EXECUTION VERSION 

 

  

GUARANTY AND SECURITY AGREEMENT

 

Dated as of March 27, 2014 

 

by

 

JAKKS PACIFIC, INC.,
CREATIVE DESIGNS INTERNATIONAL, LTD.,
DISGUISE, INC.
JAKKS SALES CORPORATION,
KIDS ONLY, INC.
MAUI, INC.
and
MOOSE MOUNTAIN MARKETING, INC.
as Borrowers,

 

and

 

EACH OTHER GRANTOR
FROM TIME TO TIME PARTY HERETO

 

in favor of

 

GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent

 

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I DEFINED TERMS       Section 1.1. Definitions 1 Section
1.2. Certain Other Terms 4       ARTICLE II GUARANTY       Section 2.1. Guaranty
4 Section 2.2. Limitation of Guaranty 4 Section 2.3. Contribution 4 Section 2.4.
Authorization; Other Agreements 4 Section 2.5. Guaranty Absolute and
Unconditional 5 Section 2.6. Waivers 5 Section 2.7. Reliance 6       ARTICLE III
GRANT OF SECURITY INTEREST       Section 3.1. Collateral 6 Section 3.2. Grant of
Security Interest in Collateral 6       ARTICLE IV Representations and
Warranties       Section 4.1. Title; No Other Liens 7 Section 4.2. Perfection
and Priority 7 Section 4.3. Pledged Collateral 7 Section 4.4. Instruments and
Tangible Chattel Paper 8 Section 4.5. Intellectual Property 8 Section 4.6.
Commercial Tort Claims 8 Section 4.7. Specific Collateral 8 Section 4.8.
Enforcement 8 Section 4.9. Representations and Warranties of the Credit
Agreement 8       ARTICLE V Covenants       Section 5.1. Maintenance of
Perfected Security Interest; Further Documentation and Consents 9 Section 5.2.
Pledged Collateral 9 Section 5.3. Accounts 10 Section 5.4. Commodity Contracts
10 Section 5.5. Delivery of Instruments and Tangible Chattel Paper and Control
of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper 10
Section 5.6. Intellectual Property 11 Section 5.7. Notices 11 Section 5.8.
Notice of Commercial Tort Claims 12 Section 5.9. Controlled Securities Account
12

  

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ARTICLE VI Remedial Provisions       Section 6.1. Code and Other Remedies 12
Section 6.2. Receivables 15 Section 6.3. Pledged Collateral 15 Section 6.4.
Payments and Proceeds to be Turned over to and Held by Agent 16 Section 6.5.
Sale of Pledged Collateral 16 Section 6.6. Deficiency 16       ARTICLE VII Agent
      Section 7.1. Agent’s Appointment as Attorney-in-Fact 16 Section 7.2.
Authorization To File Financing Statements 17 Section 7.3. Authority of Agent 18
Section 7.4. Duty; Obligations and Liabilities 18       ARTICLE VIII
Miscellaneous       Section 8.1. Reinstatement 18 Section 8.2. Release of
Collateral 18 Section 8.3. Independent Obligations 19 Section 8.4. No Waiver by
Course of Conduct 19 Section 8.5. Amendments in Writing 19 Section 8.6.
Additional Grantors; Additional Pledged Collateral 19 Section 8.7. Notices 19
Section 8.8. Successors and Assigns 19 Section 8.9. Counterparts 19 Section
8.10. Severability 20 Section 8.11. Governing Law 20 Section 8.12. Waiver of
Jury Trial 20 Section 8.13. Waiver Under Statutes 20

 

ANNEX 1 FORM OF PLEDGE AMENDMENT ANNEX 2 FORM OF JOINDER AGREEMENT ANNEX 3 FORM
OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SCHEDULE 1 COMMERCIAL TORT CLAIMS
SCHEDULE 2 FILINGS SCHEDULE 3 PLEDGED COLLATERAL

  

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GUARANTY AND SECURITY AGREEMENT

 

GUARANTY AND SECURITY AGREEMENT, dated as of March 27, 2014 (as amended,
restated, supplemented or otherwise modified from time to time, this
“Agreement”), by JAKKS PACIFIC, INC., a Delaware corporation (“JAKKS”), CREATIVE
DESIGNS INTERNATIONAL, LTD., a Delaware corporation (“CDI”), DISGUISE, INC., a
Delaware corporation (“Disguise”), JAKKS SALES CORPORATION, a Delaware
corporation (“JAKKS Sales”), KIDS ONLY, INC., a Massachusetts corporation (“Kids
Only”), MAUI, INC., an Ohio corporation (“Maui”), MOOSE MOUNTAIN MARKETING,
INC., a New Jersey corporation (“Moose Mountain” and, together with JAKKS, CDI,
Disguise, JAKKS Sales, Kids Only and Maui, collectively, “Borrowers”), and each
of the other entities listed on the signature pages hereof or that becomes a
party hereto (collectively with Borrowers, “Grantors” and each, a “Grantor”), in
favor of GENERAL ELECTRIC CAPITAL CORPORATION, as administrative agent (in such
capacity, together with its successors and permitted assigns, “Agent”) for
Secured Parties.

 

RECITALS

 

A.           Pursuant to the Credit Agreement dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”) JAKKS, as borrower representative (“Borrower
Representative”), Borrowers, the other Credit Parties party thereto, Lenders,
L/C Issuers from time to time party thereto and Agent, Lenders and L/C Issuers
have severally agreed to extend credit to Borrowers subject to the terms and
conditions set forth therein.

 

B.           Each Grantor has agreed to guarantee the Obligations (as defined in
the Credit Agreement) of the other Guarantors.

 

C.           Each Grantor will derive substantial direct and indirect benefits
from the extensions of credit under the Credit Agreement.

 

D.           It is a condition precedent to the obligation of Lenders and L/C
Issuers to extend credit to Borrowers under the Credit Agreement that Grantors
execute and deliver this Agreement to Agent;

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and to induce Lenders, L/C
Issuers and Agent to enter into the Credit Agreement and the other Loan
Documents and to induce Lenders and L/C Issuers to extend credit to Borrowers
thereunder, each Grantor hereby agrees as follows:

 

ARTICLE I
DEFINED TERMS

 

Section 1.1. Definitions.

 

(a)          Capitalized terms used herein without definition are used as
defined in the Credit Agreement and, to the extent not defined therein, such
terms that are defined in the UCC have the meanings given to them in the UCC
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined).

 

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

 

“Applicable IP Office” means the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency within or outside
the United States.

 

 

 

  

“Cash Collateral Account” means a Deposit Account or Securities Account subject,
in each instance, to a Control Agreement, other than accounts established to
cash collateralize L/C Reimbursement Obligations.

 

“Collateral” has the meaning specified in Section 3.1 hereof.

 

“Controlled Securities Account” means each Securities Account (including all
Financial Assets held therein and all certificates and instruments, if any,
representing or evidencing such Financial Assets) that is the subject of an
effective Control Agreement.

 

“Excluded Equity” means any voting stock in excess of 65% of the outstanding
voting stock of any Foreign Subsidiary which, pursuant to the terms of the
Credit Agreement, is not required to guarantee the Obligations. The term “voting
stock” means the outstanding shares of each class of Stock entitled to vote
(within the meaning of Treasury Regulations § 1.956-2(c)(2)).

 

“Excluded Property” means, collectively, (a) Excluded Equity, (b) any permit,
license, Contractual Obligation or Property of any Grantor that, either by its
terms (or in the case of Property, the terms of any related Contractual
Obligation) or by Requirement of Law, such Grantor is prohibited from
transferring, collaterally assigning, hypothecating, pledging or otherwise
disposing of, or requires the consent of any Person (other than a Borrower or
any of its Affiliates) in connection with any such transfer, collateral
assignment, hypothecation, pledge or other disposition that has not been
obtained, but only to the extent and while such prohibition is not terminated or
rendered unenforceable or otherwise deemed ineffective by the Section 9-406,
9-407, 9-408 or 9-408 of the UCC or by any other Requirement of Law (it being
understood that Grantors make no representation hereunder with respect to the
enforceability or effectiveness of any such prohibition), (c) Property owned by
any Grantor that is subject to a purchase money Lien or a Capital Lease
permitted under the Credit Agreement if the Contractual Obligation pursuant to
which such Lien is granted (or such Capital Lease) prohibits or requires the
consent of any Person (other than a Borrower or any of its Affiliates) that has
not been obtained, (d) any “intent to use” Trademark applications for which a
statement of use has not been filed (but only until such statement is filed),
and (e) the Vehicles set forth on Schedule 1.1 (Vehicles); provided, that
“Excluded Property” shall not include any Proceeds, products, substitutions or
replacements of Excluded Property (unless such Proceeds, products, substitutions
or replacements would otherwise constitute Excluded Property).

 

“Fraudulent Transfer Laws” has the meaning set forth in Section 2.2 hereof.

 

“Guaranteed Obligations” has the meaning set forth in Section 2.1 hereof.

 

“Guarantor” means each Grantor, including each Borrower with respect to the
obligations of each other Borrower.

 

“Guaranty” means the guaranty of the Guaranteed Obligations made by the
Guarantors as set forth in this Agreement.

 

“Internet Domain Name” means all right, title and interest (and all related IP
Ancillary Rights) arising under any Requirement of Law in or relating to
Internet domain names.

 

“Material Intellectual Property” means Intellectual Property that is owned by or
licensed to a Grantor and material to the conduct of any Grantor’s business.

