Exhibit 10.2

 

EXECUTION COPY

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (as the same may be amended, restated,
supplemented or otherwise modified from time to time, this “Security Agreement”)
is entered into as of September 26, 2007 by and among PRICELINE.COM
INCORPORATED, a Delaware corporation (the “Borrower”) and the other Subsidiaries
of the Borrower listed on the signature pages hereto (together with the
Borrower, the “Initial Grantors,” and together with any additional Domestic
Subsidiaries, whether now existing or hereafter formed which become parties to
this Security Agreement by executing a Supplement hereto in substantially the
form of Annex I, the “Grantors”), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
a national banking association, in its capacity as administrative agent (the
“Administrative Agent”) for the lenders party to the Credit Agreement referred
to below (collectively, the “Lenders”).

PRELIMINARY STATEMENT

The Borrower, the Administrative Agent and the Lenders are entering into a
Credit Agreement dated as of the date hereof (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”).  The Grantors are entering into this Security Agreement in order to
induce the Lenders to enter into and extend credit to the Borrower under the
Credit Agreement.

ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the Holders
of Secured Obligations, hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1.          TERMS DEFINED IN THE CREDIT AGREEMENT.  ALL CAPITALIZED TERMS USED
HEREIN AND NOT OTHERWISE DEFINED SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS
IN THE CREDIT AGREEMENT.

1.2.          TERMS DEFINED IN NEW YORK UCC.  TERMS DEFINED IN THE NEW YORK UCC
WHICH ARE NOT OTHERWISE DEFINED IN THIS SECURITY AGREEMENT ARE USED HEREIN AS
DEFINED IN THE NEW YORK UCC.

1.3.          DEFINITIONS OF CERTAIN TERMS USED HEREIN.  AS USED IN THIS
SECURITY AGREEMENT, IN ADDITION TO THE TERMS DEFINED IN THE PRELIMINARY
STATEMENT, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

“Accounts” shall have the meaning set forth in Article 9 of the New York UCC.

“Article” means a numbered article of this Security Agreement, unless another
document is specifically referenced.

“Chattel Paper” shall have the meaning set forth in Article 9 of the New York
UCC.

 

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“Collateral” all Accounts, Chattel Paper, Commercial Tort Claims, Copyrights,
Deposit Accounts, Documents, Equipment, Farm Products, Fixtures, General
Intangibles, Goods, Instruments, Inventory, Investment Property, letters of
credit, Letter-of-Credit Rights, Licenses, Patents, Pledged Deposits, Supporting
Obligations, Trademarks and Other Collateral, wherever located, in which any
Grantor now has or hereafter acquires any right or interest, and the proceeds
(including Stock Rights), insurance proceeds and products thereof, together with
all books and records, customer lists, credit files, computer files, programs,
printouts and other computer materials and records related thereto; provided
that, notwithstanding the foregoing, Collateral shall expressly exclude the
Excluded Collateral.

“Commercial Tort Claims” means those certain currently existing commercial tort
claims, as defined in the New York UCC of any Grantor, including each commercial
tort claim specifically described in Exhibit “F”.

“Control” shall have the meaning set forth in Article 8 or, if applicable, in
Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the New York UCC.

“Copyrights” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following:  (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all extensions of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.

“Default” means an event described in Section 5.1 hereof.

“Deposit Accounts” shall have the meaning set forth in Article 9 of the New York
UCC.

“Documents” shall have the meaning set forth in Article 9 of the New York UCC.

“Equipment” shall have the meaning set forth in Article 9 of the New York UCC.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.

“Excluded Collateral” means (i) any fee owned real property with a book value of
less than $5,000,000 and all leasehold interests; (ii) motor vehicles and other
assets subject to certificates of title; (iii) pledges and security interests
prohibited by law and agreements permitted under the Loan Documents (including
liens, leases and licenses permitted under the Loan Documents); (iv) assets
specifically requiring perfection through control agreements (e.g., deposit
accounts and securities accounts); (v) assets to the extent a security interest
in such assets would result in material adverse tax consequences; (vi) those
assets as to which the Administrative Agent in consultation with the Borrower
reasonably determines that the burden or cost of obtaining such a security
interest, pledge or perfection thereof outweighs the benefit to the Lenders of
the security to be afforded thereby and (vii) the outstanding voting stock of
any Foreign Subsidiary to the extent a pledge thereof would cause a Deemed
Dividend Problem.

“Farm Products” shall have the meaning set forth in Article 9 of the New York
UCC.

“Fixtures” shall have the meaning set forth in Article 9 of the New York UCC.

 

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“General Intangibles” shall have the meaning set forth in Article 9 of the New
York UCC and, in any event, includes payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill (including the goodwill associated with any
Trademark), Patents, Trademarks, Copyrights, URLs and domain names, Industrial
Designs, other industrial or Intellectual Property or rights therein or
applications therefor, whether under license or otherwise, programs, programming
materials, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, including Intellectual Property
Licenses, infringement claims, computer programs, information contained on
computer disks or tapes, software, literature, reports, catalogs, pension plan
refunds, pension plan refund claims, insurance premium rebates, tax refunds, and
tax refund claims, interests in a partnership or limited liability company which
do not constitute a security under Article 8 of the Code, and any other personal
property other than Commercial Tort Claims, money, Accounts, Chattel Paper,
Deposit Accounts, Goods, Investment Related Property, negotiable Collateral, and
oil, gas, or other minerals before extraction.

“Goods” shall have the meaning set forth in Article 9 of the New York UCC.

“Industrial Designs” means (i) registered industrial designs and industrial
design applications, and also includes registered industrial designs and
industrial design applications listed on Exhibit “B”, (ii) all renewals,
divisions and any industrial design registrations issuing thereon and any and
all foreign applications corresponding thereto, (iii) all income, royalties,
damages and payments now and hereafter due or payable under and with respect
thereto, including payments under all licenses entered into in connection
therewith and damages and payments for past or future infringements thereof,
(iv) the right to sue for past, present and future infringements thereof, and
(v) all of each Grantor’s rights corresponding thereto throughout the world.

“Instruments” shall have the meaning set forth in Article 9 of the New York UCC.

“Intellectual Property” means all Patents, Trademarks, Copyrights and any other
intellectual property.

“Inventory” shall have the meaning set forth in Article 9 of the New York UCC.

“Investment Property” shall have the meaning set forth in Article 9 of the New
York UCC.

“Letter of Credit Rights” shall have the meaning set forth in Article 9 of the
New York UCC.

“Licenses” means, with respect to any Person, all of such Person’s right, title,
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to sue for past,
present, and future breaches thereof.

“New York UCC” means the New York Uniform Commercial Code as in effect from time
to time.

“Other Collateral” means any property of the Grantors, not included within the
defined terms Accounts, Chattel Paper, Commercial Tort Claims, Copyrights,
Deposit Accounts, Documents, Equipment, Fixtures, Farm Products, General
Intangibles, Goods, Instruments, Inventory, Investment Property,
Letter-of-Credit Rights, Licenses, Patents, Pledged Deposits, Supporting
Obligations and Trademarks, including, without limitation, all cash on hand,
letters of credit, Stock Rights or any other

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deposits (general or special, time or demand, provisional or final) with any
bank or other financial institution, it being intended that the Collateral
include all real and personal property of the Grantors.

“Patents” means, with respect to any Person, all of such Person’s right, title,
and interest in and to: (a) any and all patents and patent applications; (b) all
inventions and improvements described and claimed therein; (c) all reissues,
divisions, continuations, extensions, and continuations-in-part thereof; (d) all
income, royalties, damages, claims, and payments now or hereafter due or payable
under and with respect thereto, including, without limitation, damages and
payments for past and future infringements thereof; (e) all rights to sue for
past, present, and future infringements thereof; and (f) all rights
corresponding to any of the foregoing throughout the world.

“Pledged Deposits” means all time deposits of money (other than Deposit Accounts
and Instruments), whether or not evidenced by certificates, which a Grantor may
from time to time designate as pledged to the Administrative Agent or to any
Holder of Secured Obligations as security for any Secured Obligations, and all
rights to receive interest on said deposits.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property,
Instruments or Pledged Deposits, and any other rights or claims to receive money
which are General Intangibles or which are otherwise included as Collateral.

“Section” means a numbered section of this Security Agreement, unless another
document is specifically referenced.

“Security” has the meaning set forth in Article 8 of the New York UCC.

“Stock Rights” means any securities, dividends or other distributions and any
other right or property which any Grantor shall receive or shall become entitled
to receive for any reason whatsoever with respect to, in substitution for or in
exchange for any securities or other ownership interests in a corporation,
partnership, joint venture or limited liability company constituting Collateral
and any securities, any right to receive securities and any right to receive
earnings, in which any Grantor now has or hereafter acquires any right, issued
by an issuer of such securities.

“Supporting Obligation” shall have the meaning set forth in Article 9 of the New
York UCC.

“Trademarks” means, with respect to any Person, all of such Person’s right,
title, and interest in and to the following:  (a) all trademarks (including
service marks), trade names, trade dress, and trade styles and the registrations
and applications for registration thereof and the goodwill of the business
symbolized by the foregoing; (b) all licenses of the foregoing, whether as
licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.

The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

 

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ARTICLE II

GRANT OF SECURITY INTEREST

Each of the Grantors hereby pledges, assigns and grants to the Administrative
Agent, on behalf of and for the ratable benefit of the Holders of Secured
Obligations and (to the extent specifically provided herein) their Affiliates, a
security interest in all of such Grantor’s right, title and interest, whether
now owned or hereafter acquired, in and to the Collateral to secure the prompt
and complete payment and performance of the Secured Obligations.  For the
avoidance of doubt, the grant of a security interest herein shall not be deemed
to be an assignment of intellectual property rights owned by the Grantors.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each of the Initial Grantors represents and warrants to the Administrative Agent
and the Holders of Secured Obligations, and each Grantor that becomes a party to
this Security Agreement pursuant to the execution of a Security Agreement
Supplement in substantially the form of Annex I represents and warrants (after
giving effect to supplements to each of the Exhibits hereto with respect to such
subsequent Grantor as attached to such Security Agreement Supplement), that:

3.1.          TITLE, AUTHORIZATION, VALIDITY AND ENFORCEABILITY.  SUCH GRANTOR
HAS GOOD AND VALID RIGHTS IN OR THE POWER TO TRANSFER THE COLLATERAL OWNED BY IT
AND TITLE TO THE COLLATERAL WITH RESPECT TO WHICH IT HAS PURPORTED TO GRANT A
SECURITY INTEREST HEREUNDER, FREE AND CLEAR OF ALL LIENS EXCEPT FOR LIENS
PERMITTED UNDER SECTION 4.1.3 HEREOF, AND HAS FULL CORPORATE, LIMITED LIABILITY
COMPANY OR PARTNERSHIP, AS APPLICABLE, POWER AND AUTHORITY TO GRANT TO THE
ADMINISTRATIVE AGENT THE SECURITY INTEREST IN SUCH COLLATERAL PURSUANT HERETO. 
THE EXECUTION AND DELIVERY BY SUCH GRANTOR OF THIS SECURITY AGREEMENT HAVE BEEN
DULY AUTHORIZED BY PROPER CORPORATE, LIMITED LIABILITY COMPANY OR PARTNERSHIP,
AS APPLICABLE, PROCEEDINGS, AND THIS SECURITY AGREEMENT CONSTITUTES A LEGAL,
VALID AND BINDING OBLIGATION OF SUCH GRANTOR AND CREATES A SECURITY INTEREST
WHICH IS ENFORCEABLE AGAINST SUCH GRANTOR IN ALL COLLATERAL IT NOW OWNS OR
HEREAFTER ACQUIRES, EXCEPT AS ENFORCEABILITY MAY BE LIMITED BY (I) BANKRUPTCY,
INSOLVENCY, FRAUDULENT CONVEYANCE, REORGANIZATION OR SIMILAR LAWS RELATING TO OR
AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY, (II) GENERAL EQUITABLE
PRINCIPLES (WHETHER CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW), AND (III)
REQUIREMENTS OF REASONABLENESS, GOOD FAITH AND FAIR DEALING.  WHEN FINANCING
STATEMENTS HAVE BEEN FILED IN THE APPROPRIATE OFFICES AGAINST SUCH GRANTOR IN
THE LOCATIONS LISTED ON EXHIBIT “E”, THE ADMINISTRATIVE AGENT WILL HAVE A FULLY
PERFECTED FIRST PRIORITY SECURITY INTEREST IN THE COLLATERAL OWNED BY SUCH
GRANTOR IN WHICH A SECURITY INTEREST MAY BE PERFECTED BY FILING OF A FINANCING
STATEMENT UNDER THE UCC, SUBJECT ONLY TO LIENS PERMITTED UNDER SECTION 4.1.3
HEREOF.

