Exhibit 10.12


 


EXHIBIT G TO

SECOND LIEN CREDIT AND GUARANTY AGREEMENT


 




 





SECOND LIEN PLEDGE AND SECURITY AGREEMENT


 


dated as of October 26, 2007


 


among


 


CHEM RX CORPORATION,


 


EACH OF THE OTHER GRANTORS PARTY HERETO


 


and


 


CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK
AGENCY,


 


as the Collateral Agent




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
  Section 1.01

  	
  General Definitions

  	
  1

  
	
  Section 1.02

  	
  Definitions; Interpretation

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE II GRANT OF SECURITY

  	
  8

  
	
  Section 2.01

  	
  Grant of Security

  	
  8

  
	
  Section 2.02

  	
  Certain Limited Exclusions

  	
  8

  
	
  Section 2.03

  	
  Lien Subordination

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE III SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE

  	
  9

  
	
  Section 3.01

  	
  Security for Obligations

  	
  9

  
	
  Section 3.02

  	
  Continuing Liability Under Collateral

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES AND COVENANTS

  	
  10

  
	
  Section 4.01

  	
  Generally

  	
  10

  
	
  Section 4.02

  	
  Equipment and Inventory

  	
  11

  
	
  Section 4.03

  	
  Receivables

  	
  12

  
	
  Section 4.04

  	
  Investment Related Property

  	
  13

  
	
  Section 4.05

  	
  Pledged Equity Interests

  	
  15

  
	
  Section 4.06

  	
  Pledged Debt

  	
  16

  
	
  Section 4.07

  	
  Investment Accounts

  	
  17

  
	
  Section 4.08

  	
  Material Contracts

  	
  18

  
	
  Section 4.09

  	
  Letter of Credit Rights

  	
  18

  
	
  Section 4.10

  	
  Intellectual Property

  	
  19

  
	
  Section 4.11

  	
  Commercial Tort Claims

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE V FURTHER ASSURANCES; ADDITIONAL GRANTORS

  	
  22

  
	
  Section 5.01

  	
  Further Assurances

  	
  22

  
	
  Section 5.02

  	
  Additional Grantors

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT

  	
  23

  
	
  Section 6.01

  	
  Power of Attorney

  	
  23

  
	
  Section 6.02

  	
  No Duty on the Part of Collateral Agent or
  Secured Parties

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII REMEDIES

  	
  24

  
	
  Section 7.01

  	
  Generally

  	
  24

  
	
  Section 7.02

  	
  Application of Proceeds

  	
  25

  
	
  Section 7.03

  	
  Sales on Credit

  	
  25

  
	
  Section 7.04

  	
  Deposit Accounts

  	
  26

  
	
  Section 7.05

  	
  Investment Related Property

  	
  26

  
	
  Section 7.06

  	
  Intellectual Property

  	
  26

  
	
  Section 7.07

  	
  Cash Proceeds

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII COLLATERAL AGENT

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX CONTINUING SECURITY INTEREST; TRANSFER OF LOANS

  	
  28

  



 


i

















 


	
  ARTICLE X STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI MISCELLANEOUS.

  	
  29

  
			



 


ii

















 


	
  SCHEDULE
  4.01 — GENERAL INFORMATION

  
	
   

  
	
  SCHEDULE
  4.02 — LOCATION OF EQUIPMENT AND INVENTORY

  
	
   

  
	
  SCHEDULE
  4.05 — INVESTMENT RELATED PROPERTY

  
	
   

  
	
  SCHEDULE
  4.09 — DESCRIPTION OF LETTERS OF CREDIT

  
	
   

  
	
  SCHEDULE
  4.10 — INTELLECTUAL PROPERTY EXCEPTIONS

  
	
   

  
	
  SCHEDULE
  4.11 — COMMERCIAL TORT CLAIMS

  
	
   

  
	
  EXHIBIT A –
  PLEDGE SUPPLEMENT

  
	
   

  
	
  EXHIBIT B –
  SECOND LIEN TRADEMARK SECURITY AGREEMENT

  
	
   

  
	
  EXHIBIT C –
  SECOND LIEN COPYRIGHT SECURITY AGREEMENT

  
	
   

  
	
  EXHIBIT D –
  SECOND LIEN PATENT SECURITY AGREEMENT

  



 


iii

















 


This SECOND LIEN PLEDGE AND SECURITY
AGREEMENT, dated as of October 26, 2007 (this “Agreement”), between EACH
OF THE UNDERSIGNED,
whether as an original signatory hereto or as an Additional Grantor (as herein
defined) (each, a “Grantor”), and Canadian Imperial Bank of Commerce,
New York Agency, as Collateral Agent for the Secured Parties (as herein
defined) (in such capacity as Collateral Agent, the “Collateral Agent”).