 

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“Pledged Certificated Stock” means all Certificated Securities and other Stock
or Stock Equivalent of any Person evidenced by a certificate, instrument or
other similar document and any distribution of property made on, in respect of
or in exchange for the foregoing from time to time. Pledged Certificated Stock
excludes any Excluded Property and any Cash Equivalents that are not held in
Controlled Securities Accounts to the extent permitted by Section 5.9 hereof.

 

“Pledged Collateral” means the Pledged Stock and the Pledged Debt Instruments.

 

“Pledged Debt Instruments” means Instruments evidencing any Indebtedness or
other obligations owed to any Grantor, and any distribution of property made on,
in respect of or in exchange for the foregoing from time to time. Pledged Debt
Instruments excludes any Cash Equivalents that are not held in Controlled
Securities Accounts to the extent permitted by Section 5.9 hereof.

 

“Pledged Investment Property” means any Investment Property and any distribution
of property made on, in respect of or in exchange for the foregoing from time to
time, other than any Pledged Stock or Pledged Debt Instruments. Pledged
Investment Property excludes any Cash Equivalents that are not held in
Controlled Securities Accounts to the extent permitted by Section 5.9 hereof.

 

“Pledged Stock” means all Pledged Certificated Stock and all Pledged
Uncertificated Stock.

 

“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any Person
that is not Pledged Certificated Stock, and any distribution of property made
on, in respect of or in exchange for the foregoing from time to time, to the
extent such interests are not certificated. Pledged Uncertificated Stock
excludes any Excluded Property and any Cash Equivalents that are not held in
Controlled Securities Accounts to the extent permitted by Section 5.9 hereof.

 

“Receivables” means all Accounts, rights to payment evidenced by Chattel Paper
or Instruments, Payment Intangibles and other rights to payments under General
Intangibles.

 

“Receivables Obligor” means an Account Debtor and any other Person obligated
under any Receivable.

 

“Software” means (a) all computer programs, including source code and object
code versions, (b) all data, databases and compilations of data, whether machine
readable or otherwise, and (c) all documentation, training materials and
configurations related to any of the foregoing.

 

“UCC” means the Uniform Commercial Code as from time to time in effect in the
State of New York; provided, that to the extent of any mandatory provisions of
any applicable Requirement of Law, any of the attachment, perfection or priority
of Agent’s or any other Secured Party’s security interest in any Collateral is
governed by the Uniform Commercial Code of a jurisdiction other than the State
of New York, “UCC” shall mean the Uniform Commercial Code as in effect in such
other jurisdiction.

 

“Vehicles” means all vehicles covered by a certificate of title law of any
state.

 

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Section 1.2. Certain Other Terms. The provisions of Section 12.03 of the Credit
Agreement shall apply to this Agreement, mutatis mutandis.

 

ARTICLE II
GUARANTY

 

Section 2.1. Guaranty. Each Guarantor hereby, jointly and severally with the
other Guarantors, absolutely, unconditionally and irrevocably guarantees, as
primary obligor and not merely as surety, the full and punctual payment when
due, whether at stated maturity or earlier, by reason of acceleration, mandatory
prepayment or otherwise in accordance with any Loan Document, of all the
Obligations whether existing on the date hereof or hereinafter incurred or
created (the “Guaranteed Obligations”). This Guaranty by each Guarantor
hereunder constitutes a guaranty of payment and not of collection.

 

Section 2.2. Limitation of Guaranty. The maximum aggregate amount for which any
Guarantor shall be liable hereunder shall not exceed the maximum amount for
which such Guarantor can be liable without rendering this Guaranty or any other
Loan Document, as it relates to such Guarantor, subject to avoidance under
applicable Requirements of Law relating to fraudulent conveyance or fraudulent
transfer (including the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act and Section 548 of title 11 of the United States Code or
any applicable provisions of comparable Requirements of Law) (collectively,
“Fraudulent Transfer Laws”). Any analysis of the provisions of this Guaranty for
purposes of Fraudulent Transfer Laws shall take into account the right of
contribution established in Section 2.3 hereof and, for purposes of such
analysis, give effect to any discharge of intercompany debt as a result of any
payment made under the Guaranty.

 

Section 2.3. Contribution. To the extent that any Guarantor shall be required
hereunder to pay any portion of any Guaranteed Obligation exceeding the greater
of (a) the amount of the value actually received by such Guarantor and its
Subsidiaries from the Loans and other Obligations and (b) the amount such
Guarantor would otherwise have paid if such Guarantor had paid the aggregate
amount of the Guaranteed Obligations (excluding the amount thereof repaid by a
Borrower that received the benefit of the funds advanced that constituted
Guaranteed Obligations) in the same proportion as such Guarantor’s net worth on
the date enforcement is sought hereunder bears to the aggregate net worth of all
the Guarantors on such date, then such Guarantor shall be reimbursed by such
other Guarantors for the amount of such excess, pro rata, based on the
respective net worth of such other Guarantors on such date.

 

Section 2.4. Authorization; Other Agreements. Secured Parties are hereby
authorized, without notice to or demand upon any Guarantor and without
discharging or otherwise affecting the obligations of any Guarantor hereunder
and without incurring any liability, from time to time, to do each of the
following:

 

(a)          (i) subject to compliance, if applicable, with Section 10.01 of the
Credit Agreement, modify, amend, supplement or otherwise change, (ii) accelerate
or otherwise change the time of payment or (iii) waive or otherwise consent to
noncompliance with, any Guaranteed Obligation or any Loan Document;

 

(b)          apply to the Guaranteed Obligations any sums by whomever paid or
however realized in such order as provided in the Loan Documents;

 

(c)          refund at any time any payment received by any Secured Party in
respect of any Guaranteed Obligation;

 

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(d)          (i) sell, exchange, enforce, waive, substitute, liquidate,
terminate, release, abandon, fail to perfect, subordinate, accept, substitute,
surrender, exchange, affect, impair or otherwise alter or release any Collateral
for any Guaranteed Obligation or any other guaranty therefor in any manner,
(ii) receive, take and hold additional Collateral to secure any Guaranteed
Obligation, (iii) add, release or substitute any Credit Party or any other
guarantor, maker or endorser of any Guaranteed Obligation or any part thereof
and (iv) otherwise deal in any manner with any Credit Party or any other
guarantor, maker or endorser of any Guaranteed Obligation or any part thereof;
and

 

(e)          settle, release, compromise, collect or otherwise liquidate the
Guaranteed Obligations.

 

Section 2.5. Guaranty Absolute and Unconditional. Each Guarantor hereby waives
and agrees not to assert any defense and hereby agrees that its obligations
under this Guaranty are irrevocable, absolute and unconditional. No Guarantor
shall be discharged as a result of or otherwise affected by any of the following
(which may not be pleaded and evidence of which may not be introduced in any
proceeding, in each case except as otherwise agreed in writing by Agent):

 

(a)          the invalidity or unenforceability of any obligation of any Credit
Party under any Loan Document or any other agreement or instrument relating
thereto (including any amendment, consent or waiver thereto), or any security
for, or other guaranty of, any Guaranteed Obligation or any part thereof, or the
lack of perfection or continuing perfection or failure of priority of any
security for the Guaranteed Obligations or any part thereof;

 

(b)          the absence of (i) any attempt to collect any Guaranteed Obligation
or any part thereof from any Credit Party or other action to enforce the same or
(ii) any action to enforce any Loan Document or any Lien thereunder;

 

(c)          the failure by any Person to take any steps to perfect and maintain
any Lien on, or to preserve any rights with respect to, any Collateral;

 

(d)          any workout, insolvency, bankruptcy proceeding, reorganization,
arrangement, liquidation or dissolution by or against any Credit Party or any
Subsidiary or any procedure, agreement, order, stipulation, election, action or
omission thereunder, including any discharge or disallowance of, or bar or stay
against collecting, any Guaranteed Obligation (or any interest thereon) in or as
a result of any such proceeding;

 

(e)          any foreclosure, whether or not through judicial sale, and any
other sale or other disposition of any Collateral or any election following the
occurrence of an Event of Default by any Secured Party to proceed separately
against any Collateral in accordance with such Secured Party’s rights under any
applicable Requirement of Law; or

 

(f)          any other defense, setoff, counterclaim or any other circumstance
that might otherwise constitute a legal or equitable discharge of any Credit
Party or any Subsidiary, in each case other than the payment in full of the
Guaranteed Obligations.

 

Section 2.6. Waivers. Each Guarantor hereby unconditionally and irrevocably
waives and agrees not to assert any claim, defense, setoff or counterclaim based
on diligence, promptness, presentment, requirements for any demand or notice
hereunder including any of the following: (a) any demand for payment or
performance and protest and notice of protest; (b) any notice of acceptance;
(c) any presentment, demand, protest or further notice or other requirements of
any kind with respect to any Guaranteed Obligation (including any accrued but
unpaid interest thereon) becoming immediately due and payable; and (d) any other
notice in respect of any Guaranteed Obligation or any part thereof, and any
defense arising by reason of any disability or other defense of any Credit
Party. Each Guarantor further unconditionally and irrevocably agrees not to
(x) enforce or otherwise exercise any right of subrogation or any right of
reimbursement or contribution or similar right against any Credit Party by
reason of any Loan Document or any payment made thereunder or (y) assert any
claim, defense, setoff or counterclaim it may have against any other Credit
Party, in each case until Final Satisfaction. No obligation of any Guarantor
hereunder shall be discharged other than by complete performance. Each Guarantor
further waives any right such Guarantor may have under any applicable
Requirement of Law to require any Secured Party to seek recourse first against
any Credit Party or any other Person, or to realize upon any Collateral for any
of the Obligations, as a condition precedent to enforcing such Guarantor’s
liability and obligations under this Guaranty.