3.2.          CONFLICTING LAWS AND CONTRACTS.  NEITHER THE EXECUTION AND
DELIVERY BY SUCH GRANTOR OF THIS SECURITY AGREEMENT, THE CREATION AND PERFECTION
OF THE SECURITY INTEREST IN THE COLLATERAL GRANTED HEREUNDER, NOR COMPLIANCE
WITH THE TERMS AND PROVISIONS HEREOF WILL VIOLATE (I) ANY LAW, RULE, REGULATION,
ORDER, WRIT, JUDGMENT, INJUNCTION, DECREE OR AWARD BINDING ON SUCH GRANTOR, OR
(II) SUCH GRANTOR’S CHARTER, ARTICLES, PARTNERSHIP AGREEMENT OR BY-LAWS (OR
SIMILAR CONSTITUTIVE DOCUMENTS), OR (III) THE PROVISIONS OF ANY INDENTURE,
INSTRUMENT OR AGREEMENT TO WHICH SUCH GRANTOR IS A PARTY OR IS SUBJECT, OR BY
WHICH IT, OR ITS PROPERTY MAY BE BOUND OR AFFECTED, OR CONFLICT WITH OR
CONSTITUTE A DEFAULT THEREUNDER, OR RESULT IN OR REQUIRE THE CREATION OR
IMPOSITION OF ANY LIEN IN, OF OR ON THE PROPERTY OF SUCH GRANTOR PURSUANT TO THE
TERMS OF ANY SUCH INDENTURE, INSTRUMENT OR AGREEMENT (OTHER THAN ANY LIEN OF THE
ADMINISTRATIVE AGENT ON BEHALF OF THE HOLDERS OF SECURED OBLIGATIONS).

 

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3.3.          PRINCIPAL LOCATION.  SUCH GRANTOR’S MAILING ADDRESS AND THE
LOCATION OF ITS PLACE OF BUSINESS (IF IT HAS ONLY ONE) OR ITS CHIEF EXECUTIVE
OFFICE (IF IT HAS MORE THAN ONE PLACE OF BUSINESS), IS DISCLOSED IN EXHIBIT “A”.

3.4.          NO OTHER NAMES; ETC..  WITHIN THE LAST FIVE (5) YEARS, SUCH
GRANTOR HAS NOT CONDUCTED BUSINESS UNDER ANY NAME, CHANGED ITS JURISDICTION OF
FORMATION, MERGED WITH OR INTO OR CONSOLIDATED WITH ANY OTHER CORPORATION,
EXCEPT AS DISCLOSED IN EXHIBIT A.  THE NAME IN WHICH SUCH GRANTOR HAS EXECUTED
THIS SECURITY AGREEMENT IS THE EXACT NAME AS IT APPEARS IN SUCH GRANTOR’S
ORGANIZATIONAL DOCUMENTS, AS AMENDED, AS FILED WITH SUCH GRANTOR’S JURISDICTION
OF ORGANIZATION AS OF THE EFFECTIVE DATE.

3.5.          ACCOUNTS AND CHATTEL PAPER.  THE NAMES OF THE OBLIGORS, AMOUNTS
OWING, DUE DATES AND OTHER INFORMATION WITH RESPECT TO THE ACCOUNTS AND CHATTEL
PAPER OWNED BY SUCH GRANTOR ARE AND WILL BE CORRECTLY STATED IN ALL RECORDS OF
SUCH GRANTOR RELATING THERETO.

3.6.          FILING REQUIREMENTS.  NONE OF THE COLLATERAL OWNED BY SUCH GRANTOR
IS OF A TYPE FOR WHICH SECURITY INTERESTS OR LIENS MAY BE PERFECTED BY FILING
UNDER ANY FEDERAL STATUTE EXCEPT FOR PATENTS, TRADEMARKS AND COPYRIGHTS HELD BY
SUCH GRANTOR AND DESCRIBED IN EXHIBIT “B”.  THE LEGAL DESCRIPTION, COUNTY AND
STREET ADDRESS OF THE PROPERTY ON WHICH ANY FIXTURES WITH A FAIR MARKET VALUE IN
EXCESS OF $1,000,000 OWNED BY SUCH GRANTOR ARE LOCATED IS SET FORTH IN EXHIBIT
“C” TOGETHER WITH THE NAME AND ADDRESS OF THE RECORD OWNER OF EACH SUCH
PROPERTY.

3.7.          NO FINANCING STATEMENTS.  NO FINANCING STATEMENT DESCRIBING ALL OR
ANY PORTION OF THE COLLATERAL WHICH HAS NOT LAPSED OR BEEN TERMINATED NAMING
SUCH GRANTOR AS DEBTOR HAS BEEN FILED IN ANY JURISDICTION EXCEPT FINANCING
STATEMENTS (I) NAMING THE ADMINISTRATIVE AGENT ON BEHALF OF THE HOLDERS OF
SECURED OBLIGATIONS AS THE SECURED PARTY AND (II) IN RESPECT OF LIENS PERMITTED
BY SECTION 6.02 OF THE CREDIT AGREEMENT; PROVIDED, THAT, EXCEPT AS CONTEMPLATED
BY SECTION 9.02(D) OF THE CREDIT AGREEMENT, NOTHING HEREIN SHALL BE DEEMED TO
CONSTITUTE AN AGREEMENT TO SUBORDINATE ANY OF THE LIENS OF THE ADMINISTRATIVE
AGENT UNDER THE LOAN DOCUMENTS TO ANY LIENS OTHERWISE PERMITTED UNDER SECTION
6.02 OF THE CREDIT AGREEMENT.

3.8.          FEDERAL EMPLOYER IDENTIFICATION NUMBER; STATE ORGANIZATION NUMBER;
JURISDICTION OF ORGANIZATION.  SUCH GRANTOR’S FEDERAL EMPLOYER IDENTIFICATION
NUMBER IS, AND IF SUCH GRANTOR IS A REGISTERED ORGANIZATION, SUCH GRANTOR’S
STATE OF ORGANIZATION, TYPE OF ORGANIZATION AND STATE OF ORGANIZATION
IDENTIFICATION NUMBER AND IS LISTED ON EXHIBIT “G”.

3.9.          PLEDGED SECURITIES AND OTHER INVESTMENT PROPERTY.  EXHIBIT “D”
SETS FORTH A COMPLETE AND ACCURATE LIST OF THE INSTRUMENTS, SECURITIES AND OTHER
INVESTMENT PROPERTY DELIVERED TO THE ADMINISTRATIVE AGENT.  EACH GRANTOR IS THE
DIRECT AND BENEFICIAL OWNER OF EACH INSTRUMENT, SECURITY AND OTHER TYPE OF
INVESTMENT PROPERTY LISTED ON EXHIBIT “D” AS BEING OWNED BY IT, FREE AND CLEAR
OF ANY LIENS, EXCEPT FOR THE SECURITY INTEREST GRANTED TO THE ADMINISTRATIVE
AGENT FOR THE BENEFIT OF THE HOLDERS OF SECURED OBLIGATIONS HEREUNDER OR AS
PERMITTED BY SECTION 6.02 OF THE CREDIT AGREEMENT.  EACH GRANTOR FURTHER
REPRESENTS AND WARRANTS THAT (I) ALL SUCH INSTRUMENTS, SECURITIES OR OTHER TYPES
OF INVESTMENT PROPERTY WHICH ARE SHARES OF STOCK IN A CORPORATION OR OWNERSHIP
INTERESTS IN A PARTNERSHIP OR LIMITED LIABILITY COMPANY CONSTITUTE THE
PERCENTAGE OF THE ISSUED AND OUTSTANDING SHARES OF STOCK (OR OTHER EQUITY
INTERESTS) OF THE RESPECTIVE ISSUERS THEREOF INDICATED ON EXHIBIT “D” HERETO AND
(II) WITH RESPECT TO ANY CERTIFICATES DELIVERED TO THE ADMINISTRATIVE AGENT
REPRESENTING AN OWNERSHIP INTEREST IN A PARTNERSHIP OR LIMITED LIABILITY
COMPANY, EITHER SUCH CERTIFICATES ARE SECURITIES AS DEFINED IN ARTICLE 8 OF THE
NEW YORK UCC OF THE APPLICABLE JURISDICTION AS A RESULT OF ACTIONS BY THE ISSUER
OR OTHERWISE, OR, IF SUCH CERTIFICATES ARE NOT SECURITIES, SUCH GRANTOR HAS SO
INFORMED THE ADMINISTRATIVE AGENT SO THAT THE ADMINISTRATIVE AGENT MAY TAKE
STEPS TO PERFECT ITS SECURITY INTEREST THEREIN AS A GENERAL INTANGIBLE.

 

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3.10.        INTELLECTUAL PROPERTY.

3.10.1  EXHIBIT “B” CONTAINS A COMPLETE AND ACCURATE LISTING AS OF THE EFFECTIVE
DATE OF ALL MATERIAL INTELLECTUAL PROPERTY, INCLUDING, BUT NOT LIMITED TO THE
FOLLOWING: (I) STATE, U.S. AND FOREIGN TRADEMARK REGISTRATIONS, APPLICATIONS FOR
TRADEMARK REGISTRATION AND MATERIAL COMMON LAW TRADEMARKS, (II) U.S. AND FOREIGN
PATENTS AND PATENTS APPLICATIONS, TOGETHER WITH ALL REISSUANCES, CONTINUATIONS,
CONTINUATIONS IN PART, REVISIONS, EXTENSIONS, AND REEXAMINATIONS THEREOF, (III)
U.S. AND FOREIGN COPYRIGHT REGISTRATIONS AND APPLICATIONS FOR REGISTRATION, (IV)
FOREIGN INDUSTRIAL DESIGN REGISTRATIONS AND INDUSTRIAL DESIGN APPLICATIONS, (V)
DOMAIN NAMES, (VI) MATERIAL PROPRIETARY COMPUTER SOFTWARE, AND (VII) ALL FORMS
OF INTELLECTUAL PROPERTY DESCRIBED IN CLAUSES (I)-(III) ABOVE THAT ARE OWNED BY
A THIRD PARTY AND LICENSED TO THE GRANTORS OR OTHERWISE USED BY THE GRANTORS
UNDER CONTRACT EXCEPT WHERE THE INABILITY TO USE SUCH INTELLECTUAL PROPERTY
COULD NOT BE REASONABLY EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  ALL OF
THE U.S. REGISTRATIONS, APPLICATIONS FOR REGISTRATION OR APPLICATIONS FOR
ISSUANCE OF THE INTELLECTUAL PROPERTY ARE VALID AND SUBSISTING, IN GOOD STANDING
AND ARE RECORDED OR IS IN THE PROCESS OF BEING RECORDED IN THE NAME OF THE
APPLICABLE GRANTOR.

