General Counsel & Secretary

 

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

 

 

HERBALIFE LTD.,

 

a Cayman Islands exempted company with limited liability,

 

as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett R. Chapman

 

 

Title: General Counsel & Secretary

 

 

 

 

 

 

 

WH INTERMEDIATE HOLDINGS LTD.,

 

a Cayman Islands exempted company with limited liability,

 

as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett R. Chapman

 

 

Title: General Counsel & Secretary

 

 

 

 

 

 

 

HBL LTD.,

 

a Cayman Islands exempted company with limited liability,

 

as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett R. Chapman

 

 

Title: General Counsel & Secretary

 

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WH LUXEMBOURG HOLDINGS S.à.R.L.,

 

a Luxembourg corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Christophe Thomann

 

 

 

Name: Christophe Thomann

 

 

Title: Manager

 

 

 

 

 

 

 

HLF LUXEMBOURG HOLDINGS S.à R.L.,

 

a Luxembourg corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Christophe Thomann

 

 

 

Name: Christophe Thomann

 

 

Title: Manager

 

 

 

 

 

 

 

WH LUXEMBOURG INTERMEDIATE HOLDINGS S.à.R.L.,

 

a Luxembourg corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Christophe Thomann

 

 

 

Name: Christophe Thomann

 

 

Title: Manager

 

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HERBALIFE INTERNATIONAL OF AMERICA, INC.,

 

a Nevada corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett Chapman

 

 

Title: Secretary

 

 

 

 

 

 

 

HERBALIFE INTERNATIONAL OF EUROPE, INC.,

 

a California corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett Chapman

 

 

Title: Secretary

 

 

 

 

 

 

 

HERBALIFE INTERNATIONAL COMMUNICATIONS, INC.,

 

a California corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett Chapman

 

 

Title: Secretary

 

 

 

 

 

 

 

HERBALIFE INTERNATIONAL DISTRIBUTION, INC.,

 

a California corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett Chapman

 

 

Title: Secretary

 

 

 

 

 

 

 

HERBALIFE TAIWAN, INC.,

 

a California corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett Chapman

 

 

Title: Secretary

 

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

 

 

HERBALIFE INTERNATIONAL (THAILAND), LTD.,

 

a California corporation, as a Pledgor

 

 

 

 

 

 

 

By:

/s/ Brett R. Chapman

 

 

 

Name: Brett Chapman

 

 

Title: Secretary

 

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MORGAN STANLEY & CO. INCORPORATED,

 

as Collateral Agent

 

 

 

 

 

 

 

By:

/s/ Eugene F. Martin

 

 

 

Name:  Eugene F. Martin

 

 

Title:   Managing Director

 

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EXHIBIT A

 

Form of

ISSUER ACKNOWLEDGMENT

 

The undersigned hereby (a) acknowledges receipt of a copy of that certain
security agreement (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Security Agreement”; capitalized terms used but
not otherwise defined herein shall have the meanings assigned to such terms in
the Security Agreement), dated as of December [  ], 2004, among Herbalife
International, Inc., a Nevada corporation (“Borrower”), the Guarantors (defined
therein), and Morgan Stanley & Co. Incorporated, as collateral agent (in such
capacity and together with any successors in such capacity, “Collateral Agent”);
(b) agrees promptly to note on its books the security interests granted to
Collateral Agent and confirmed under the Security Agreement; (c) agrees that it
will comply with Collateral Agent’s instructions with respect to the applicable
Securities Collateral without further consent by the applicable Pledgor;
(d) agrees to notify Collateral Agent upon obtaining knowledge of any interest
in favor of any person in the applicable Securities Collateral that is adverse
to the interest of Collateral Agent therein; and (e) waives any right or
requirement at any time hereafter to receive a copy of the Security Agreement in
connection with the registration of any Securities Collateral thereunder in the
name of Collateral Agent or its nominee or the exercise of voting rights by
Collateral Agent or its nominee.

 

 

[NAME OF ISSUER]

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

A-1

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