 

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Section 2.7. Reliance. Each Guarantor hereby assumes responsibility for keeping
itself informed of the financial condition of each Credit Party and any other
guarantor, maker or endorser of any Guaranteed Obligation or any part thereof,
and of all other circumstances bearing upon the risk of nonpayment of any
Guaranteed Obligation or any part thereof that diligent inquiry would reveal,
and each Guarantor hereby agrees that no Secured Party shall have any duty to
advise any Guarantor of information known to it regarding such condition or any
such circumstances. In the event any Secured Party, in its sole discretion,
undertakes at any time or from time to time to provide any such information to
any Guarantor, such Secured Party shall be under no obligation to (a) undertake
any investigation not a part of its regular business routine, (b) disclose any
information that such Secured Party, pursuant to accepted or reasonable
commercial finance or banking practices, wishes to maintain confidential or
(c) make any future disclosures of such information or any other information to
any Guarantor.

 

ARTICLE III
GRANT OF SECURITY INTEREST

 

Section 3.1. Collateral. For purposes of this Agreement, all of the following
property owned by the Grantors is collectively referred to as the “Collateral”:

 

(a)          all Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, General Intangibles, Instruments, Inventory, Investment Property,
Letter of Credit Rights and any Supporting Obligations related to any of the
foregoing;

 

(b)          all Intellectual Property;

 

(c)          the Commercial Tort Claims described on Schedule 1 and on any
supplement thereto received by Agent pursuant to Section 5.8 hereof or
otherwise;

 

(d)          all books and Records pertaining to the other property described in
this Section;

 

(e)          all property held by any Secured Party, including all property of
every description, in the custody of or in transit to such Secured Party for any
purpose, including safekeeping, collection or pledge, for the account of such
Grantor or as to which such Grantor may have any right or power, including but
not limited to cash;

 

(f)          all other Goods (including but not limited to Fixtures) and
personal property, whether tangible or intangible and wherever located; and

 

(g)          to the extent not otherwise included, all Proceeds of the
foregoing.

 

For the avoidance of doubt, the term “Collateral” does not include any Excluded
Property.

 

Section 3.2. Grant of Security Interest in Collateral. Each Grantor, as
collateral security for the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations
(the “Secured Obligations”), hereby mortgages, pledges and hypothecates to
Agent, for the benefit of the Secured Parties, and grants to Agent, for the
benefit of the Secured Parties a Lien on and security interest in, all of its
right, title and interest in, to and under the Collateral of such Grantor,
whether now existing or hereinafter acquired; provided, that notwithstanding the
foregoing, no Lien or security interest is hereby granted on any Excluded
Property; provided further, that if and when any property shall cease to be
Excluded Property, a Lien on and security interest in such property
automatically shall be deemed granted therein.

 

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ARTICLE IV
Representations and Warranties

 

Each Grantor hereby represents and warrants to each Secured Party:

 

Section 4.1. Title; No Other Liens. Except for Permitted Liens, such Grantor
owns each item of the Collateral free and clear of any and all Liens or claims
of others. Such Grantor is the record and beneficial owner of the Collateral
pledged by it hereunder constituting Instruments or Securities.

 

Section 4.2. Perfection and Priority. The security interest granted pursuant to
this Agreement constitutes a valid and continuing perfected security interest in
favor of Agent in all Collateral, prior to all other Liens on the Collateral
except for Permitted Liens permitted pursuant Section 6.01(d), 6.01(e), 6.01(h),
6.01(i) or 6.01(k) of the Credit Agreement upon: (a) in the case of all
Collateral in which a security interest may be perfected by filing a financing
statement under the UCC, the completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other documents
referred to on such schedule, have been delivered to Agent in completed and duly
authorized form), (b) with respect to any Deposit Account, the execution of
Control Agreements, (c) in the case of all Copyrights, Trademarks and Patents
for which UCC filings are insufficient, all appropriate filings having been made
with the United States Copyright Office or the United States Patent and
Trademark Office, as applicable, (d) in the case of letter-of-credit rights that
are not Supporting Obligations of Collateral, the execution of a Contractual
Obligation granting control to Agent over such letter-of-credit rights, (e) in
the case of Electronic Chattel Paper, the completion of all steps necessary to
grant control to Agent over such Electronic Chattel Paper, (f) in the case of
Vehicles, the actions required under Section 5.1(e) hereof, (g) in the case of
all Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment
Property, the delivery thereof to Agent of such Pledged Certificated Stock,
Pledged Debt Instruments and Pledged Investment Property consisting of
Instruments and certificates, in each case properly endorsed for transfer to
Agent or in blank, (h) in the case of all Pledged Investment Property not in
certificated form, the execution of Control Agreements with respect to such
Investment Property and (i) in the case of all other Instruments and Tangible
Chattel Paper that are not Pledged Certificated Stock, Pledged Debt Instruments
or Pledged Investment Property, the delivery thereof to Agent of such
Instruments and Tangible Chattel Paper. Except as set forth in this Section, all
actions by each Grantor necessary or desirable to protect and perfect the Lien
granted hereunder on the Collateral have been duly taken.

 

Section 4.3. Pledged Collateral.

 

(a)          All Pledged Stock held by such Grantor (i) is listed on Schedule 3
and constitutes that percentage of the issued and outstanding equity of all
classes of each issuer thereof as set forth on Schedule 3, (ii) has been duly
authorized, validly issued and is fully paid and as to Stock in corporations,
non-assessable and (iii) constitutes the legal, valid and binding obligation of
the issuer thereof, enforceable in accordance with its terms.

 

(b)          As of the Closing Date, all Pledged Collateral (other than Pledged
Uncertificated Stock) and all Pledged Investment Property consisting of
Instruments and Security Certificates have been delivered to Agent in accordance
with Section 5.2(a) hereof.

 

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(c)          Upon the occurrence and during the continuance of an Event of
Default, Agent shall be entitled to exercise all of the rights of such Grantor
in any Pledged Stock held by such Grantor, and a transferee or assignee of such
Pledged Stock shall become a holder of such Pledged Stock to the same extent as
such Grantor and be entitled to participate in the management of the issuer of
such Pledged Stock and, upon the transfer of the entire interest of such
Grantor, such Grantor shall, by operation of law, cease to be a holder of such
Pledged Stock.

 

Section 4.4. Instruments and Tangible Chattel Paper. No amount payable to such
Grantor under or in connection with any Receivable is evidenced by any
Instrument (other than checks representing payments on Accounts received in the
Ordinary Course of Business and promptly deposited into a Cash Collateral
Account) or Tangible Chattel Paper that has not been delivered to Agent,
properly endorsed for transfer, to the extent delivery is required by
Section 5.5(a) hereof.

 

Section 4.5. Intellectual Property. Each Grantor and each Subsidiary owns, or is
licensed to use, all Intellectual Property necessary to conduct its business as
currently conducted except for such Intellectual Property the failure of which
to own or license would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect. On the Closing Date, all
Material Intellectual Property owned by such Grantor is valid, in full force and
effect, subsisting, unexpired and enforceable, and no Material Intellectual
Property has been abandoned. To the knowledge of each Grantor, the conduct and
operations of the businesses of each Grantor and each Subsidiary does not
infringe, misappropriate, dilute, violate or otherwise impair any Intellectual
Property owned by any other Person. Neither the consummation of the transactions
contemplated by any Loan Document shall cause a breach or default of any
material IP License or limit or impair the ownership, use, validity or
enforceability of, or any rights of such Grantor in, any Material Intellectual
Property. There are no pending (or, to the knowledge of such Grantor,
threatened) actions, investigations, suits, proceedings, audits, claims,
demands, orders or disputes challenging the ownership, use, validity,
enforceability of, or such Grantor’s rights in, (a) any Intellectual Property,
other than, in each case, as cannot reasonably be expected to affect the Loan
Documents and the transactions contemplated therein and would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect or (b) any
Material Intellectual Property of such Grantor. To such Grantor’s knowledge, no
Person has been or is infringing, misappropriating, diluting, violating or
otherwise impairing any Intellectual Property of such Grantor. Such Grantor, and
to such Grantor’s knowledge each other party thereto, is not in material breach
or default of any material IP License.

 

Section 4.6. Commercial Tort Claims. The only Commercial Tort Claims of any
Grantor existing on the date hereof (regardless of whether such Commercial Tort
Claim has been asserted, threatened or has otherwise been made known to the
obligee thereof) are those listed on Schedule 1, which sets forth such
information separately for each Grantor.

 

Section 4.7. Specific Collateral. None of the Collateral is or is Proceeds or
products of Farm Products, As-Extracted Collateral, Health Care Insurance
Receivables or timber to be cut.

 

Section 4.8. Enforcement. No Permit, notice to, consent from or filing with any
Governmental Authority or any other Person is required for the exercise or
enforcement by Agent of its rights and remedies pursuant to this Agreement,
including the transfer of any Collateral, except as may be required in
connection with the disposition of any portion of the Pledged Collateral by laws
affecting the offering and sale of Securities generally or any approvals that
may be required to be obtained from any bailees or landlords to collect the
Collateral.

 

Section 4.9. Representations and Warranties of the Credit Agreement. The
representations and warranties as to such Grantor made in Article IV
(Representations and Warranties) of the Credit Agreement are true and correct on
each date as required by Section 3.02 of the Credit Agreement.

 

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ARTICLE V
Covenants

 

Each Grantor covenants and agrees that until Final Satisfaction:

 

Section 5.1. Maintenance of Perfected Security Interest; Further Documentation
and Consents.