3.10.2  ON THE EFFECTIVE DATE, THE INTELLECTUAL PROPERTY SCHEDULED ON EXHIBIT B,
WHICH IS REGISTERED WITH A GOVERNMENTAL AUTHORITY, IS VALID, SUBSISTING AND
ENFORCEABLE AND HAS NOT BEEN ABANDONED OR ADJUDGED INVALID OR UNENFORCEABLE, IN
WHOLE OR IN PART EXCEPT AS COULD NOT BE REASONABLY EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT.  EACH GRANTOR HAS GOOD, MARKETABLE AND EXCLUSIVE TITLE
TO, AND THE VALID AND ENFORCEABLE POWER AND RIGHT TO SELL, LICENSE, TRANSFER,
DISTRIBUTE, USE AND OTHERWISE EXPLOIT, SUCH INTELLECTUAL PROPERTY.

3.10.3  TO EACH GRANTOR’S KNOWLEDGE, ON THE EFFECTIVE DATE, NO PERSON HAS
VIOLATED, INFRINGED UPON OR BREACHED, OR IS CURRENTLY VIOLATING, INFRINGING UPON
OR BREACHING, ANY OF THE RIGHTS OF THE GRANTORS TO THE INTELLECTUAL PROPERTY OR
HAS BREACHED OR IS BREACHING ANY DUTY OR OBLIGATION OWED TO THE GRANTORS IN
RESPECT OF THE INTELLECTUAL PROPERTY EXCEPT WHERE THOSE BREACHES, INDIVIDUALLY
OR IN THE AGGREGATE, COULD NOT BE REASONABLY EXPECTED TO RESULT IN A MATERIAL
ADVERSE EFFECT.

3.10.4  ON THE EFFECTIVE DATE, NO SETTLEMENT OR CONSENTS, COVENANTS NOT TO SUE,
NONASSERTION ASSURANCES, OR RELEASES HAVE BEEN ENTERED INTO BY ANY GRANTOR OR TO
WHICH ANY GRANTOR IS BOUND THAT ADVERSELY AFFECTS ITS RIGHTS TO OWN OR USE ANY
INTELLECTUAL PROPERTY EXCEPT AS COULD NOT BE REASONABLY EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT, IN EACH CASE INDIVIDUALLY OR IN THE AGGREGATE.

3.10.5  ON THE EFFECTIVE DATE, NO GRANTOR HAS RECEIVED ANY WRITTEN NOTICE THAT
REMAINS OUTSTANDING CHALLENGING THE VALIDITY, ENFORCEABILITY, OR OWNERSHIP OF
ANY INTELLECTUAL PROPERTY EXCEPT WHERE THOSE CHALLENGES COULD NOT REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, AND TO SUCH GRANTOR’S KNOWLEDGE
AT THE DATE HEREOF THERE ARE NO FACTS UPON WHICH SUCH A CHALLENGE COULD BE MADE.

3.10.6  ON THE EFFECTIVE DATE, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
BY LOAN DOCUMENTS WILL NOT RESULT IN THE TERMINATION OR MATERIAL IMPAIRMENT OF
ANY OF THE INTELLECTUAL PROPERTY WHICH TERMINATION COULD REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT.

 

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ARTICLE IV

COVENANTS

From the date of this Security Agreement and thereafter until this Security
Agreement is terminated, each of the Initial Grantors agrees, and from and after
the effective date of any Security Agreement Supplement applicable to any
Grantor (and after giving effect to supplements to each of the Exhibits hereto
with respect to such subsequent Grantor as attached to such Security Agreement
Supplement) and thereafter until this Security Agreement is terminated each such
subsequent Grantor agrees:

4.1.          GENERAL.

4.1.1  FINANCING STATEMENTS AND OTHER ACTIONS; DEFENSE OF TITLE.  EACH GRANTOR
HEREBY AUTHORIZES THE ADMINISTRATIVE AGENT TO FILE, AND IF REQUESTED WILL
EXECUTE AND DELIVER TO THE ADMINISTRATIVE AGENT, ALL FINANCING STATEMENTS
DESCRIBING THE COLLATERAL OWNED BY SUCH GRANTOR AND OTHER DOCUMENTS AND TAKE
SUCH OTHER ACTIONS AS MAY FROM TIME TO TIME REASONABLY BE REQUESTED BY THE
ADMINISTRATIVE AGENT IN ORDER TO MAINTAIN A FIRST PRIORITY, PERFECTED SECURITY
INTEREST IN AND, IF APPLICABLE, CONTROL OF, THE COLLATERAL OWNED BY SUCH
GRANTOR, SUBJECT TO LIENS PERMITTED UNDER SECTION 6.02 OF THE CREDIT AGREEMENT,
PROVIDED THAT, EXCEPT AS CONTEMPLATED BY SECTION 9.02(D) OF THE CREDIT
AGREEMENT, NOTHING HEREIN SHALL BE DEEMED TO CONSTITUTE AN AGREEMENT TO
SUBORDINATE ANY OF THE LIENS OF THE ADMINISTRATIVE AGENT UNDER THE LOAN
DOCUMENTS TO ANY LIENS OTHERWISE PERMITTED UNDER SECTION 6.02 OF THE CREDIT
AGREEMENT.  SUCH FINANCING STATEMENTS MAY DESCRIBE THE COLLATERAL IN THE SAME
MANNER AS DESCRIBED HEREIN OR MAY CONTAIN AN INDICATION OR DESCRIPTION OF
COLLATERAL THAT DESCRIBES SUCH PROPERTY IN ANY OTHER MANNER AS THE
ADMINISTRATIVE AGENT MAY DETERMINE, IN ITS SOLE DISCRETION, IS NECESSARY,
ADVISABLE OR PRUDENT TO ENSURE THAT THE PERFECTION OF THE SECURITY INTEREST IN
THE COLLATERAL GRANTED TO THE ADMINISTRATIVE AGENT HEREIN, INCLUDING, WITHOUT
LIMITATION, DESCRIBING SUCH PROPERTY AS “ALL ASSETS” OR “ALL PERSONAL PROPERTY,
WHETHER NOW OWNED OR HEREAFTER ACQUIRED.”  EACH GRANTOR WILL TAKE ANY AND ALL
ACTIONS NECESSARY TO DEFEND TITLE TO THE COLLATERAL OWNED BY SUCH GRANTOR
AGAINST ALL PERSONS AND TO DEFEND THE SECURITY INTEREST OF THE ADMINISTRATIVE
AGENT IN SUCH COLLATERAL AND THE PRIORITY THEREOF AGAINST ANY LIEN NOT EXPRESSLY
PERMITTED HEREUNDER.

4.1.2  DISPOSITION OF COLLATERAL.  NO GRANTOR WILL SELL, LEASE OR OTHERWISE
DISPOSE OF THE COLLATERAL OWNED BY SUCH GRANTOR EXCEPT DISPOSITIONS PERMITTED
PURSUANT TO SECTION 6.03 OF THE CREDIT AGREEMENT.

4.1.3  LIENS.  NO GRANTOR WILL CREATE, INCUR, OR SUFFER TO EXIST ANY LIEN ON THE
COLLATERAL OWNED BY SUCH GRANTOR EXCEPT LIENS PERMITTED PURSUANT TO SECTION 6.02
OF THE CREDIT AGREEMENT, PROVIDED, THAT, EXCEPT AS CONTEMPLATED BY SECTION
9.02(D) OF THE CREDIT AGREEMENT, NOTHING HEREIN SHALL BE DEEMED TO CONSTITUTE AN
AGREEMENT TO SUBORDINATE ANY OF THE LIENS OF THE ADMINISTRATIVE AGENT UNDER THE
LOAN DOCUMENTS TO ANY LIENS OTHERWISE PERMITTED UNDER SECTION 6.02 OF THE CREDIT
AGREEMENT.

4.1.4  CHANGE IN CORPORATE EXISTENCE, TYPE OR JURISDICTION OF ORGANIZATION,
LOCATION, NAME.  EACH GRANTOR WILL:

(I)                                     PRESERVE ITS EXISTENCE AND CORPORATE
STRUCTURE AS IN EFFECT ON THE EFFECTIVE DATE;

(II)                                  NOT CHANGE ITS JURISDICTION OF
ORGANIZATION; AND

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(III)                               NOT MAINTAIN ITS PLACE OF BUSINESS (IF IT
HAS ONLY ONE) OR ITS CHIEF EXECUTIVE OFFICE (IF IT HAS MORE THAN ONE PLACE OF
BUSINESS) AT A LOCATION OTHER THAN A LOCATION SPECIFIED ON EXHIBIT “A”.

unless, in each such case, such Grantor shall have given the Administrative
Agent not less than 30 days’ prior written notice of such event or occurrence
and the Administrative Agent shall have either (x) determined that such event or
occurrence will not adversely affect the validity, perfection or priority of the
Administrative Agent’s security interest in the Collateral, or (y) taken such
steps (with the cooperation of such Grantor to the extent necessary or
advisable) as are necessary or advisable to properly maintain the validity,
perfection and priority of the Administrative Agent’s security interest in the
Collateral owned by such Grantor.

4.1.5  OTHER FINANCING STATEMENTS.  NO GRANTOR WILL SUFFER TO EXIST OR AUTHORIZE
THE FILING OF ANY FINANCING STATEMENT NAMING IT AS DEBTOR COVERING ALL OR ANY
PORTION OF THE COLLATERAL OWNED BY SUCH GRANTOR, EXCEPT ANY FINANCING STATEMENT
AUTHORIZED UNDER SECTION 4.1.1 HEREOF.

4.2.          RECEIVABLES.

4.2.1  CERTAIN AGREEMENTS ON RECEIVABLES.  DURING THE OCCURRENCE AND
CONTINUATION OF AN EVENT OF DEFAULT AND AFTER NOTICE FROM THE ADMINISTRATIVE
AGENT, NO GRANTOR WILL MAKE OR AGREE TO MAKE ANY DISCOUNT, CREDIT, REBATE OR
OTHER REDUCTION IN THE ORIGINAL AMOUNT OWING ON A RECEIVABLE OR ACCEPT IN
SATISFACTION OF A RECEIVABLE LESS THAN THE ORIGINAL AMOUNT THEREOF.  PRIOR TO
THE OCCURRENCE AND CONTINUATION OF A DEFAULT, SUCH GRANTOR MAY REDUCE THE AMOUNT
OF ACCOUNTS ARISING FROM THE SALE OF INVENTORY OR THE RENDERING OF SERVICES IN
ACCORDANCE WITH ITS POLICIES AND IN THE ORDINARY COURSE OF BUSINESS AND AS
OTHERWISE PERMITTED UNDER THE CREDIT AGREEMENT.

4.2.2  COLLECTION OF RECEIVABLES.  EXCEPT AS OTHERWISE PROVIDED IN THIS SECURITY
AGREEMENT, EACH GRANTOR WILL ENDEAVOR IN ACCORDANCE WITH REASONABLE BUSINESS
PRACTICES TO CAUSE TO BE COLLECTED FROM THE ACCOUNT DEBTOR NAMED IN EACH OF ITS
ACCOUNTS OR OBLIGOR UNDER ANY CONTRACT AND ENFORCE IN ACCORDANCE WITH GENERALLY
ACCEPTED LAWFUL COLLECTION PROCEDURES, AT SUCH GRANTOR’S SOLE EXPENSE, ALL
AMOUNTS DUE OR HEREAFTER DUE TO SUCH GRANTOR UNDER THE RECEIVABLES OWNED BY SUCH
GRANTOR.

4.2.3  DELIVERY OF INVOICES.  EACH GRANTOR WILL DELIVER TO THE ADMINISTRATIVE
AGENT PROMPTLY UPON ITS REQUEST AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT
DUPLICATE INVOICES WITH RESPECT TO EACH ACCOUNT OWNED BY SUCH GRANTOR BEARING
SUCH LANGUAGE OF ASSIGNMENT AS THE ADMINISTRATIVE AGENT SHALL SPECIFY.