 


RECITALS:


 


WHEREAS, reference is made to that certain
Second Lien Credit and Guaranty Agreement, dated as of the date hereof (as it
may be amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”), by and among Chem Rx Corporation (formerly
Paramount Acquisition Corp.), a Delaware corporation (“Company”), certain subsidiaries of
the Company, as Guarantors, the lenders party thereto from time to time (the “Lenders”),
CIBC WORLD MARKETS CORP., as Sole Lead Arranger and Sole Book Runner, and
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Administrative Agent
(in such capacity, the “Administrative Agent”) and Collateral Agent;


 


WHEREAS, subject to the terms and conditions
of the Credit Agreement, certain Grantors may enter into one or more Hedge
Agreements with one or more Lender Counterparties;


 


WHEREAS, in consideration of the extensions
of credit and other accommodations of Lenders and Lender Counterparties as set
forth in the Credit Agreement and the Hedge Agreements, respectively, each
Grantor has agreed to secure such Grantor’s Obligations under the Loan
Documents and the Hedge Agreements as set forth herein;


 


WHEREAS, as of the date hereof, each Grantor
has also entered into that certain (a) First Lien Credit and Guaranty
Agreement, dated as of the date hereof (as may be amended, supplemented or
otherwise modified from time to time, the “First Lien Credit Agreement”),
by and among the Grantors, the lenders party thereto from time to time,
Canadian Imperial Bank of Commerce, New York Agency, as administrative agent
and collateral agent (in such capacity, the “First Lien Collateral Agent”)
and the other agents party thereto and (b) First Lien Pledge and Security
Agreement, dated as of the date hereof (as may be amended, supplemented or
otherwise modified from time to time, the “First Lien Security Agreement”),
by and between each of the Grantors and the First Lien Collateral Agent,
pursuant to which each Grantor has granted a First Priority Lien to the First
Lien Collateral Agent for the benefit of the holder of the First Lien
Obligations (as defined in the Intercreditor Agreement referred to below) on
the Collateral to secure such Grantor’s obligations under the Loan Documents
(as defined in the First Lien Credit Agreement);


 


 WHEREAS, the Grantors, the First Lien
Collateral Agent and the Collateral Agent have entered into an Intercreditor
Agreement, dated as of the date hereof (as may be amended, supplemented or
otherwise modified from time to time, the “Intercreditor Agreement”);
and


 


NOW, THEREFORE, in consideration of the
premises and the agreements, provisions and covenants herein contained, each
Grantor and the Collateral Agent agree as follows:


 


ARTICLE I



DEFINITIONS


 


Section 1.01                                General
Definitions. In this Agreement, the following terms shall have the
following meanings:


 

















 


“Account Debtor” shall mean each
Person who is obligated on a Receivable or any Supporting Obligation related
thereto.


 


“Accounts” shall mean all “accounts”
as defined in Article 9 of the UCC including Health-Care Insurance Receivables.


 


“Additional Grantors” shall have the
meaning assigned in Section 5.02.


 


“Administrative Agent” shall have the
meaning set forth in the recitals.


 


“Agreement” shall have the meaning set
forth in the preamble.


 


“Assigned Agreements” shall mean all
agreements and contracts to which such Grantor is a party as of the date
hereof, or to which such Grantor becomes a party after the date hereof,
including, without limitation, each Material Contract, as each such agreement
may be amended, supplemented, restated or otherwise modified from time to time.


 


“Borrower” shall have the meaning set
forth in the preamble.


 


“Cash Proceeds” shall have the meaning
assigned in Section 7.07.


 


“Chattel Paper” shall mean all “chattel
paper” as defined in Article 9 of the UCC, including, without limitation, “electronic
chattel paper” or “tangible chattel paper”, as each term is defined in Article
9 of the UCC.


 


“Collateral” shall have the meaning
assigned in Section 2.01.


 


“Collateral Account” means any account
established by the Collateral Agent for the purpose of serving as a collateral
account under this Agreement.


 


“Collateral Agent” shall have the
meaning set forth in the preamble.


 


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


 


“Collateral Support” shall mean all
property (real or personal) assigned, hypothecated or otherwise securing any
Collateral and shall include any security agreement or other agreement granting
a lien or security interest in such real or personal property.


 


“Commercial Tort Claims” shall mean
all “commercial tort claims” as defined in Article 9 of the UCC,
including, without limitation, all commercial tort claims listed on Schedule
4.11 (as such schedule may be amended or supplemented from time to time).


 


“Commodities Accounts” (i) shall mean
all “commodity accounts” as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all of the accounts listed on Schedule 4.05(A)
under the heading “Commodities Accounts” (as such schedule may be amended or
supplemented from time to time).