 

(a)          Generally. Such Grantor shall (i) not use or permit the use of any
Collateral unlawfully or in violation of any provision of any Loan Document, any
Related Agreement, any Requirement of Law or any policy of insurance covering
the Collateral and (ii) not enter into any Contractual Obligation or undertaking
restricting the right or ability of such Grantor or Agent to sell, assign,
convey or transfer any Collateral if such restriction would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect.

 

(b)          Such Grantor shall maintain the security interest created by this
Agreement as a perfected security interest having at least the priority
described in Section 4.2 hereof and shall defend such security interest and such
priority against the claims and demands of all Persons.

 

(c)          Such Grantor shall furnish to Agent from time to time statements
and schedules further identifying and describing the Collateral and such other
documents in connection with the Collateral as Agent may reasonably request, all
in reasonable detail and in form and substance satisfactory to Agent.

 

(d)          If requested by Agent, Grantor shall arrange for Agent’s first
priority security interest to be noted on the certificate of title of each
Vehicle constituting Collateral and shall file any other necessary documentation
in each jurisdiction that Agent shall deem advisable to perfect its security
interests in any Vehicle.

 

(e)          To ensure that a Lien and security interest is granted on any of
the Excluded Property set forth in clause (b) of the definition of “Excluded
Property,” such Grantor shall use commercially reasonable efforts to obtain any
required consents from any Person with respect to any permit or license or any
Contractual Obligation that requires such consent as a condition to the creation
by such Grantor of a Lien on any right, title or interest in such permit,
license or Contractual Obligation or any Stock or Stock Equivalent related
thereto.

 

Section 5.2. Pledged Collateral.

 

(a)          Delivery of Pledged Collateral. Such Grantor shall (i) deliver to
Agent, in suitable form for transfer and in form and substance satisfactory to
Agent, (A) all Pledged Certificated Stock, (B) all Pledged Debt Instruments and
(C) all certificates and instruments evidencing Pledged Investment Property and
(ii) maintain all other Pledged Investment Property in a Controlled Securities
Account.

 

(b)          Event of Default. During the continuance of an Event of Default,
Agent shall have the right, at any time in its discretion and without notice to
Grantor, to (i) transfer to or to register in its name or in the name of its
nominees any Pledged Collateral or any Pledged Investment Property and
(ii) exchange any certificate or instrument representing or evidencing any
Pledged Collateral or any Pledged Investment Property for certificates or
instruments of smaller or larger denominations.

 

(c)          Cash Distributions with respect to Pledged Collateral. Except as
provided in Article VI hereof and subject to the limitations set forth in the
Credit Agreement, such Grantor shall be entitled to receive all cash
distributions paid in respect of the Pledged Collateral.

 

9

 

 

(d)          Voting Rights. Except as provided in Article VI hereof, such
Grantor shall be entitled to exercise all voting, consent and corporate,
partnership, limited liability company and similar rights with respect to the
Pledged Collateral; provided, that no vote shall be cast, consent given or right
exercised or other action taken by such Grantor that would impair the Collateral
or be inconsistent with or result in any violation of any provision of any Loan
Document.

 

Section 5.3. Accounts.

 

(a)          Such Grantor shall not, other than in the Ordinary Course of
Business, (i) grant any extension of the time of payment of any Account,
(ii) compromise or settle any Account for less than the full amount thereof,
(iii) release, wholly or partially, any Person liable for the payment of any
Account, (iv) allow any credit or discount on any Account or (v) amend,
supplement or modify any Account in any manner that could adversely affect the
value thereof.

 

(b)          Agent shall have the right to make test verifications of the
Accounts in any manner and through any medium that it reasonably considers
advisable, and such Grantor shall furnish all such assistance and information as
Agent may reasonably require in connection therewith. At any time and from time
to time, upon Agent’s reasonable request, such Grantor shall cause independent
public accountants or others satisfactory to Agent to furnish to Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Accounts; provided, that unless an Event of Default shall be
continuing, Agent shall request no more than two such reports during any
calendar year.

 

Section 5.4. Commodity Contracts. Such Grantor shall not have any Commodity
Contract unless subject to a Control Agreement.

 

Section 5.5. Delivery of Instruments and Tangible Chattel Paper and Control of
Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper.

 

(a)          If any amount in excess of $100,000 payable to a Grantor under or
in connection with any Collateral owned by such Grantor shall be or become
evidenced by an Instrument or Tangible Chattel Paper other than such Instrument
delivered in accordance with Section 5.2(a) hereof and in the possession of
Agent, such Grantor shall mark all such Instruments and Tangible Chattel Paper
with the following legend: “This writing and the obligations evidenced or
secured hereby are subject to the security interest of General Electric Capital
Corporation, as Agent” and, at the request of Agent, shall immediately deliver
such Instrument or Tangible Chattel Paper to Agent, duly Indorsed in a manner
satisfactory to Agent.

 

(b)          Such Grantor shall not grant “control” (within the meaning of such
term under Article 9-106 of the UCC) over any Investment Property to any Person
other than Agent.

 

(c)          If such Grantor is or becomes the beneficiary of a Letter of Credit
that is (i) not a Supporting Obligations of any Collateral and (ii) in excess of
$100,000, such Grantor shall promptly, and in any event within five Business
Days after becoming a beneficiary, notify Agent thereof and enter into a
Contractual Obligation with Agent, the issuer of such Letter of Credit or any
nominated person with respect to the letter-of-credit rights under such Letter
of Credit. Such Contractual Obligation shall assign the proceeds of such
letter-of-credit rights to Agent for the purpose of granting Agent control for
the purposes of Section 9-107 of the UCC (or any similar section under any
equivalent UCC). Such Contractual Obligation shall also direct all payments
thereunder to a Cash Collateral Account. The provisions of the Contractual
Obligation shall be in form and substance reasonably satisfactory to Agent.

 

10

 

 

(d)          If any amount in excess of $100,000 payable under or in connection
with any Collateral shall be or become evidenced by Electronic Chattel Paper,
such Grantor shall take all steps necessary to grant Agent control of all such
Electronic Chattel Paper for the purposes of Section 9-105 of the UCC (or any
similar section under any equivalent UCC) and all “transferable records” as
defined in each of the Uniform Electronic Transactions Act and the Electronic
Signatures in Global and National Commerce Act.

 

Section 5.6. Intellectual Property.

 

(a)          On or before the last Business Day of each Fiscal Quarter, the
Grantors shall provide Agent notification of any change to the Perfection
Certificate with respect to Intellectual Property of any Grantor or the filing
of any applications for the registration of any Patent, Trademark or Copyright
filed by such Grantor with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency thereof and the
short-form intellectual property agreements and assignments described in this
Section and any other documents that Agent reasonably requests with respect
thereto.

 

(b)          Each Grantor shall (and shall cause all its Subsidiaries and
licensees to) (i) preserve or renew all of its registered Intellectual Property,
the non-preservation of which would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, (ii) conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect, (iii) comply
in all material respects with the terms of its IP Licenses, (iv)(A) continue to
use each owned Trademark included in the Material Intellectual Property in order
to maintain such Trademark in full force and effect with respect to each class
of Goods for which such Trademark is currently used, free from any claim of
abandonment for non-use, (B) maintain at least the same standards of quality of
products and services offered under such Trademark as are currently maintained,
(C) use such Trademark with the appropriate notice of registration and all other
notices and legends required by applicable Requirements of Law, (D) not adopt or
use any other Trademark that is confusingly similar or a colorable imitation of
such Trademark unless Agent shall obtain a perfected security interest in such
other Trademark pursuant to this Agreement and (v) not do any act or omit to do
any act whereby (w) such Trademark (or any goodwill associated therewith) may
become destroyed, invalidated, impaired or harmed in any way, (x) any Patent
included in the Material Intellectual Property may become forfeited, misused,
unenforceable, abandoned or dedicated to the public, (y) any portion of the
Copyrights included in the Material Intellectual Property may become
invalidated, otherwise impaired or fall into the public domain or (z) any Trade
Secret that is Material Intellectual Property may become publicly available or
otherwise unprotectable. Each Grantor shall take all actions, deliver all
documents and provide all information necessary or reasonably requested by Agent
to ensure any Internet Domain Name is registered.

 

(c)          Each Grantor shall notify Agent immediately if it knows, or has
reason to know, that any application or registration relating to any Material
Intellectual Property may become forfeited, misused, unenforceable, abandoned or
dedicated to the public, or of any adverse determination or development
regarding the validity or enforceability or such Grantor’s ownership of,
interest in, right to use, register, own or maintain any Material Intellectual
Property (including the institution of, or any such determination or development
in, any proceeding relating to the foregoing in any Applicable IP Office). Such
Grantor shall take all actions that are necessary or reasonably requested by
Agent to maintain and pursue each application (and to obtain the relevant
registration or recordation) and to maintain each registration and recordation
included in the Material Intellectual Property.

 

(d)          No Grantor shall knowingly do any act or omit to do any act to
infringe, misappropriate, dilute, violate or otherwise impair the Intellectual
Property of any other Person. In the event that any Material Intellectual
Property of such Grantor is or has been infringed, misappropriated, violated,
diluted or otherwise impaired by a third party, such Grantor shall take such
action as it reasonably deems appropriate under the circumstances in response
thereto, including promptly bringing suit and recovering all damages therefor.

 

11

 

 

(e)          Each Grantor shall execute and deliver to Agent in form and
substance reasonably acceptable to Agent and suitable for (i) filing in the
Applicable IP Office the short-form intellectual property security agreements in
the form attached hereto as Annex 3 for all Copyrights, Trademarks, Patents and
IP Licenses of such Grantor and (ii) recording with the appropriate Internet
domain name registrar, a duly executed form of collateral assignment for all
Internet Domain Names of such Grantor (together with appropriate supporting
documentation as may be requested by Agent).