4.3.          MAINTENANCE OF GOODS.  EACH GRANTOR WILL DO ALL THINGS NECESSARY
TO MAINTAIN, PRESERVE, PROTECT AND KEEP THE INVENTORY AND THE EQUIPMENT OWNED BY
SUCH GRANTOR IN GOOD REPAIR, WORKING ORDER AND SALEABLE CONDITION (ORDINARY WEAR
AND TEAR EXCEPTED) AND MAKE ALL NECESSARY AND PROPER REPAIRS, RENEWALS AND
REPLACEMENTS SO THAT ITS BUSINESS CARRIED ON IN CONNECTION THEREWITH MAY BE
PROPERLY CONDUCTED AT ALL TIMES, EXCEPT WHERE THE FAILURE TO DO SO, INDIVIDUALLY
OR IN THE AGGREGATE, COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.

4.4.          INSTRUMENTS, SECURITIES, CHATTEL PAPER, DOCUMENTS AND PLEDGED
DEPOSITS.  EACH GRANTOR WILL (I) DELIVER TO THE ADMINISTRATIVE AGENT PROMPTLY
UPON EXECUTION OF THIS SECURITY AGREEMENT THE ORIGINALS OF ALL CHATTEL PAPER,
SECURITIES (TO THE EXTENT CERTIFICATED) AND INSTRUMENTS CONSTITUTING COLLATERAL
(IF ANY THEN EXIST) WITH A PRINCIPAL AMOUNT IN EXCESS OF $1,000,000 (PROVIDED
THAT SUCH DOLLAR THRESHOLD SHALL NOT APPLY TO SECURITIES AND INSTRUMENTS
CONSTITUTING INVESTMENT PROPERTY REPRESENTING EQUITY INTERESTS IN SUBSIDIARIES),
(II) HOLD IN TRUST FOR THE ADMINISTRATIVE AGENT UPON RECEIPT AND IMMEDIATELY

 

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THEREAFTER DELIVER TO THE ADMINISTRATIVE AGENT ANY CHATTEL PAPER, SECURITIES AND
INSTRUMENTS CONSTITUTING COLLATERAL, (III) UPON THE DESIGNATION OF ANY PLEDGED
DEPOSITS (AS SET FORTH IN THE DEFINITION THEREOF), DELIVER TO THE ADMINISTRATIVE
AGENT SUCH PLEDGED DEPOSITS WHICH ARE EVIDENCED BY CERTIFICATES INCLUDED IN THE
COLLATERAL ENDORSED IN BLANK, MARKED WITH SUCH LEGENDS AND ASSIGNED AS THE
ADMINISTRATIVE AGENT SHALL SPECIFY, AND (IV) UPON THE ADMINISTRATIVE AGENT’S
REQUEST, AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT,
DELIVER TO THE ADMINISTRATIVE AGENT (AND THEREAFTER HOLD IN TRUST FOR THE
ADMINISTRATIVE AGENT UPON RECEIPT AND IMMEDIATELY DELIVER TO THE ADMINISTRATIVE
AGENT) ANY DOCUMENT EVIDENCING OR CONSTITUTING COLLATERAL.

4.5.          UNCERTIFICATED SECURITIES AND CERTAIN OTHER INVESTMENT PROPERTY. 
EACH GRANTOR WILL PERMIT THE ADMINISTRATIVE AGENT FROM TIME TO TIME TO CAUSE THE
APPROPRIATE ISSUERS (AND, IF HELD WITH A SECURITIES INTERMEDIARY, SUCH
SECURITIES INTERMEDIARY) OF UNCERTIFICATED SECURITIES OR OTHER TYPES OF
INVESTMENT PROPERTY NOT REPRESENTED BY CERTIFICATES WHICH ARE COLLATERAL OWNED
BY SUCH GRANTOR TO MARK THEIR BOOKS AND RECORDS WITH THE NUMBERS AND FACE
AMOUNTS OF ALL SUCH UNCERTIFICATED SECURITIES OR OTHER TYPES OF INVESTMENT
PROPERTY NOT REPRESENTED BY CERTIFICATES AND ALL ROLLOVERS AND REPLACEMENTS
THEREFOR TO REFLECT THE LIEN OF THE ADMINISTRATIVE AGENT GRANTED PURSUANT TO
THIS SECURITY AGREEMENT.  EACH GRANTOR WILL USE ALL COMMERCIALLY REASONABLE
EFFORTS, WITH RESPECT TO INVESTMENT PROPERTY CONSTITUTING COLLATERAL OWNED BY
SUCH GRANTOR HELD WITH A FINANCIAL INTERMEDIARY, TO CAUSE SUCH FINANCIAL
INTERMEDIARY TO ENTER INTO A CONTROL AGREEMENT WITH THE ADMINISTRATIVE AGENT IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT.

4.6.          STOCK AND OTHER OWNERSHIP INTERESTS.

4.6.1  CHANGES IN CAPITAL STRUCTURE OF ISSUERS.  EXCEPT AS PERMITTED IN THE
CREDIT AGREEMENT, NO GRANTOR WILL (I) PERMIT OR SUFFER ANY ISSUER OF PRIVATELY
HELD CORPORATE SECURITIES OR OTHER OWNERSHIP INTERESTS IN A CORPORATION,
PARTNERSHIP, JOINT VENTURE OR LIMITED LIABILITY COMPANY CONSTITUTING COLLATERAL
OWNED BY SUCH GRANTOR TO DISSOLVE, LIQUIDATE, RETIRE ANY OF ITS CAPITAL STOCK OR
OTHER INSTRUMENTS OR SECURITIES EVIDENCING OWNERSHIP, REDUCE ITS CAPITAL OR
MERGE OR CONSOLIDATE WITH ANY OTHER ENTITY, OR (II) VOTE ANY OF THE INSTRUMENTS,
SECURITIES OR OTHER INVESTMENT PROPERTY IN FAVOR OF ANY OF THE FOREGOING EXCEPT
TO THE EXTENT PERMITTED UNDER SECTION 6.03 OF THE CREDIT AGREEMENT.

4.6.2  REGISTRATION OF PLEDGED SECURITIES AND OTHER INVESTMENT PROPERTY.  EACH
GRANTOR WILL PERMIT ANY REGISTRABLE COLLATERAL OWNED BY SUCH GRANTOR TO BE
REGISTERED IN THE NAME OF THE ADMINISTRATIVE AGENT OR ITS NOMINEE AT ANY TIME AT
THE OPTION OF THE REQUIRED LENDERS FOLLOWING THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT AND WITHOUT ANY FURTHER CONSENT OF SUCH
GRANTOR.

4.6.3  EXERCISE OF RIGHTS IN PLEDGED SECURITIES AND OTHER INVESTMENT PROPERTY. 
EACH GRANTOR WILL PERMIT THE ADMINISTRATIVE AGENT OR ITS NOMINEE AT ANY TIME
AFTER THE CONTINUANCE OF AN EVENT OF DEFAULT, WITHOUT NOTICE, TO EXERCISE OR
REFRAIN FROM EXERCISING ANY AND ALL VOTING AND OTHER CONSENSUAL RIGHTS
PERTAINING TO THE COLLATERAL OWNED BY SUCH GRANTOR OR ANY PART THEREOF, AND TO
RECEIVE ALL DIVIDENDS AND INTEREST IN RESPECT OF SUCH COLLATERAL.

4.7.          LETTER-OF-CREDIT RIGHTS.  EACH GRANTOR WILL, UPON THE
ADMINISTRATIVE AGENT’S REQUEST, CAUSE EACH ISSUER OF A LETTER OF CREDIT WITH A
FACE AMOUNT IN EXCESS OF $1,000,000, TO CONSENT TO THE ASSIGNMENT OF PROCEEDS OF
THE LETTER OF CREDIT IN ORDER TO GIVE THE ADMINISTRATIVE AGENT CONTROL OF THE
LETTER-OF-CREDIT RIGHTS TO SUCH LETTER OF CREDIT.

4.8.          FEDERAL, STATE OR MUNICIPAL CLAIMS.  EACH GRANTOR WILL NOTIFY THE
ADMINISTRATIVE AGENT OF ANY COLLATERAL OWNED BY SUCH GRANTOR WHICH CONSTITUTES A
CLAIM AGAINST THE UNITED STATES GOVERNMENT

 

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OR ANY STATE OR LOCAL GOVERNMENT OR ANY INSTRUMENTALITY OR AGENCY THEREOF, THE
ASSIGNMENT OF WHICH CLAIM IS RESTRICTED BY FEDERAL, STATE OR MUNICIPAL LAW.

4.9.          INTELLECTUAL PROPERTY.

4.9.1  IF, AFTER THE DATE HEREOF, ANY GRANTOR OBTAINS RIGHTS TO, INCLUDING, BUT
NOT LIMITED TO FILING AND ACCEPTANCE OF A STATEMENT OF USE OR AN AMENDMENT TO
ALLEGE USE WITH THE U.S. PATENT AND TRADEMARK OFFICE, OR APPLIES FOR OR SEEKS
REGISTRATION OF, ANY NEW PATENTABLE INVENTION, TRADEMARK OR COPYRIGHT IN
ADDITION TO THE PATENTS, TRADEMARKS AND COPYRIGHTS DESCRIBED IN PART C OF
EXHIBIT “B”, WHICH ARE ALL OF SUCH GRANTOR’S PATENTS, TRADEMARKS AND COPYRIGHTS
AS OF THE EFFECTIVE DATE, THEN SUCH GRANTOR SHALL GIVE THE ADMINISTRATIVE AGENT
NOTICE THEREOF, AS PART OF EACH COMPLIANCE CERTIFICATE PROVIDED TO THE
ADMINISTRATIVE AGENT PURSUANT TO THE CREDIT AGREEMENT.  EACH GRANTOR AGREES
PROMPTLY UPON REQUEST BY THE ADMINISTRATIVE AGENT TO EXECUTE AND DELIVER TO THE
ADMINISTRATIVE AGENT ANY SUPPLEMENT TO THIS SECURITY AGREEMENT OR ANY OTHER
DOCUMENT REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT TO EVIDENCE SUCH
SECURITY INTEREST IN A FORM APPROPRIATE FOR RECORDING IN THE APPLICABLE FEDERAL
OFFICE.  EACH GRANTOR ALSO HEREBY AUTHORIZES THE ADMINISTRATIVE AGENT TO MODIFY
THIS SECURITY AGREEMENT UNILATERALLY FOR THE SOLE PURPOSE OF (I) AMENDING PART C
OF EXHIBIT “B” TO INCLUDE ANY FUTURE PATENTS, TRADEMARKS AND/OR COPYRIGHTS OF
WHICH THE ADMINISTRATIVE AGENT RECEIVES NOTIFICATION FROM SUCH GRANTOR PURSUANT
HERETO AND (II) RECORDING, IN ADDITION TO AND NOT IN SUBSTITUTION FOR THIS
SECURITY AGREEMENT, A DUPLICATE ORIGINAL OF THIS SECURITY AGREEMENT CONTAINING
IN PART C OF EXHIBIT “B” A DESCRIPTION OF SUCH FUTURE PATENTS, TRADEMARKS AND/OR
COPYRIGHTS.

4.9.2  AS OF THE EFFECTIVE DATE, NO GRANTOR HAS ANY INTEREST IN, OR TITLE TO,
ANY REGISTERED COPYRIGHTS, MATERIAL INTELLECTUAL PROPERTY LICENSES, PATENTS, OR
REGISTERED TRADEMARKS EXCEPT AS SET FORTH ON EXHIBIT “B”.  THIS AGREEMENT IS
EFFECTIVE TO CREATE A VALID AND CONTINUING LIEN ON SUCH REGISTERED COPYRIGHTS,
MATERIAL INTELLECTUAL PROPERTY LICENSES, PATENTS, OR REGISTERED TRADEMARKS AND,
UPON FILING OF THE CONFIRMATORY GRANT OF SECURITY INTEREST IN COPYRIGHTS WITH
THE UNITED STATES COPYRIGHT OFFICE AND FILING OF THE CONFIRMATORY GRANT OF
SECURITY INTEREST IN PATENTS WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE,
AND THE FILING OF APPROPRIATE FINANCING STATEMENTS IN THE JURISDICTIONS LISTED
ON EXHIBIT “E” HERETO, ALL ACTION NECESSARY OR DESIRABLE TO PROTECT AND PERFECT
THE SECURITY INTEREST IN, TO AND ON EACH GRANTOR’S PATENTS, REGISTERED
TRADEMARKS, OR REGISTERED COPYRIGHTS HAS BEEN TAKEN AND SUCH PERFECTED SECURITY
INTEREST IS ENFORCEABLE AS SUCH AS AGAINST ANY AND ALL CREDITORS OF AND
PURCHASERS FROM ANY GRANTOR.  NO GRANTOR HAS ANY INTEREST IN ANY REGISTERED
COPYRIGHT THAT IS NECESSARY IN CONNECTION WITH THE OPERATION OF SUCH GRANTOR’S
BUSINESS, EXCEPT FOR THOSE REGISTERED COPYRIGHTS IDENTIFIED ON EXHIBIT “B”
ATTACHED HERETO WHICH HAVE BEEN REGISTERED WITH THE UNITED STATES COPYRIGHT
OFFICE.

4.10.        COMMERCIAL TORT CLAIMS.  IF, AFTER THE DATE HEREOF, ANY GRANTOR
IDENTIFIES THE EXISTENCE OF A COMMERCIAL TORT CLAIM IN AN AMOUNT IN EXCESS OF
$1,000,000 BELONGING TO SUCH GRANTOR THAT HAS ARISEN IN THE COURSE OF SUCH
GRANTOR’S BUSINESS IN ADDITION TO THE COMMERCIAL TORT CLAIMS DESCRIBED IN
EXHIBIT “F”, WHICH ARE ALL OF SUCH GRANTOR’S COMMERCIAL TORT CLAIMS AS OF THE
EFFECTIVE DATE, THEN SUCH GRANTOR SHALL GIVE THE ADMINISTRATIVE AGENT PROMPT
NOTICE THEREOF, BUT IN ANY EVENT NOT LESS FREQUENTLY THAN QUARTERLY.  EACH
GRANTOR AGREES PROMPTLY UPON REQUEST BY THE ADMINISTRATIVE AGENT TO EXECUTE AND
DELIVER TO THE ADMINISTRATIVE AGENT ANY SUPPLEMENT TO THIS SECURITY AGREEMENT OR
ANY OTHER DOCUMENT REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT TO EVIDENCE
THE GRANT OF A SECURITY INTEREST THEREIN IN FAVOR OF THE ADMINISTRATIVE AGENT.

 

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ARTICLE V

DEFAULT

5.1.          DEFAULT.  THE OCCURRENCE OF ANY “DEFAULT” AND “EVENT OF DEFAULT”
UNDER, AND AS DEFINED IN, THE CREDIT AGREEMENT SHALL CONSTITUTE A DEFAULT AND
EVENT OF DEFAULT, RESPECTIVELY, HEREUNDER.

5.2.          ACCELERATION AND REMEDIES.  UPON THE ACCELERATION OF THE
OBLIGATIONS UNDER THE CREDIT AGREEMENT PURSUANT TO ARTICLE VII THEREOF, THE
OBLIGATIONS UNDER THE CREDIT AGREEMENT AND, TO THE EXTENT PROVIDED FOR UNDER THE
SWAP AGREEMENTS AND THE BANKING SERVICES AGREEMENTS EVIDENCING THE SAME, THE
SWAP OBLIGATIONS AND THE BANKING SERVICES OBLIGATIONS, SHALL IMMEDIATELY BECOME
DUE AND PAYABLE WITHOUT PRESENTMENT, DEMAND, PROTEST OR NOTICE OF ANY KIND, ALL
OF WHICH ARE HEREBY EXPRESSLY WAIVED, AND THE ADMINISTRATIVE AGENT MAY, WITH THE
CONCURRENCE OR AT THE DIRECTION OF THE REQUIRED LENDERS, EXERCISE ANY OR ALL OF
THE FOLLOWING RIGHTS AND REMEDIES:

5.2.1  THOSE RIGHTS AND REMEDIES PROVIDED IN THIS SECURITY AGREEMENT, THE CREDIT
AGREEMENT, OR ANY OTHER LOAN DOCUMENT, PROVIDED THAT THIS SECTION 5.2.1 SHALL
NOT BE UNDERSTOOD TO LIMIT ANY RIGHTS OR REMEDIES AVAILABLE TO THE
ADMINISTRATIVE AGENT AND THE HOLDERS OF SECURED OBLIGATIONS PRIOR TO A DEFAULT.

5.2.2  THOSE RIGHTS AND REMEDIES AVAILABLE TO A SECURED PARTY UNDER THE NEW YORK
UCC (WHETHER OR NOT THE NEW YORK UCC APPLIES TO THE AFFECTED COLLATERAL) OR
UNDER ANY OTHER APPLICABLE LAW (INCLUDING, WITHOUT LIMITATION, ANY LAW GOVERNING
THE EXERCISE OF A BANK’S RIGHT OF SETOFF OR BANKERS’ LIEN) WHEN A DEBTOR IS IN
DEFAULT UNDER A SECURITY AGREEMENT.

5.2.3  WITHOUT NOTICE EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 8.1 HEREOF OR
ELSEWHERE HEREIN, SELL, LEASE, ASSIGN, GRANT AN OPTION OR OPTIONS TO PURCHASE OR
OTHERWISE DISPOSE OF THE COLLATERAL OR ANY PART THEREOF IN ONE OR MORE PARCELS
AT PUBLIC OR PRIVATE SALE, FOR CASH, ON CREDIT OR FOR FUTURE DELIVERY, AND UPON
SUCH OTHER TERMS AS THE ADMINISTRATIVE AGENT MAY DEEM COMMERCIALLY REASONABLE.

The Administrative Agent, on behalf of the secured parties, may comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral, and such compliance will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.

If, after the Credit Agreement has terminated by its terms and all of the
Secured Obligations have been paid in full, there remain outstanding Swap
Obligations or Banking Services Obligations, the Required Lenders may exercise
the remedies provided in this Section 5.2 upon the occurrence of any event which
would allow or require the termination or acceleration of any Swap Obligations
or Banking Services Obligations.

5.3.          GRANTORS’ OBLIGATIONS UPON DEFAULT.  UPON THE REQUEST OF THE
ADMINISTRATIVE AGENT AFTER THE OCCURRENCE OF A DEFAULT, EACH GRANTOR WILL:

5.3.1  ASSEMBLY OF COLLATERAL.  ASSEMBLE AND MAKE AVAILABLE TO THE
ADMINISTRATIVE AGENT THE COLLATERAL AND ALL RECORDS RELATING THERETO AT ANY
PLACE OR PLACES SPECIFIED BY THE ADMINISTRATIVE AGENT.

5.3.2  SECURED PARTY ACCESS.  PERMIT THE ADMINISTRATIVE AGENT, BY THE
ADMINISTRATIVE AGENT’S REPRESENTATIVES AND AGENTS, TO ENTER ANY PREMISES WHERE
ALL OR ANY PART OF THE COLLATERAL,

 

 

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OR THE BOOKS AND RECORDS RELATING THERETO, OR BOTH, ARE LOCATED, TO TAKE
POSSESSION OF ALL OR ANY PART OF THE COLLATERAL AND TO REMOVE ALL OR ANY PART OF
THE COLLATERAL.

5.4.          LICENSE.  THE ADMINISTRATIVE AGENT IS HEREBY GRANTED A LICENSE OR
OTHER RIGHT TO USE, FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF A
DEFAULT, WITHOUT CHARGE, EACH GRANTOR’S LABELS, PATENTS, COPYRIGHTS, RIGHTS OF
USE OF ANY NAME, TRADE SECRETS, TRADE NAMES, TRADEMARKS, SERVICE MARKS, CUSTOMER
LISTS AND ADVERTISING MATTER, OR ANY PROPERTY OF A SIMILAR NATURE, AS IT
PERTAINS TO THE COLLATERAL, IN COMPLETING PRODUCTION OF, ADVERTISING FOR SALE,
AND SELLING ANY COLLATERAL, AND, FOLLOWING THE OCCURRENCE AND DURING THE
CONTINUANCE OF A DEFAULT, SUCH GRANTOR’S RIGHTS UNDER ALL LICENSES AND ALL
FRANCHISE AGREEMENTS SHALL INURE TO THE ADMINISTRATIVE AGENT’S BENEFIT.  IN
ADDITION, EACH GRANTOR HEREBY IRREVOCABLY AGREES THAT THE ADMINISTRATIVE AGENT
MAY, FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF A DEFAULT, SELL ANY
OF SUCH GRANTOR’S INVENTORY DIRECTLY TO ANY PERSON, INCLUDING WITHOUT LIMITATION
PERSONS WHO HAVE PREVIOUSLY PURCHASED SUCH GRANTOR’S INVENTORY FROM SUCH GRANTOR
AND IN CONNECTION WITH ANY SUCH SALE OR OTHER ENFORCEMENT OF THE ADMINISTRATIVE
AGENT’S RIGHTS UNDER THIS SECURITY AGREEMENT, MAY SELL INVENTORY WHICH BEARS ANY
TRADEMARK OWNED BY OR LICENSED TO SUCH GRANTOR AND ANY INVENTORY THAT IS COVERED
BY ANY COPYRIGHT OWNED BY OR LICENSED TO SUCH GRANTOR AND THE ADMINISTRATIVE
AGENT MAY FINISH ANY WORK IN PROCESS AND AFFIX ANY TRADEMARK OWNED BY OR
LICENSED TO SUCH GRANTOR AND SELL SUCH INVENTORY AS PROVIDED HEREIN.

ARTICLE VI

WAIVERS, AMENDMENTS AND REMEDIES

No delay or omission of the Administrative Agent or any Holder of Secured
Obligations to exercise any right or remedy granted under this Security
Agreement shall impair such right or remedy or be construed to be a waiver of
any Default or an acquiescence therein, and any single or partial exercise of
any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy.  No waiver, amendment or
other variation of the terms, conditions or provisions of this Security
Agreement whatsoever shall be valid unless in writing signed by the
Administrative Agent with the concurrence or at the direction of the (a) 
Required Lenders and (b) each Grantor, and then only to the extent in such
writing specifically set forth, provided that the addition of any Domestic
Subsidiary as a Grantor hereunder by execution of a Security Agreement
Supplement in the form of Annex I (with such modifications as shall be
acceptable to the Administrative Agent) shall not require receipt of any consent
from or execution of any documentation by any other Grantor party hereto.  All
rights and remedies contained in this Security Agreement or by law afforded
shall be cumulative and all shall be available to the Administrative Agent and
the Holders of Secured Obligations until the Secured Obligations have been paid
in full.

ARTICLE VII

PROCEEDS; COLLECTION OF RECEIVABLES

7.1.          LOCKBOXES.  UPON REQUEST OF THE ADMINISTRATIVE AGENT AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, EACH GRANTOR SHALL
EXECUTE AND DELIVER TO THE ADMINISTRATIVE AGENT IRREVOCABLE LOCKBOX AGREEMENTS
IN THE FORM PROVIDED BY OR OTHERWISE REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE
AGENT, WHICH AGREEMENTS SHALL BE ACCOMPANIED BY AN ACKNOWLEDGMENT BY THE BANK
WHERE THE LOCKBOX IS LOCATED OF THE LIEN OF THE ADMINISTRATIVE AGENT GRANTED
HEREUNDER AND OF IRREVOCABLE INSTRUCTIONS TO WIRE ALL AMOUNTS COLLECTED THEREIN
TO A SPECIAL COLLATERAL ACCOUNT AT THE ADMINISTRATIVE AGENT.