 

Section 5.7. Notices. Such Grantor shall promptly notify Agent in writing of its
acquisition of any interest hereafter in property that is of a type where a
security interest or lien must be or may be registered, recorded or filed under,
or notice thereof given under, any federal statute or regulation.

 

Section 5.8. Notice of Commercial Tort Claims. Such Grantor agrees that, if it
shall acquire any interest in any Commercial Tort Claim, (a) such Grantor shall
immediately deliver to Agent, in each case in form and substance satisfactory to
Agent, a notice of the existence and nature of such Commercial Tort Claim and a
supplement to Schedule 1 containing a specific description of such Commercial
Tort Claim, (b) Section 3.1 hereof shall apply to such Commercial Tort Claim and
(iii) such Grantor shall execute and deliver to Agent, in each case in form and
substance reasonably satisfactory to Agent, any document, and take all other
action, deemed by Agent to be reasonably necessary or appropriate for Agent to
obtain, for the benefit of the Secured Parties, a perfected security interest
having at least the priority set forth in Section 4.2 hereof in all such
Commercial Tort Claims. Any supplement to Schedule 1 delivered pursuant to this
Section shall, after the receipt thereof by Agent, become part of Schedule 1 for
all purposes hereunder other than in respect of representations and warranties
made prior to the date of such receipt.

 

Section 5.9. Controlled Securities Account. Each Grantor shall deposit all of
its Cash Equivalents in Securities Accounts that are Controlled Securities
Accounts except for Cash Equivalents the aggregate value of which does not
exceed $50,000.

 

ARTICLE VI
Remedial Provisions

 

Section 6.1. Code and Other Remedies.

 

(a)          UCC Remedies. During the continuance of an Event of Default, Agent
may exercise, in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to any Secured Obligation, all rights and remedies of a secured party
under the UCC or any other applicable law.

 

(b)          Disposition of Collateral. Without limiting the generality of the
foregoing, Agent may, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), during the continuance of any Event of Default (personally or through
its agents or attorneys), (i) enter upon, use, operate and occupy the premises
where any Collateral is located, without any obligation to pay rent or other
compensation to any Person, through self-help, without judicial process, without
first obtaining a final judgment or giving any Grantor or any other Person
notice or opportunity for a hearing on Agent’s claim or action, (ii) to take
possession of, remove or render unusable any Collateral, (iii) collect, receive,
appropriate and realize upon any Collateral and (iv) sell, assign, convey,
transfer, grant option or options to purchase and deliver any Collateral (enter
into Contractual Obligations to do any of the foregoing), in one or more parcels
at public or private sale or sales, at any exchange, broker’s board or office of
any Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. Agent shall have the
right, upon any such public sale or sales and, to the extent permitted by the
UCC and other applicable Requirements of Law, upon any such private sale, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption of any Grantor, which right or equity is hereby waived and
released.

 

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(c)          Management of the Collateral. Each Grantor further agrees, that,
during the continuance of any Event of Default, (i) at Agent’s request, such
Grantor shall assemble the Collateral and make it available to Agent at places
that Agent shall reasonably select, whether at such Grantor’s premises or
elsewhere, (ii) without limiting the foregoing, Agent also has the right to
require that each Grantor store and keep any Collateral pending further action
by Agent and, while any such Collateral is so stored or kept, provide such
guards and maintenance services as shall be necessary to protect the same and to
preserve and maintain such Collateral in good condition, (iii) until Agent is
able to sell, assign, convey or transfer any Collateral, Agent shall have the
right to hold or use such Collateral to the extent that it deems appropriate for
the purpose of preserving the Collateral or its value or for any other purpose
deemed appropriate by Agent, and (iv) Agent may, if it so elects, seek the
appointment of a receiver or keeper to take possession of any Collateral and to
enforce any of Agent’s remedies (for the benefit of the Secured Parties), with
respect to such appointment without prior notice or hearing as to such
appointment. Agent shall not have any obligation to any Grantor to maintain or
preserve the rights of any Grantor as against third parties with respect to any
Collateral while such Collateral is in the possession of Agent.

 

(d)          Application of Proceeds. Agent shall apply the cash proceeds of any
action taken by it pursuant to this Section, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any Collateral or in any way relating to the
Collateral or the rights of Agent and any other Secured Party hereunder,
including reasonable attorneys’ fees and disbursements, to the payment in whole
or in part of the Secured Obligations, as set forth in the Credit Agreement, and
only after such application and after the payment by Agent of any other amount
required by any Requirement of Law, need Agent account for the surplus, if any,
to any Grantor.

 

(e)          Direct Obligation. Neither Agent nor any other Secured Party shall
be required to make any demand upon, or pursue or exhaust any right or remedy
against, any Grantor, any other Credit Party or any other Person with respect to
the payment of the Obligations or to pursue or exhaust any right or remedy with
respect to any Collateral therefor or any direct or indirect guaranty thereof.
All of the rights and remedies of Agent and any other Secured Party under any
Loan Document shall be cumulative, may be exercised individually or concurrently
and not exclusive of any other rights or remedies provided by any Requirement of
Law. To the extent it may lawfully do so, each Grantor absolutely and
irrevocably waives and relinquishes the benefit and advantage of, and covenants
not to assert against Agent or any other Secured Party, any valuation, stay,
appraisement, extension, redemption or similar laws and any and all rights or
defenses it may have as a surety, now or hereafter existing, arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of any Collateral shall be required by law, such notice shall
be deemed reasonable and proper if given at least 10 days before such sale or
other disposition.

 

(f)          Commercially Reasonable. To the extent that applicable Requirements
of Law impose duties on Agent to exercise remedies in a commercially reasonable
manner, each Grantor acknowledges and agrees that it is commercially reasonable
for Agent to do any of the following:

 

13

 

 

(i)          fail to incur significant costs, expenses or other Liabilities
reasonably deemed as such by Agent to prepare any Collateral for disposition or
otherwise to complete raw material or work in process into finished Goods or
other finished products for disposition;

 

(ii)         fail to obtain Permits, or other consents, for access to any
Collateral to sell or for the collection or sale of any Collateral, or, if not
required by other Requirements of Law, fail to obtain Permits or other consents
for the collection or disposition of any Collateral;

 

(iii)        fail to exercise remedies against any Receivables Obligor or other
Persons obligated on any Collateral or to remove Liens on any Collateral or to
remove any adverse claims against any Collateral;

 

(iv)        advertise dispositions of any Collateral through publications or
media of general circulation, whether or not such Collateral is of a specialized
nature, or to contact other Persons, whether or not in the same business as any
Grantor, for expressions of interest in acquiring any such Collateral;

 

(v)         exercise collection remedies against Receivables Obligors and other
Persons obligated on any Collateral, directly or through the use of collection
agencies or other collection specialists, hire one or more professional
auctioneers to assist in the disposition of any Collateral, whether or not such
Collateral is of a specialized nature, or, to the extent deemed appropriate by
Agent, obtain the services of other brokers, investment bankers, consultants and
other professionals to assist Agent in the collection or disposition of any
Collateral, or utilize Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets to dispose of any
Collateral;

 

(vi)        dispose of assets in wholesale rather than retail markets;

 

(vii)       disclaim disposition warranties, such as title, possession or quiet
enjoyment; or

 

(viii)      purchase insurance or credit enhancements to insure Agent against
risks of loss, collection or disposition of any Collateral or to provide to
Agent a guaranteed return from the collection or disposition of any Collateral.

 

Each Grantor acknowledges that the purpose of this Section is to provide a
non-exhaustive list of actions or omissions that are commercially reasonable
when exercising remedies against any Collateral and that other actions or
omissions by any Secured Party shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section. Nothing contained in
this Section shall be construed to grant any rights to any Grantor or to impose
any duties on Agent that would not have been granted or imposed by this
Agreement or by applicable Requirements of Law in the absence of this Section.

 

(g)          IP Licenses. For the purpose of enabling Agent to exercise rights
and remedies under this Section, each Grantor hereby grants to Agent, for the
benefit of the Secured Parties, an irrevocable, nonexclusive, worldwide license
(exercisable without payment of royalty or other compensation to such Grantor),
including in such license the right to sublicense, use and practice any
Intellectual Property now owned or hereafter acquired by such Grantor and access
to all media in which any of the licensed items may be recorded or stored and to
all Software and programs used for the compilation or printout thereof.

 

14

 

 

Section 6.2. Receivables.

 

(a)          At all times, any payment of Receivables and proceeds of other
Collateral received by, or on behalf of, any Grantor shall be promptly (and, in
any event, within two Business Days) deposited by such Grantor in the exact form
received in a Cash Collateral Account. Each such deposit of payments shall be
accompanied by a report identifying, in reasonable detail, the nature and source
of such payments.

 

(b)          At any time during the continuance of an Event of Default:

 

(i)          each Grantor shall, upon Agent’s request, deliver to Agent all
original and other documents evidencing, and relating to any Receivable,
including all original orders, invoices and shipping receipts and notify
Receivable Obligors thereunder that the Receivables have been collaterally
assigned to Agent and that payments in respect thereof shall be made directly to
Agent; and

 

(ii)         Agent may, without notice, at any time during the continuance of an
Event of Default, limit or terminate the authority of a Grantor to collect any
amounts due under any Receivable and, in its own name or in the name of others,
communicate with the Receivable Obligors thereunder and enforce such Grantor’s
rights against such Receivables Obligors. Anything herein to the contrary
notwithstanding, each Grantor shall remain liable under each Receivable to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. No Secured Party shall have any obligation or liability, or
be obligated in any manner to perform any obligation of any Grantor, under or
pursuant to any agreement giving rise to any Receivable.