 

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7.2.          COLLECTION OF RECEIVABLES.  THE ADMINISTRATIVE AGENT MAY AT ANY
TIME AFTER THE OCCURRENCE OF A DEFAULT, BY GIVING EACH GRANTOR WRITTEN NOTICE,
ELECT TO REQUIRE THAT THE RECEIVABLES BE PAID DIRECTLY TO THE ADMINISTRATIVE
AGENT FOR THE BENEFIT OF THE HOLDERS OF SECURED OBLIGATIONS.  IN SUCH EVENT,
EACH GRANTOR SHALL, AND SHALL PERMIT THE ADMINISTRATIVE AGENT TO, PROMPTLY
NOTIFY THE ACCOUNT DEBTORS OR OBLIGORS UNDER THE RECEIVABLES OWNED BY SUCH
GRANTOR OF THE ADMINISTRATIVE AGENT’S INTEREST THEREIN AND DIRECT SUCH ACCOUNT
DEBTORS OR OBLIGORS TO MAKE PAYMENT OF ALL AMOUNTS THEN OR THEREAFTER DUE UNDER
SUCH RECEIVABLES DIRECTLY TO THE ADMINISTRATIVE AGENT.  UPON RECEIPT OF ANY SUCH
NOTICE FROM THE ADMINISTRATIVE AGENT, EACH GRANTOR SHALL THEREAFTER HOLD IN
TRUST FOR THE ADMINISTRATIVE AGENT, ON BEHALF OF THE HOLDERS OF SECURED
OBLIGATIONS, ALL AMOUNTS AND PROCEEDS RECEIVED BY IT WITH RESPECT TO THE
RECEIVABLES AND OTHER COLLATERAL AND PROMPTLY AND AT ALL TIMES THEREAFTER
DELIVER TO THE ADMINISTRATIVE AGENT ALL SUCH AMOUNTS AND PROCEEDS IN THE SAME
FORM AS SO RECEIVED, WHETHER BY CASH, CHECK, DRAFT OR OTHERWISE, WITH ANY
NECESSARY ENDORSEMENTS.  THE ADMINISTRATIVE AGENT SHALL HOLD AND APPLY FUNDS SO
RECEIVED AS PROVIDED BY THE TERMS OF SECTIONS 7.3 AND 7.4 HEREOF.

7.3.          SPECIAL COLLATERAL ACCOUNT.  THE ADMINISTRATIVE AGENT MAY REQUIRE
ALL CASH PROCEEDS OF THE COLLATERAL TO BE DEPOSITED IN A SPECIAL NON-INTEREST
BEARING CASH COLLATERAL ACCOUNT WITH THE ADMINISTRATIVE AGENT AND HELD THERE AS
SECURITY FOR THE SECURED OBLIGATIONS.  NO GRANTOR SHALL HAVE ANY CONTROL
WHATSOEVER OVER SAID CASH COLLATERAL ACCOUNT.  IF NO DEFAULT HAS OCCURRED OR IS
CONTINUING, THE ADMINISTRATIVE AGENT SHALL FROM TIME TO TIME DEPOSIT THE
COLLECTED BALANCES IN SAID CASH COLLATERAL ACCOUNT INTO THE APPLICABLE GRANTOR’S
GENERAL OPERATING ACCOUNT WITH THE ADMINISTRATIVE AGENT.  IF ANY EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING, THE ADMINISTRATIVE AGENT MAY (AND SHALL,
AT THE DIRECTION OF THE REQUIRED LENDERS), FROM TIME TO TIME, APPLY THE
COLLECTED BALANCES IN SAID CASH COLLATERAL ACCOUNT TO THE PAYMENT OF THE SECURED
OBLIGATIONS WHETHER OR NOT THE SECURED OBLIGATIONS SHALL THEN BE DUE.

7.4.          APPLICATION OF PROCEEDS.  THE PROCEEDS OF THE COLLATERAL SHALL BE
APPLIED BY THE ADMINISTRATIVE AGENT TO PAYMENT OF THE SECURED OBLIGATIONS AS
PROVIDED UNDER SECTION 2.18 OF THE CREDIT AGREEMENT.

ARTICLE VIII

GENERAL PROVISIONS

8.1.          NOTICE OF DISPOSITION OF COLLATERAL; CONDITION OF COLLATERAL. 
EACH GRANTOR HEREBY WAIVES NOTICE OF THE TIME AND PLACE OF ANY PUBLIC SALE OR
THE TIME AFTER WHICH ANY PRIVATE SALE OR OTHER DISPOSITION OF ALL OR ANY PART OF
THE COLLATERAL MAY BE MADE.  TO THE EXTENT SUCH NOTICE MAY NOT BE WAIVED UNDER
APPLICABLE LAW, ANY NOTICE MADE SHALL BE DEEMED REASONABLE IF SENT TO THE
BORROWER, ADDRESSED AS SET FORTH IN ARTICLE IX, AT LEAST TEN (10) DAYS PRIOR TO
(I) THE DATE OF ANY SUCH PUBLIC SALE OR (II) THE TIME AFTER WHICH ANY SUCH
PRIVATE SALE OR OTHER DISPOSITION MAY BE MADE.  THE ADMINISTRATIVE AGENT SHALL
HAVE NO OBLIGATION TO CLEAN-UP OR OTHERWISE PREPARE THE COLLATERAL FOR SALE.

8.2.          COMPROMISES AND COLLECTION OF COLLATERAL.  EACH GRANTOR AND THE
ADMINISTRATIVE AGENT RECOGNIZE THAT SETOFFS, COUNTERCLAIMS, DEFENSES AND OTHER
CLAIMS MAY BE ASSERTED BY OBLIGORS WITH RESPECT TO CERTAIN OF THE RECEIVABLES,
THAT CERTAIN OF THE RECEIVABLES MAY BE OR BECOME UNCOLLECTIBLE IN WHOLE OR IN
PART AND THAT THE EXPENSE AND PROBABILITY OF SUCCESS IN LITIGATING A DISPUTED
RECEIVABLE MAY EXCEED THE AMOUNT THAT REASONABLY MAY BE EXPECTED TO BE RECOVERED
WITH RESPECT TO A RECEIVABLE.  IN VIEW OF THE FOREGOING, EACH GRANTOR AGREES
THAT THE ADMINISTRATIVE AGENT MAY AT ANY TIME AND FROM TIME TO TIME, IF AN EVENT
OF DEFAULT HAS OCCURRED AND IS CONTINUING, COMPROMISE WITH THE OBLIGOR ON ANY
RECEIVABLE, ACCEPT IN FULL PAYMENT OF ANY RECEIVABLE SUCH AMOUNT AS THE
ADMINISTRATIVE AGENT IN ITS SOLE DISCRETION SHALL DETERMINE OR ABANDON ANY
RECEIVABLE, AND ANY SUCH ACTION BY THE ADMINISTRATIVE AGENT SHALL BE
COMMERCIALLY REASONABLE SO LONG AS THE ADMINISTRATIVE AGENT ACTS IN GOOD FAITH
BASED ON INFORMATION KNOWN TO IT AT THE TIME IT TAKES ANY SUCH ACTION.

 

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8.3.          SECURED PARTY PERFORMANCE OF GRANTOR’S OBLIGATIONS.  WITHOUT
HAVING ANY OBLIGATION TO DO SO, IF A GRANTOR FAILS TO DO SO AFTER NOTICE BY THE
ADMINISTRATIVE AGENT, THE ADMINISTRATIVE AGENT MAY PERFORM OR PAY ANY OBLIGATION
WHICH ANY GRANTOR HAS AGREED TO PERFORM OR PAY IN THIS SECURITY AGREEMENT AND
SUCH GRANTOR SHALL REIMBURSE THE ADMINISTRATIVE AGENT FOR ANY REASONABLE AMOUNTS
PAID BY THE ADMINISTRATIVE AGENT PURSUANT TO THIS SECTION 8.3.  EACH GRANTOR’S
OBLIGATION TO REIMBURSE THE ADMINISTRATIVE AGENT PURSUANT TO THE PRECEDING
SENTENCE SHALL BE A SECURED OBLIGATION PAYABLE ON DEMAND.

8.4.          AUTHORIZATION FOR SECURED PARTY TO TAKE CERTAIN ACTION.  EACH
GRANTOR IRREVOCABLY AUTHORIZES THE ADMINISTRATIVE AGENT AT ANY TIME AND FROM
TIME TO TIME IN THE SOLE DISCRETION OF THE ADMINISTRATIVE AGENT AND APPOINTS THE
ADMINISTRATIVE AGENT AS ITS ATTORNEY IN FACT (I) TO EXECUTE ON BEHALF OF SUCH
GRANTOR AS DEBTOR AND TO FILE FINANCING STATEMENTS NECESSARY OR DESIRABLE IN THE
ADMINISTRATIVE AGENT’S SOLE DISCRETION TO PERFECT AND TO MAINTAIN THE PERFECTION
AND PRIORITY OF THE ADMINISTRATIVE AGENT’S SECURITY INTEREST IN THE COLLATERAL,
(II) DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO INDORSE AND COLLECT ANY
CASH PROCEEDS OF THE COLLATERAL, (III) TO FILE A CARBON, PHOTOGRAPHIC OR OTHER
REPRODUCTION OF THIS SECURITY AGREEMENT OR ANY FINANCING STATEMENT WITH RESPECT
TO THE COLLATERAL AS A FINANCING STATEMENT AND TO FILE ANY OTHER FINANCING
STATEMENT OR AMENDMENT OF A FINANCING STATEMENT (WHICH DOES NOT ADD NEW
COLLATERAL OR ADD A DEBTOR) IN SUCH OFFICES AS THE ADMINISTRATIVE AGENT IN ITS
SOLE DISCRETION DEEMS NECESSARY OR DESIRABLE TO PERFECT AND TO MAINTAIN THE
PERFECTION AND PRIORITY OF THE ADMINISTRATIVE AGENT’S SECURITY INTEREST IN THE
COLLATERAL, (IV) DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO CONTACT AND
ENTER INTO ONE OR MORE AGREEMENTS WITH THE ISSUERS OF UNCERTIFICATED SECURITIES
WHICH ARE COLLATERAL OWNED BY SUCH GRANTOR AND WHICH ARE SECURITIES OR WITH
FINANCIAL INTERMEDIARIES HOLDING OTHER INVESTMENT PROPERTY AS MAY BE NECESSARY
OR ADVISABLE TO GIVE THE ADMINISTRATIVE AGENT CONTROL OVER SUCH SECURITIES OR
OTHER INVESTMENT PROPERTY, (V) SUBJECT TO THE TERMS OF SECTION 4.1.2 HEREOF,
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO ENFORCE PAYMENT OF THE
INSTRUMENTS, ACCOUNTS AND RECEIVABLES IN THE NAME OF THE ADMINISTRATIVE AGENT OR
SUCH GRANTOR, (VI) DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO APPLY THE
PROCEEDS OF ANY COLLATERAL RECEIVED BY THE ADMINISTRATIVE AGENT TO THE SECURED
OBLIGATIONS AS PROVIDED IN ARTICLE VII AND (VII) DURING THE CONTINUANCE OF AN
EVENT OF DEFAULT TO DISCHARGE PAST DUE TAXES, ASSESSMENTS, CHARGES, FEES OR
LIENS ON THE COLLATERAL (EXCEPT FOR SUCH LIENS AS ARE SPECIFICALLY PERMITTED
HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT), AND EACH GRANTOR AGREES TO
REIMBURSE THE ADMINISTRATIVE AGENT ON DEMAND FOR ANY REASONABLE PAYMENT MADE OR
ANY REASONABLE EXPENSE INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION
THEREWITH, PROVIDED THAT THIS AUTHORIZATION SHALL NOT RELIEVE ANY GRANTOR OF ANY
OF ITS OBLIGATIONS UNDER THIS SECURITY AGREEMENT OR UNDER THE CREDIT AGREEMENT.