 

Section 6.3. Pledged Collateral.

 

(a)          Voting Rights; Proxies. During the continuance of an Event of
Default, upon notice by Agent to the relevant Grantor or Grantors, Agent or its
nominee may exercise (A) any voting, consent, corporate and other right
pertaining to the Pledged Collateral and (B) any right of conversion, exchange
and subscription and any other right, privilege or option pertaining to the
Pledged Collateral as if it were the absolute owner thereof, all without
liability except to account for property actually received by it; provided, that
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing. Each Grantor hereby grants to Agent an irrevocable proxy to vote all or
any part of the Pledged Collateral and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Collateral would be
entitled, which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Collateral on the
record books of the issuer thereof) by any other person (including the issuer of
such Pledged Collateral or any officer or agent thereof) during the continuance
of an Event of Default and which proxy shall only terminate upon Final
Satisfaction. In addition, each Grantor shall promptly execute and deliver (or
cause to be executed and delivered) to Agent all such proxies, dividend payment
orders and other instruments as Agent may from time to time reasonably request.

 

(b)          Authorization of Issuers. Each Grantor hereby irrevocably
authorizes and instructs each issuer of any Pledged Collateral to, without
further action by any Grantor, (i) comply with any instruction received by such
issuer from Agent in writing that states that an Event of Default is continuing
and is otherwise in accordance with the terms of this Agreement and each Grantor
agrees that such issuer shall be fully protected from Liabilities to such
Grantor in so complying and (ii) unless otherwise expressly permitted hereby or
the Credit Agreement, pay any dividend or make any other payment with respect to
the Pledged Collateral directly to Agent.

 

15

 

 

Section 6.4. Payments and Proceeds to be Turned over to and Held by Agent.
During the continuance of an Event of Default, all payments received under and
all Proceeds of any Collateral received by any Grantor hereunder in cash or Cash
Equivalents shall be held by such Grantor in trust for Agent and the other
Secured Parties, segregated from other funds of such Grantor, and shall,
promptly upon receipt by any Grantor, be turned over to Agent in the exact form
received (with any necessary endorsement). All such payments and Proceeds and
any other payments under or Proceeds of any Collateral received by Agent in cash
or Cash Equivalents shall be held by Agent in a Cash Collateral Account. All
payments and Proceeds being held by Agent in a Cash Collateral Account (or by
such Grantor in trust for Agent) shall continue to be held as collateral
security for the Secured Obligations and shall not constitute payment thereof
until applied as provided in the Credit Agreement.

 

Section 6.5. Sale of Pledged Collateral.

 

(a)          Each Grantor recognizes that Agent may be unable to effect a public
sale of any Pledged Collateral by reason of certain prohibitions contained in
the Securities Act and applicable state or foreign securities laws or otherwise
or may determine that a public sale is impracticable, not desirable or not
commercially reasonable and, accordingly, may resort to one or more private
sales thereof to a restricted group of purchasers that shall be obliged to
agree, among other things, to acquire such Securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that such less favorable terms shall
not be the sole basis of a claim that any such private sale was not conducted in
a commercially reasonable manner. Agent shall be under no obligation to delay a
sale of any Pledged Collateral for the period of time necessary to permit the
issuer thereof to register such Securities for public sale under the Securities
Act or under applicable state securities laws even if such issuer would agree to
do so.

 

(b)          Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of any
portion of the Pledged Collateral pursuant to Section 6.1 and this Section valid
and binding and in compliance with all applicable Requirements of Law. Each
Grantor further agrees that a breach of any covenant contained herein will cause
irreparable injury to Agent and other Secured Parties, that Agent and the other
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained herein shall be
specifically enforceable against such Grantor, and such Grantor hereby waives
and agrees not to assert any defense against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement. Each Grantor waives any and all rights of
contribution or subrogation upon the sale or disposition of all or any portion
of the Pledged Collateral by Agent until Final Satisfaction.

 

Section 6.6. Deficiency. Each Grantor shall remain liable for any deficiency if
the Proceeds of any sale or other disposition of any Collateral are insufficient
to pay the Secured Obligations and the fees and disbursements of any attorney
employed by Agent or any other Secured Party to collect such deficiency.

 

ARTICLE VII
Agent

 

Section 7.1. Agent’s Appointment as Attorney-in-Fact. Each Grantor hereby
irrevocably constitutes and appoints Agent and any Related Person thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in
the name of such Grantor or in its own name, for the purpose of carrying out the
terms of the Loan Documents, to take any appropriate action and to execute any
document or instrument that may be necessary or desirable to accomplish the
purposes of the Loan Documents or to exercise any of Agent’s rights or remedies
under the Loan Documents. All powers, authorizations and agencies contained in
this Agreement are coupled with an interest and are irrevocable until Final
Satisfaction.

 

16

 

 

(a)          Without limiting the generality of the foregoing, each Grantor
hereby gives Agent and its Related Persons the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any of the
following when an Event of Default shall be continuing:

 

(i)          (A) sign and indorse any invoice, freight or express bill, bill of
lading, storage or warehouse receipt, draft against debtors, assignment,
verification, notice and other document in connection with any Collateral,
(B) commence and prosecute any suit, action or proceeding at law or in equity in
any court of competent jurisdiction to collect any Collateral and to enforce any
other right in respect of any Collateral, (C) defend any actions, suits,
proceedings, audits, claims, demands, orders or disputes brought against such
Grantor with respect to any Collateral, (D) settle, compromise or adjust any
such actions, suits, proceedings, audits, claims, demands, orders or disputes
and, in connection therewith, give such discharges or releases as Agent may deem
appropriate, (E) assign any Intellectual Property owned by such Grantor or any
IP Licenses of such Grantor constituting Collateral throughout the world on such
terms and conditions and in such manner as Agent shall in its sole discretion
determine, including the execution and filing of any document necessary to
effectuate or record such assignment and (F) generally, sell, assign, convey,
transfer or grant a Lien on, make any Contractual Obligation with respect to and
otherwise deal with, any Collateral as fully and completely as though Agent were
the absolute owner thereof for all purposes and do, at Agent’s option, at any
time or from time to time, all acts and things that Agent deems necessary to
protect, preserve or realize upon any Collateral and the Secured Parties’
security interests therein and to effect the intent of the Loan Documents, all
as fully and effectively as such Grantor might do; or

 

(ii)         perform or comply, or otherwise cause the performance or
compliance, with any Contractual Obligation of such Grantor under any Loan
Document.

 

(b)          The expenses of Agent incurred in connection with actions
undertaken as provided in this Section, together with interest thereon at the
Default Rate, from the date of payment by Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to Agent on demand.

 

(c)          Each Grantor hereby ratifies all actions taken, at any time, by
Agent or its Related Persons by virtue of this Section.

 

Section 7.2. Authorization To File Financing Statements. Each Grantor authorizes
Agent and its Related Persons, at any time and from time to time, to file or
record financing statements, amendments thereto, and other filing or recording
documents or instruments with respect to any Collateral in such form and in such
offices as Agent reasonably determines appropriate to perfect, or continue or
maintain perfection of, the security interests of Agent under this Agreement,
and such financing statements and amendments may describe the Collateral covered
thereby as “all assets of the debtor” or words of similar import. Such Grantor
also hereby ratifies its authorization for Agent to have filed any initial
financing statement or amendment thereto under the UCC (or other similar laws)
in effect in any jurisdiction if filed prior to the date hereof. Each Grantor
hereby (i) waives any right under the UCC or any other Requirement of Law to
receive notice and/or copies of any filed or recorded financing statements,
amendments thereto, continuations thereof or termination statements and
(ii) releases and excuses each Secured Party from any obligation under the UCC
or any other Requirement of Law to provide notice or a copy of any such filed or
recorded documents.

 

17

 

 

Section 7.3. Authority of Agent. Each Grantor acknowledges that the rights and
responsibilities of Agent under this Agreement and any related Collateral
Document shall, as between Agent and the other Secured Parties, be governed by
the Credit Agreement, but, as between Agent and any Grantor, Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation or entitlement to make any inquiry respecting such
authority.

 

Section 7.4. Duty; Obligations and Liabilities. Agent’s sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in its
possession shall be to deal with it in the same manner as Agent deals with
similar property for its own account. The powers conferred on Agent hereunder
are solely to protect Agent’s interest in the Collateral and shall not impose
any duty upon Agent or any other Secured Party to exercise any such powers. Each
Secured Party shall be accountable only for amounts that it receives as a result
of the exercise of such powers, and neither it nor any of its Related Persons
shall be responsible to any Grantor for any act or failure to act hereunder,
except for such Secured Party’s own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. No Secured Party and no
Related Person thereof shall be liable for failure to demand, collect or realize
upon any Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
any Grantor or any other Person or to take any other action whatsoever with
regard to any Collateral. In addition, Agent shall not be liable or responsible
for any loss or damage to any Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehousemen, carrier,
forwarding agency, consignee or other bailee if such Person has been selected by
Agent in good faith.