8.5.          SPECIFIC PERFORMANCE OF CERTAIN COVENANTS.  EACH GRANTOR
ACKNOWLEDGES AND AGREES THAT A BREACH OF ANY OF THE COVENANTS CONTAINED IN
SECTIONS 4.1.2, 4.1.3, 4.4, 5.3, OR 8.7 OR IN ARTICLE VII HEREOF WILL CAUSE
IRREPARABLE INJURY TO THE ADMINISTRATIVE AGENT AND THE HOLDERS OF SECURED
OBLIGATIONS, THAT THE ADMINISTRATIVE AGENT AND HOLDERS OF SECURED OBLIGATIONS
HAVE NO ADEQUATE REMEDY AT LAW IN RESPECT OF SUCH BREACHES AND THEREFORE AGREES,
WITHOUT LIMITING THE RIGHT OF THE ADMINISTRATIVE AGENT OR THE HOLDERS OF SECURED
OBLIGATIONS TO SEEK AND OBTAIN SPECIFIC PERFORMANCE OF OTHER OBLIGATIONS OF THE
GRANTORS CONTAINED IN THIS SECURITY AGREEMENT, THAT THE COVENANTS OF THE
GRANTORS CONTAINED IN THE SECTIONS REFERRED TO IN THIS SECTION 8.5 SHALL BE
SPECIFICALLY ENFORCEABLE AGAINST THE GRANTORS.

8.6.          USE AND POSSESSION OF CERTAIN PREMISES.  DURING THE CONTINUANCE OF
AN EVENT OF DEFAULT, THE ADMINISTRATIVE AGENT SHALL BE ENTITLED TO OCCUPY AND
USE ANY PREMISES OWNED OR LEASED BY THE GRANTORS WHERE ANY OF THE COLLATERAL OR
ANY RECORDS RELATING TO THE COLLATERAL ARE LOCATED UNTIL THE SECURED OBLIGATIONS
ARE PAID OR THE COLLATERAL IS REMOVED THEREFROM, WHICHEVER FIRST OCCURS, WITHOUT
ANY OBLIGATION TO PAY ANY GRANTOR FOR SUCH USE AND OCCUPANCY.

8.7.          DISPOSITIONS NOT AUTHORIZED.  NO GRANTOR IS AUTHORIZED TO SELL OR
OTHERWISE DISPOSE OF THE COLLATERAL EXCEPT AS SET FORTH IN SECTION 4.1.2 HEREOF
AND NOTWITHSTANDING ANY COURSE OF DEALING BETWEEN

 

15

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ANY GRANTOR AND THE ADMINISTRATIVE AGENT OR OTHER CONDUCT OF THE ADMINISTRATIVE
AGENT, NO AUTHORIZATION TO SELL OR OTHERWISE DISPOSE OF THE COLLATERAL (EXCEPT
AS SET FORTH IN SECTION 4.1.2 HEREOF) SHALL BE BINDING UPON THE ADMINISTRATIVE
AGENT OR THE HOLDERS OF SECURED OBLIGATIONS UNLESS SUCH AUTHORIZATION IS IN
WRITING SIGNED BY THE ADMINISTRATIVE AGENT WITH THE CONSENT OR AT THE DIRECTION
OF THE REQUIRED LENDERS.

8.8.          BENEFIT OF AGREEMENT.  THE TERMS AND PROVISIONS OF THIS SECURITY
AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE GRANTORS, THE
ADMINISTRATIVE AGENT AND THE HOLDERS OF SECURED OBLIGATIONS AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS (INCLUDING ALL PERSONS WHO BECOME BOUND AS A DEBTOR TO
THIS SECURITY AGREEMENT), EXCEPT THAT THE GRANTORS SHALL NOT HAVE THE RIGHT TO
ASSIGN THEIR RIGHTS OR DELEGATE THEIR OBLIGATIONS UNDER THIS SECURITY AGREEMENT
OR ANY INTEREST HEREIN, WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE
AGENT.

8.9.          SURVIVAL OF REPRESENTATIONS.  ALL REPRESENTATIONS AND WARRANTIES
OF THE GRANTORS CONTAINED IN THIS SECURITY AGREEMENT SHALL SURVIVE THE EXECUTION
AND DELIVERY OF THIS SECURITY AGREEMENT.

8.10.        TAXES AND EXPENSES.  ANY TAXES (INCLUDING INCOME TAXES) PAYABLE OR
RULED PAYABLE BY A FEDERAL OR STATE AUTHORITY IN RESPECT OF THIS SECURITY
AGREEMENT SHALL BE PAID BY THE GRANTORS, TOGETHER WITH INTEREST AND PENALTIES,
IF ANY.  THE GRANTORS SHALL REIMBURSE THE ADMINISTRATIVE AGENT FOR ANY AND ALL
REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE FEES, CHARGES AND
DISBURSEMENTS OF COUNSEL) PAID OR INCURRED BY THE ADMINISTRATIVE AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, COLLECTION
AND ENFORCEMENT OF THIS SECURITY AGREEMENT AND IN THE AUDIT, ANALYSIS,
ADMINISTRATION, COLLECTION, PRESERVATION OR SALE OF THE COLLATERAL (INCLUDING
THE EXPENSES AND CHARGES ASSOCIATED WITH ANY PERIODIC OR SPECIAL AUDIT OF THE
COLLATERAL).  ANY AND ALL COSTS AND EXPENSES INCURRED BY THE GRANTORS IN THE
PERFORMANCE OF ACTIONS REQUIRED PURSUANT TO THE TERMS HEREOF SHALL BE BORNE
SOLELY BY THE GRANTORS.

8.11.        HEADINGS.  THE TITLE OF AND SECTION HEADINGS IN THIS SECURITY
AGREEMENT ARE FOR CONVENIENCE OF REFERENCE ONLY, AND SHALL NOT GOVERN THE
INTERPRETATION OF ANY OF THE TERMS AND PROVISIONS OF THIS SECURITY AGREEMENT.

8.12.        TERMINATION.  THIS SECURITY AGREEMENT SHALL CONTINUE IN EFFECT
(NOTWITHSTANDING THE FACT THAT FROM TIME TO TIME THERE MAY BE NO SECURED
OBLIGATIONS OUTSTANDING) UNTIL (I) THE CREDIT AGREEMENT HAS TERMINATED PURSUANT
TO ITS EXPRESS TERMS AND (II) ALL OF THE SECURED OBLIGATIONS (OTHER THAN SWAP
OBLIGATIONS AND CASH MANAGEMENT OBLIGATIONS NOT YET THEN DUE AND PAYABLE) HAVE
BEEN INDEFEASIBLY PAID IN CASH AND PERFORMED IN FULL AND NO COMMITMENTS OF THE
ADMINISTRATIVE AGENT OR THE HOLDERS OF SECURED OBLIGATIONS WHICH WOULD GIVE RISE
TO ANY OBLIGATIONS ARE OUTSTANDING.

8.13.        ENTIRE AGREEMENT.  THIS SECURITY AGREEMENT EMBODIES THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE GRANTORS AND THE ADMINISTRATIVE AGENT
RELATING TO THE COLLATERAL AND SUPERSEDES ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS AMONG THE GRANTORS AND THE ADMINISTRATIVE AGENT RELATING TO THE
COLLATERAL.

8.14.        GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.

8.14.1  THIS SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

8.14.2  EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE
STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW

 

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YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GRANTOR
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR,
TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH GRANTOR AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY
LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY GRANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

8.14.3  EACH GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT
IN ANY COURT REFERRED TO IN SECTION 8.14.2.  EACH GRANTOR HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

8.14.4  EACH PARTY TO THIS SECURITY AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN ARTICLE IX OF THIS SECURITY
AGREEMENT, AND EACH OF THE GRANTORS HEREBY APPOINTS THE COMPANY AS ITS AGENT FOR
SERVICE OF PROCESS.  NOTHING IN THIS SECURITY AGREEMENT OR ANY OTHER LOAN
DOCUMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS SECURITY AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

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

8.15.        INDEMNITY.  EACH GRANTOR HEREBY AGREES, JOINTLY WITH THE OTHER
GRANTORS AND SEVERALLY, TO INDEMNIFY THE ADMINISTRATIVE AGENT AND THE HOLDERS OF
SECURED OBLIGATIONS (COLLECTIVELY, THE “INDEMNITEES”), AND THEIR RESPECTIVE
SUCCESSORS, ASSIGNS, AGENTS AND EMPLOYEES, FROM AND AGAINST ANY AND ALL
LIABILITIES, DAMAGES, PENALTIES, SUITS, COSTS, AND EXPENSES OF ANY KIND AND
NATURE  (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES OF LITIGATION OR
PREPARATION THEREFOR WHETHER OR NOT ANY INDEMNITEE IS A PARTY THERETO) IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, OR THEIR RESPECTIVE
SUCCESSORS, ASSIGNS, AGENTS AND EMPLOYEES, IN ANY WAY RELATING TO OR ARISING OUT
OF THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE MANUFACTURE,
PURCHASE, ACCEPTANCE, REJECTION, OWNERSHIP, DELIVERY, LEASE, POSSESSION, USE,
OPERATION, CONDITION, SALE, RETURN OR OTHER DISPOSITION OF ANY COLLATERAL
(INCLUDING, WITHOUT LIMITATION, LATENT AND OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE BY ANY INDEMNITEE OR ANY GRANTOR, AND ANY CLAIM FOR PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT); PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS
TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES

 

17

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ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM (A)
THE WILLFUL MISCONDUCT, BAD FAITH, FRAUD OR GROSS NEGLIGENCE OF SUCH INDEMNITEE,
ITS CONTROLLED AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND CONTROLLING PERSONS (EACH OFFICER, DIRECTOR, EMPLOYEE,
AGENT OR CONTROLLING PERSON OF ANY SUCH INDEMNITEE OR ANY OF SUCH ENTITY’S
CONTROLLED AFFILIATES, A “RELATED PARTY” OF SUCH ENTITY) (B) ANY MATERIAL BREACH
OF THE EXPRESS OBLIGATIONS OF SUCH INDEMNITEE OR ANY OF ITS AFFILIATES OR
RELATED PARTIES UNDER THE CREDIT AGREEMENT, OR (C) ANY DISPUTE SOLELY AMONG
INDEMNITEES (NOT ARISING AS A RESULT OF ANY ACT OR OMISSION BY ANY GRANTOR OR
ANY OF ITS AFFILIATES).