 

ARTICLE VIII
Miscellaneous

 

Section 8.1. Reinstatement. Each Grantor agrees that, if any payment made by any
Credit Party or other Person and applied to the Secured Obligations is at any
time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the Proceeds of any Collateral are required to be returned by any Secured Party
to such Credit Party, its estate, trustee, receiver or any other party,
including any Grantor, under any bankruptcy law, state or federal law, common
law or equitable cause, then, to the extent of such payment or repayment, any
Lien or other Collateral securing such liability shall be and remain in full
force and effect, as fully as if such payment had never been made. If, prior to
any of the foregoing, (a) any Lien or other Collateral securing such Grantor’s
liability hereunder shall have been released or terminated by virtue of the
foregoing or (b) any provision of the Guaranty hereunder shall have been
terminated, cancelled or surrendered, such Lien, other Collateral or provision
shall be reinstated in full force and effect and such prior release,
termination, cancellation or surrender shall not diminish, release, discharge,
impair or otherwise affect the obligations of any such Grantor in respect of any
Lien or other Collateral securing such obligation or the amount of such payment.

 

Section 8.2. Release of Collateral. Upon Final Satisfaction, (a) the Collateral
shall be released from the Lien created hereby and all obligations (other than
those expressly stated to survive such termination) of Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights to the Collateral shall revert to
Grantors, and (b) Agent shall deliver any Collateral in its possession pursuant
to the written instructions of Borrower Representative. If Agent shall be
directed or permitted pursuant to Section 9.09(b) of the Credit Agreement to
release any Lien or any Collateral, such Collateral shall be released from the
Lien created hereby to the extent provided under, and subject to the terms and
conditions set forth in, Section 9.09(b) of the Credit Agreement. At the time
provided in Section 9.09(a) of the Credit Agreement, a Grantor that is a
Subsidiary of Borrower shall be released from its obligations hereunder to the
extent provided in Section 9.09 of the Credit Agreement.

 

18

 

 

Section 8.3. Independent Obligations. The obligations of each Grantor hereunder
are independent of and separate from the Secured Obligations and the Guaranteed
Obligations. If any Secured Obligation or Guaranteed Obligation is not paid when
due, or upon any Event of Default, Agent may, at its sole election, proceed
directly and at once, without notice, against any Grantor and any Collateral to
collect and recover the full amount of any Secured Obligation or Guaranteed
Obligation then due, without first proceeding against any other Grantor, any
other Credit Party or any other Collateral and without first joining any other
Grantor or any other Credit Party in any proceeding.

 

Section 8.4. No Waiver by Course of Conduct. No Secured Party shall by any act
(except by a written instrument pursuant to Section 8.5 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No failure
to exercise, nor any delay in exercising, on the part of any Secured Party, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by any Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy that
such Secured Party would otherwise have on any future occasion.

 

Section 8.5. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.01 of the Credit Agreement; provided, however, that
annexes to this Agreement may be supplemented (but no existing provisions may be
modified and no Collateral may be released) through a Pledge Amendment
substantially in the form of Annex 1 (a “Pledge Amendment”) or a Joinder
Agreement substantially in the form of Annex 2 (a “Joinder”), in each case duly
executed by Agent and each Grantor directly affected thereby.

 

Section 8.6. Additional Grantors; Additional Pledged Collateral.

 

(a)          Joinder Agreements. If required pursuant to Section 5.11(c) of the
Credit Agreement, each Borrower shall cause each of its Subsidiaries that is not
a Grantor to become a Grantor hereunder, such Subsidiary shall execute and
deliver to Agent a Joinder and shall thereafter for all purposes be a party
hereto and have the same rights, benefits and obligations as a Grantor party
hereto on the Closing Date.

 

(b)          Pledge Amendments. To the extent any Pledged Collateral has not
been delivered as of the Closing Date, such Grantor shall deliver a Pledge
Amendment duly executed by Grantor. Such Grantor authorizes Agent to attach each
Pledge Amendment to this Agreement.

 

Section 8.7. Notices. All notices, requests and demands to or upon Agent or any
Grantor hereunder shall be effected in the manner provided for in Section 10.02
of the Credit Agreement; provided, that any such notice, request or demand to or
upon any Grantor shall be addressed to Borrower Representative’s notice address
set forth in Section 10.02 of the Credit Agreement.

 

Section 8.8. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of each
Secured Party and their successors and assigns; provided, however, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of Agent.

 

Section 8.9. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
signature page of this Agreement by facsimile transmission or by Electronic
Transmission shall be as effective as delivery of a manually executed
counterpart hereof.

 

19

 

 

Section 8.10. Severability. Any provision of this Agreement being held illegal,
invalid or unenforceable in any jurisdiction shall not affect any part of such
provision not held illegal, invalid or unenforceable, any other provision of
this Agreement or any part of such provision in any other jurisdiction.

 

Section 8.11. Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.

 

Section 8.12. Waiver of Jury Trial. THE PARTIES HERETO, TO THE EXTENT PERMITTED
BY LAW, WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY OR THEREBY. THIS
WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE. EACH GRANTOR AGREES TO BE BOUND BY THE PROVISIONS OF
SECTIONS 10.18(b) AND 10.18(c) OF THE CREDIT AGREEMENT.

 

Section 8.13. Waiver Under Statutes. Each Guarantor makes the following
additional waivers:

 

(a)          EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES THAT SUCH GUARANTOR
MAY HAVE BECAUSE THE GUARANTEED OBLIGATIONS UNDER THE LOAN DOCUMENTS ARE SECURED
BY REAL PROPERTY. THIS MEANS, AMONG OTHER THINGS: (i) AGENT MAY COLLECT FROM
SUCH GUARANTOR WITHOUT FIRST FORECLOSING ON ANY REAL OR PERSONAL PROPERTY
COLLATERAL PLEDGED BY A BORROWER; (II) IF AGENT FORECLOSES ON ANY REAL PROPERTY
COLLATERAL PLEDGED BY A BORROWER: (A) THE AMOUNT OF THE OBLIGATIONS MAY BE
REDUCED ONLY BY THE PRICE FOR WHICH THAT COLLATERAL IS SOLD AT THE FORECLOSURE
SALE, EVEN IF THE COLLATERAL IS WORTH MORE THAN THE SALE PRICE; (B) AGENT MAY
COLLECT FROM SUCH GUARANTOR EVEN IF AGENT, BY FORECLOSING ON THE REAL PROPERTY
COLLATERAL, HAS DESTROYED ANY RIGHT SUCH GUARANTOR MAY HAVE TO COLLECT FROM SUCH
BORROWER. THIS IS AN UNCONDITIONAL AND IRREVOCABLE WAIVER OF ANY RIGHTS AND
DEFENSES SUCH GUARANTOR MAY HAVE BECAUSE THE BORROWERS' OBLIGATIONS UNDER THE
LOAN DOCUMENTS ARE SECURED BY REAL PROPERTY. THESE RIGHTS AND DEFENSES INCLUDE,
BUT ARE NOT LIMITED TO, ANY RIGHTS OR DEFENSES BASED UPON SECTION 580a, 580b,
580d, OR 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE (THE “CCP”).

 

(b)          IN ADDITION, EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING
OUT OF AN ELECTION OF REMEDIES BY AGENT, EVEN THOUGH THAT ELECTION OF REMEDIES,
SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR A GUARANTEED
OBLIGATION, HAS DESTROYED SUCH GUARANTOR’S RIGHTS BY THE OPERATION OF SECTION
580d OF THE CCP OR OTHERWISE.

 

[signature pages follows]

 

20

 

 

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

 

“Grantors”

 

CREATIVE DESIGNS INTERNATIONAL, LTD.

DISGUISE, INC.

JAKKS PACIFIC, INC.

JAKKS SALES CORPORATION

KIDS ONLY, INC.

MAUI, INC.

MOOSE MOUNTAIN MARKETING INC.

 

By:       Joel M. Bennett     Executive Vice President and     Chief Financial
Officer  

 

ACCEPTED AND AGREED
as of the date first above written:

 

“Agent”

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

By:       Eric J. Watson     Duly Authorized Signatory  

 

 

Guaranty and Security Agreement

 

21

 

 

ANNEX 1
TO
GUARANTY AND SECURITY AGREEMENT

 

FORM OF PLEDGE AMENDMENT

 

THIS PLEDGE AMENDMENT, dated as of ________ ___, ____, is delivered pursuant to
Section 8.6 of the Guaranty and Security Agreement, dated as of March 27, 2014,
by JAKKS Pacific, Inc., a Delaware corporation (“JAKKS”), Creative Designs
International, Ltd., a Delaware corporation (“CDI”), Disguise, Inc., a Delaware
corporation (“Disguise”), JAKKS Sales Corporation, a Delaware corporation
(“JAKKS Sales”), Kids Only, Inc., a Massachusetts corporation (“Kids Only”),
Maui, Inc., an Ohio corporation (“Maui”), Moose Mountain Marketing, Inc., a New
Jersey corporation (“Moose Mountain” and, together with JAKKS, Creative,
Disguise, JAKKS Sales, Kids Only and Maui, “Borrowers”), and the other Persons
from time to time party thereto as Grantors in favor of General Electric Capital
Corporation, as Agent for the Secured Parties referred to therein (as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time, the “Guaranty and Security Agreement”). Capitalized terms used herein
without definition are used as defined in the Guaranty and Security Agreement.

 

The undersigned hereby agrees that this Pledge Amendment may be attached to the
Guaranty and Security Agreement and that the Pledged Collateral listed on
Annex 1-A to this Pledge Amendment shall be and become part of the Collateral
referred to in the Guaranty and Security Agreement and shall secure all
Obligations of the undersigned.

 

The undersigned hereby represents and warrants that each of the representations
and warranties contained in Sections 4.1, 4.2, 4.3 and 4.8 of the Guaranty and
Security Agreement is true and correct and as of the date hereof as if made on
and as of such date.

 

  [GRANTOR]         By     Name     Title  

 

1-1

 

 

ANNEX 1-A

 

PLEDGED STOCK

  

Issuer Class Certificate No(s). Par Value No. of Shares,
Units or
Interests                                                            

 

PLEDGED DEBT INSTRUMENTS

  

Issuer Description of Debt Certificate
No(s). Final
Maturity Principal
Amount                                        

  

1-2

 

 

ACCEPTED AND AGREED
as of the date first above written:

 

“Agent”

 

GENERAL ELECTRIC CAPITAL CORPORATION         By:       Eric J. Watson     Duly
Authorized Signatory  

 

 

1-3

 

 

ANNEX 2
TO
GUARANTY AND SECURITY AGREEMENT

 

FORM OF JOINDER AGREEMENT

 

THIS JOINDER AGREEMENT, dated as of ________ ___, ____, is delivered pursuant to
Section 8.6 of the Guaranty and Security Agreement, dated as of March 27, 2014,
by JAKKS Pacific, Inc., a Delaware corporation (“JAKKS”), Creative Designs
International, Ltd., a Delaware corporation (“Creative”), Disguise, Inc., a
Delaware corporation (“Disguise”), JAKKS Sales Corporation, a Delaware
corporation (“JAKKS Sales”), Kids Only, Inc., a Massachusetts corporation (“Kids
Only”), Maui, Inc., an Ohio corporation (“Maui”), Moose Mountain Marketing,
Inc., a New Jersey corporation (“Moose Mountain” and, together with JAKKS,
Creative, Disguise, JAKKS Sales, Kids Only and Maui, “Borrowers”), and the other
Persons from time to time party thereto as Grantors in favor of General Electric
Capital Corporation, as Agent for the Secured Parties referred to therein (as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time, the “Guaranty and Security Agreement”). Capitalized terms used
herein without definition are used as defined in the Guaranty and Security
Agreement.

 

By executing and delivering this Joinder Agreement, the undersigned, as provided
in Section 8.6 of the Guaranty and Security Agreement, hereby becomes a party to
the Guaranty and Security Agreement as a Grantor thereunder with the same force
and effect as if originally named as a Grantor therein and, without limiting the
generality of the foregoing, as collateral security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, hereby mortgages, pledges and
hypothecates to Agent, for the benefit of the Secured Parties, and grants to
Agent, for the benefit of the Secured Parties, a lien on and security interest
in, all of its right, title and interest in, to and under the Collateral of the
undersigned and expressly assumes all obligations and liabilities of a Grantor
thereunder. The undersigned hereby agrees to be bound as a Grantor for the
purposes of the Guaranty and Security Agreement.

 

The information set forth in Annex 1-A is hereby added to the information set
forth in Schedules 1, 2, 3 to the Guaranty and Security Agreement, Schedule 4.24
to the Credit Agreement and the Perfection Certificate. By acknowledging and
agreeing to this Joinder Agreement, the undersigned hereby agree that this
Joinder Agreement may be attached to the Guaranty and Security Agreement and
that the Collateral listed on Annex 1-A to this Joinder Amendment shall be and
become part of the Collateral referred to in the Guaranty and Security Agreement
and shall secure all Secured Obligations of the undersigned.

 

The undersigned hereby represents and warrants that each of the representations
and warranties contained in Article IV of the Guaranty and Security Agreement
applicable to it is true and correct on and as the date hereof as if made on and
as of such date.

 

[signature page follows]

 

2-1

 

  

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

 

  [ADDITIONAL GRANTOR]         By     Name:     Title:  

 

ACCEPTED AND AGREED   as of the date first above written:      

[GRANTOR PLEDGING ADDITIONAL

COLLATERAL]

        By     Name:     Title:           “Agent”           GENERAL ELECTRIC
CAPITAL CORPORATION         By:       Eric J. Watson     Duly Authorized
Signatory  

 

 

2-2

 

 

ANNEX 3
TO
GUARANTY AND SECURITY AGREEMENT

 

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

THIS [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of ________
___. ____, is made by each of the entities listed on the signature pages hereof
(each a “Grantor” and, collectively, the “Grantors”), in favor of General
Electric Capital Corporation (“GE Capital”), as administrative agent (in such
capacity, together with its successors and permitted assigns, “Agent”) for the
Secured Parties (as defined in the Credit Agreement referred to below).

 

RECITALS

 

A.           Pursuant to the Credit Agreement, dated as of March 27, 2014 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), by and among Borrowers, Borrower Representative, the other
Credit Parties, Lenders and L/C Issuers from time to time party thereto and GE
Capital, as Agent, Lenders and L/C Issuers have severally agreed to make
extensions of credit to Borrower upon the terms and subject to the conditions
set forth therein.

 

B.           Each Grantor has agreed, pursuant to a Guaranty and Security
Agreement of even date herewith in favor of Agent (as amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty and Security
Agreement”), to guarantee the Obligations (as defined in the Credit Agreement)
of each Borrower.

 

C.           All of Grantors are party to the Guaranty and Security Agreement
pursuant to which Grantors are required to execute and deliver this [Copyright]
[Patent] [Trademark] Security Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and to induce Lenders, L/C
Issuers and Agent to enter into the Credit Agreement and to induce Lenders and
L/C Issuers to make their respective extensions of credit to Borrowers
thereunder, each Grantor hereby agrees with Agent as follows:

 

Section 1.          Defined Terms. Capitalized terms used herein without
definition are used as defined in the Guaranty and Security Agreement.

 

Section 2.          Grant of Security Interest in [Copyright] [Trademark]
[Patent] Collateral. Each Grantor, as collateral security for the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations of such Grantor, hereby
mortgages, pledges and hypothecates to Agent for the benefit of the Secured
Parties, and grants to Agent for the benefit of the Secured Parties a Lien on
and security interest in, all of its right, title and interest in, to and under
the following Collateral of such Grantor (the “[Copyright] [Patent] [Trademark]
Collateral”):

 

(a)          [all of its Copyrights and all IP Licenses providing for the grant
by such Grantor of any right under any Copyright, including, without limitation,
those referred to on Schedule 1 hereto;

 

(b)          all renewals, reversions and extensions of the foregoing; and

 

(c)          all income, royalties, proceeds and Liabilities at any time due or
payable or asserted under and with respect to any of the foregoing, including,
without limitation, all rights to sue and recover at law or in equity for any
past, present and future infringement, misappropriation, dilution, violation or
other impairment thereof.]

 

3-1

 

 

or

 

(a)          [all of its Patents and all IP Licenses providing for the grant by
such Grantor of any right under any Patent, including, without limitation, those
referred to on Schedule 1 hereto;

 

(b)          all reissues, reexaminations, continuations, continuations-in-part,
divisionals, renewals and extensions of the foregoing; and

 

(c)          all income, royalties, proceeds and Liabilities at any time due or
payable or asserted under and with respect to any of the foregoing, including,
without limitation, all rights to sue and recover at law or in equity for any
past, present and future infringement, misappropriation, dilution, violation or
other impairment thereof.]

 

or

 

(a)          [all of its Trademarks and all IP Licenses providing for the grant
by such Grantor of any right under any Trademark, including, without limitation,
those referred to on Schedule 1 hereto;

 

(b)          all renewals and extensions of the foregoing;

 

(c)          all goodwill of the business connected with the use of, and
symbolized by, each such Trademark; and

 

(d)          all income, royalties, proceeds and Liabilities at any time due or
payable or asserted under and with respect to any of the foregoing, including,
without limitation, all rights to sue and recover at law or in equity for any
past, present and future infringement, misappropriation, dilution, violation or
other impairment thereof.]

 

Section 3.          Guaranty and Security Agreement. The security interest
granted pursuant to this [Copyright] [Patent] [Trademark] Security Agreement is
granted in conjunction with the security interest granted to Agent pursuant to
the Guaranty and Security Agreement and each Grantor hereby acknowledges and
agrees that the rights and remedies of Agent with respect to the security
interest in the [Copyright] [Patent] [Trademark] Collateral made and granted
hereby are more fully set forth in the Guaranty and Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.

 

Section 4.          Grantor Remains Liable. Each Grantor hereby agrees that,
anything herein to the contrary notwithstanding, such Grantor shall assume full
and complete responsibility for the prosecution, defense, enforcement or any
other necessary or desirable actions in connection with their [Copyrights]
[Patents] [Trademarks] and IP Licenses subject to a security interest hereunder.

 

Section 5.          Counterparts. This [Copyright] [Patent] [Trademark] Security
Agreement may be executed in any number of counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Signature pages may be detached from multiple separate counterparts
and attached to a single counterpart.

 

3-2

 

  

Section 6.          Governing Law. This [Copyright] [Patent] [Trademark]
Security Agreement and the rights and obligations of the parties hereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York.

 

[signature page follows]

 

3-3

 

 

IN WITNESS WHEREOF, Grantor has caused this [Copyright] [Patent] [Trademark]
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.

 

  [GRANTOR]         By     Name:     Title:  

 

ACCEPTED AND AGREED   as of the date first above written:       “Agent”      
GENERAL ELECTRIC CAPITAL CORPORATION         By:       Eric J. Watson     Duly
Authorized Signatory  

 

3-4

 

  

SCHEDULE I
TO
[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT

 

[Copyright] [Patent] [Trademark] Registrations

 

1.          REGISTERED [COPYRIGHTS] [PATENTS] [TRADEMARKS]

 

[Include Registration Number and Date]

 

2.          [COPYRIGHT] [PATENT] [TRADEMARK] APPLICATIONS

 

[Include Application Number and Date]

 

3.          IP LICENSES TO THIRD PARTIES

 

[Include complete legal description of agreement (name of agreement, parties and
date)]

 

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