8.16.        SUBORDINATION OF INTERCOMPANY INDEBTEDNESS.  EACH GRANTOR AGREES
THAT ANY AND ALL CLAIMS OF SUCH GRANTOR AGAINST ANY OTHER GRANTOR (EACH AN
“OBLIGOR”) WITH RESPECT TO ANY “INTERCOMPANY INDEBTEDNESS” (AS HEREINAFTER
DEFINED), ANY ENDORSER, OBLIGOR OR ANY OTHER GUARANTOR OF ALL OR ANY PART OF THE
SECURED OBLIGATIONS, OR AGAINST ANY OF ITS PROPERTIES SHALL BE SUBORDINATE AND
SUBJECT IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT, IN FULL AND IN CASH, OF ALL
SECURED OBLIGATIONS, PROVIDED THAT, AND NOT IN CONTRAVENTION OF THE FOREGOING,
SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND NOTICE OF AN
EVENT OF DEFAULT HAS BEEN GIVEN BY THE ADMINISTRATIVE AGENT, SUCH GRANTOR MAY
MAKE LOANS TO AND RECEIVE PAYMENTS WITH RESPECT TO SUCH INTERCOMPANY
INDEBTEDNESS FROM EACH SUCH OBLIGOR TO THE EXTENT NOT PROHIBITED BY THE TERMS OF
THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS.  NOTWITHSTANDING ANY RIGHT
OF ANY GRANTOR TO ASK, DEMAND, SUE FOR, TAKE OR RECEIVE ANY PAYMENT FROM ANY
OBLIGOR, ALL RIGHTS, LIENS AND SECURITY INTERESTS OF SUCH GRANTOR, WHETHER NOW
OR HEREAFTER ARISING AND HOWSOEVER EXISTING, IN ANY ASSETS OF ANY OTHER OBLIGOR
SHALL BE AND ARE SUBORDINATED TO THE RIGHTS OF THE HOLDERS OF SECURED
OBLIGATIONS AND THE ADMINISTRATIVE AGENT IN THOSE ASSETS.  NO GRANTOR SHALL HAVE
ANY RIGHT TO POSSESSION OF ANY SUCH ASSET OR TO FORECLOSE UPON ANY SUCH ASSET,
WHETHER BY JUDICIAL ACTION OR OTHERWISE, UNLESS AND UNTIL ALL OF THE SECURED
OBLIGATIONS (OTHER THAN CONTINGENT INDEMNITY OBLIGATIONS) SHALL HAVE BEEN FULLY
PAID AND SATISFIED (IN CASH) AND ALL COMMITMENTS AND LETTERS OF CREDIT ISSUED
UNDER THE CREDIT AGREEMENT HAVE TERMINATED OR EXPIRED.  IF ALL OR ANY PART OF
THE ASSETS OF ANY OBLIGOR, OR THE PROCEEDS THEREOF, ARE SUBJECT TO ANY
DISTRIBUTION, DIVISION OR APPLICATION TO THE CREDITORS OF SUCH OBLIGOR, WHETHER
PARTIAL OR COMPLETE, VOLUNTARY OR INVOLUNTARY, AND WHETHER BY REASON OF
LIQUIDATION, BANKRUPTCY, ARRANGEMENT, RECEIVERSHIP, ASSIGNMENT FOR THE BENEFIT
OF CREDITORS OR ANY OTHER ACTION OR PROCEEDING, OR IF THE BUSINESS OF ANY SUCH
OBLIGOR IS DISSOLVED OR IF SUBSTANTIALLY ALL OF THE ASSETS OF ANY SUCH OBLIGOR
ARE SOLD, THEN, AND IN ANY SUCH EVENT (SUCH EVENTS BEING HEREIN REFERRED TO AS
AN “INSOLVENCY EVENT”), ANY PAYMENT OR DISTRIBUTION OF ANY KIND OR CHARACTER,
EITHER IN CASH, SECURITIES OR OTHER PROPERTY, WHICH SHALL BE PAYABLE OR
DELIVERABLE UPON OR WITH RESPECT TO ANY INDEBTEDNESS OF ANY OBLIGOR TO ANY
GRANTOR (“INTERCOMPANY INDEBTEDNESS”) SHALL BE PAID OR DELIVERED DIRECTLY TO THE
ADMINISTRATIVE AGENT FOR APPLICATION ON ANY OF THE SECURED OBLIGATIONS, DUE OR
TO BECOME DUE, UNTIL SUCH SECURED OBLIGATIONS (OTHER THAN CONTINGENT INDEMNITY
OBLIGATIONS) SHALL HAVE FIRST BEEN FULLY PAID AND SATISFIED (IN CASH).  SHOULD
ANY PAYMENT, DISTRIBUTION, SECURITY OR INSTRUMENT OR PROCEEDS THEREOF BE
RECEIVED BY THE APPLICABLE GRANTOR UPON OR WITH RESPECT TO THE INTERCOMPANY
INDEBTEDNESS AFTER ANY INSOLVENCY EVENT AND PRIOR TO THE SATISFACTION OF ALL OF
THE SECURED OBLIGATIONS (OTHER THAN CONTINGENT INDEMNITY OBLIGATIONS) AND THE
TERMINATION OR EXPIRATION OF ALL COMMITMENTS OF THE LENDERS AND LETTERS OF
CREDIT ISSUED PURSUANT TO THE CREDIT AGREEMENT, SUCH GRANTOR SHALL RECEIVE AND
HOLD THE SAME IN TRUST, AS TRUSTEE, FOR THE BENEFIT OF THE HOLDERS OF SECURED
OBLIGATIONS AND SHALL FORTHWITH DELIVER THE SAME TO THE ADMINISTRATIVE AGENT,
FOR THE BENEFIT OF THE HOLDERS OF SECURED OBLIGATIONS, IN PRECISELY THE FORM
RECEIVED (EXCEPT FOR THE ENDORSEMENT OR ASSIGNMENT OF THE GRANTOR WHERE
NECESSARY), FOR APPLICATION TO ANY OF THE SECURED OBLIGATIONS, DUE OR NOT DUE,
AND, UNTIL SO DELIVERED, THE SAME SHALL BE HELD IN TRUST BY THE GRANTOR AS THE
PROPERTY OF THE HOLDERS OF SECURED OBLIGATIONS.  IF ANY SUCH GRANTOR FAILS TO
MAKE ANY SUCH ENDORSEMENT OR ASSIGNMENT TO THE ADMINISTRATIVE AGENT, THE
ADMINISTRATIVE AGENT OR ANY OF ITS OFFICERS OR EMPLOYEES IS IRREVOCABLY
AUTHORIZED TO MAKE THE SAME.  EACH GRANTOR AGREES THAT UNTIL THE SECURED
OBLIGATIONS (OTHER THAN THE CONTINGENT INDEMNITY OBLIGATIONS) HAVE BEEN PAID IN
FULL (IN CASH) AND SATISFIED AND ALL COMMITMENTS AND LETTERS OF CREDIT ISSUED
UNDER THE CREDIT AGREEMENT HAVE TERMINATED OR EXPIRED, NO GRANTOR WILL ASSIGN OR
TRANSFER TO ANY PERSON (OTHER THAN THE ADMINISTRATIVE AGENT OR THE BORROWER OR
ANOTHER GRANTOR) ANY CLAIM ANY SUCH GRANTOR HAS OR MAY HAVE AGAINST ANY OBLIGOR.

 

18

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8.17.        SEVERABILITY.  ANY PROVISION IN THIS SECURITY AGREEMENT THAT IS
HELD TO BE INOPERATIVE, UNENFORCEABLE, OR INVALID IN ANY JURISDICTION SHALL, AS
TO THAT JURISDICTION, BE INOPERATIVE, UNENFORCEABLE, OR INVALID WITHOUT
AFFECTING THE REMAINING PROVISIONS IN THAT JURISDICTION OR THE OPERATION,
ENFORCEABILITY, OR VALIDITY OF THAT PROVISION IN ANY OTHER JURISDICTION, AND TO
THIS END THE PROVISIONS OF THIS SECURITY AGREEMENT ARE DECLARED TO BE SEVERABLE.

8.18.        COUNTERPARTS.  THIS SECURITY AGREEMENT MAY BE EXECUTED IN
COUNTERPARTS (AND BY DIFFERENT PARTIES HERETO IN DIFFERENT COUNTERPARTS), EACH
OF WHICH SHALL CONSTITUTE AN ORIGINAL, BUT ALL OF WHICH WHEN TAKEN TOGETHER
SHALL CONSTITUTE A SINGLE CONTRACT.  DELIVERY OF AN EXECUTED COUNTERPART OF A
SIGNATURE PAGE OF THIS SECURITY AGREEMENT BY TELECOPY SHALL BE EFFECTIVE AS
DELIVERY OF A MANUALLY EXECUTED COUNTERPART OF THIS SECURITY AGREEMENT.

ARTICLE IX

NOTICES

9.1.          SENDING NOTICES.  ANY NOTICE REQUIRED OR PERMITTED TO BE GIVEN
UNDER THIS SECURITY AGREEMENT SHALL BE SENT (AND DEEMED RECEIVED) IN THE MANNER
AND TO THE ADDRESSES SET FORTH IN SECTION 9.01 OF THE CREDIT AGREEMENT.  ANY
NOTICE DELIVERED TO THE BORROWER SHALL BE DEEMED TO HAVE BEEN DELIVERED TO ALL
OF THE GRANTORS.

9.2.          CHANGE IN ADDRESS FOR NOTICES.  EACH OF THE GRANTORS, THE
ADMINISTRATIVE AGENT AND THE LENDERS MAY CHANGE THE ADDRESS FOR SERVICE OF
NOTICE UPON IT BY A NOTICE IN WRITING TO THE OTHER PARTIES.

ARTICLE X

THE ADMINISTRATIVE AGENT

JPMorgan Chase Bank, National Association has been appointed Administrative
Agent for the Holders of Secured Obligations hereunder pursuant to Article VIII
of the Credit Agreement.  It is expressly understood and agreed by the parties
to this Security Agreement that any authority conferred upon the Administrative
Agent hereunder is subject to the terms of the delegation of authority made by
the Holders of Secured Obligations to the Administrative Agent pursuant to the
Credit Agreement, and that the Administrative Agent has agreed to act (and any
successor Administrative Agent shall act) as such hereunder only on the express
conditions contained in such Article VIII.  Any successor Administrative Agent
appointed pursuant to Article VIII of the Credit Agreement shall be entitled to
all the rights, interests and benefits of the Administrative Agent hereunder.

[Signature Pages Follow]

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IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent have
executed this Security Agreement as of the date first above written.

 

PRICELINE.COM INCORPORATED,
as a Grantor

 

 

 

 

 

By:

/s/ Robert J. Mylod, Jr.

 

 

Name:  Robert J. Mylod, r.

 

Title:    Chief Executive Officer

 

 

WALKAWAY, INC., as a Grantor

 

 

 

By:

/s/ Paul Hennessy

 

 

Name:  Paul Hennessy

 

Title:    President

 

 

PRICELINE.COM AUTO SERVICES, LLC, as a
Grantor

 

by PRICELINE.COM INCORPORATED, as
Managing Member

 

 

 

By:

/s/ Robert J. Mylod, Jr.

 

 

Name:  Robert J. Mylod, Jr.

 

Title:    Chief Executive Officer

 

 

ALLPRICE HOLDINGS, INC., as a Grantor

 

 

 

By:

/s/ Glenn Fogel

 

 

Name:  Glenn Fogel

 

Title:    President

 

 

PRICELINE.COM EUROPE HOLDCO, INC., as a
Grantor

 

 

 

By:

/s/ Glenn Fogel

 

 

Name:  Glenn Fogel

 

Title:    Chief Executive Officer

 

 

MTG.COM, INC., as a Grantor

 

 

 

By:

/s/ Paul Hennessy

 

 

Name:  Paul Hennessy

 

Title:    President

 

 

PCLN ASIA, INC., as a Grantor

 

 

 

By:

/s/ Glenn Fogel

 

 

Name:  Glenn Fogel

 

Title:    President

 

SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT

 

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

 

 

PRICELINE.COM CANADA, INC., as a Grantor

 

 

 

By:

/s/ Chris Soder

 

 

Name:  Chris Soder

 

Title:    President

 

 

LOWESTFARE.COM INCORPORATED, as a
Grantor

 

 

 

By:

/s/ Chris Soder

 

 

Name:  Chris Soder

 

Title:    President

 

 

 

TRAVELWEB LLC, as a Grantor

 

By LOWESTFARE.COM INCORPORATED, as
Managing Member

 

 

 

By:

/s/ Chris Soder

 

 

Name:  Chris Soder

 

Title:    President

 

SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT

 

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JPMORGAN CHASE BANK, NATIONAL

 

ASSOCIATION, as Administrative Agent

 

 

 

By:

/s/ Edmond F. Thompson

 

 

Name:

Edmond F. Thompson

 

Title:

SVP

 

 

SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT

 

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