 


“Company” shall have the meaning set
forth in the recitals.


 


2

















 


“Copyright Licenses” shall mean any
and all agreements providing for the granting of any right in or to Copyrights
(whether such Grantor is licensee or licensor thereunder) including, without
limitation, each agreement referred to in Schedule 4.10(B) (as such schedule
may be amended or supplemented from time to time).


 


“Copyrights” shall mean all United
States and foreign copyrights (including Community designs), including but not
limited to copyrights in software and databases, and all Mask Works (as defined
under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or
unregistered, and with respect to any and all of the foregoing: (i) all
registrations and applications therefor including, without limitation, the
registrations and applications referred to in Schedule 4.10(A) (as such
schedule may be amended or supplemented from time to time), (ii) all extensions
and renewals thereof, (iii) all rights corresponding thereto throughout the
world, (iv) all rights to sue for past, present and future infringements
thereof, and (v) all Proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.


 


“Credit Agreement” shall have the
meaning set forth in the recitals.


 


“Deposit Accounts” (i) shall mean all “deposit
accounts” as defined in Article 9 of the UCC and (ii) shall include, without
limitation, all of the accounts listed on Schedule 4.05(A) under the heading “Deposit
Accounts” (as such schedule may be amended or supplemented from time to time).


 


“Documents” shall mean all “documents”
as defined in Article 9 of the UCC.


 


“Equipment” shall mean:  (i) all “equipment” as defined in Article 9
of the UCC, (ii) all machinery, manufacturing equipment, data processing
equipment, computers, office equipment, furnishings, furniture, appliances,
fixtures and tools (in each case, regardless of whether characterized as
equipment under the UCC) and (iii) all accessions or additions thereto, all
parts thereof, whether or not at any time of determination incorporated or
installed therein or attached thereto, and all replacements therefor, wherever
located, now or hereafter existing, including any fixtures.


 


“Event of Default” means each of the conditions or
events set forth in Section 8.01 of the Credit Agreement.


 


“First Lien Collateral Agent” shall have the meaning set forth
in the recitals.


 


“First Lien Credit Agreement” shall have the meaning set forth
in the recitals.


 


“First Lien Security Agreement” shall have the meaning set forth
in the recitals.


 


“General Intangibles” (i) shall mean
all “general intangibles” as defined in Article 9 of the UCC, including “payment
intangibles” also as defined in Article 9 of the UCC and (ii) shall include,
without limitation, all interest rate or currency protection or hedging
arrangements, all tax refunds, all licenses, permits, concessions and
authorizations, all Assigned Agreements and all Intellectual Property (in each
case, regardless of whether characterized as general intangibles under the
UCC).


 


“Goods” (i) shall mean all “goods” as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
Inventory and Equipment (in each case, regardless of whether characterized as
goods under the UCC).


 


“Grantor” shall have the meaning set
forth in the preamble.


 


3

















 


“Health-Care Insurance Receivable”
shall mean all “health-care insurance receivable” as defined in Article 9 of
the UCC.


 


“Instruments” shall mean all “instruments”
as defined in Article 9 of the UCC.


 


“Insurance” shall mean (i) all
insurance policies covering any or all of the Collateral (regardless of whether
the Collateral Agent is the loss payee thereof) and (ii) any key man life
insurance policies.


 


“Intellectual Property” shall mean,
collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the
Trade Secret Licenses.


 


“Intercreditor Agreement” shall have the meaning set
forth in the recitals.


 


“Internal Revenue Code” shall mean the
United States Internal Revenue Code of 1986, as amended from time to time.


 


“Inventory” shall mean (i) all “inventory”
as defined in Article 9 of the UCC and (ii) all goods held for sale or lease or
to be furnished under contracts of service or so leased or furnished, all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing
or production of such inventory or otherwise used or consumed in any Grantor’s
business; and all goods which are returned to or repossessed by any Grantor,
all computer programs embedded in any goods and all accessions thereto and
products thereof (in each case, regardless of whether characterized as
inventory under the UCC).


 


“Investment Accounts” shall mean the
Collateral Account, Securities Accounts, Commodities Accounts and Deposit
Accounts.


 


“Investment Related Property” shall
mean:  (i) all “investment property” (as
such term is defined in Article 9 of the UCC) and (ii) all of the following
(regardless of whether classified as investment property under the UCC): all
Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit, excluding, in any case, stock or interests in any
Consent Subsidiary.


 


“Lenders” shall have the meaning set
forth in the recitals.


 


“Letter of Credit Right” shall mean “letter-of-credit
right” as defined in Article 9 of the UCC.


 


“Loan Documents” shall mean the Credit
Agreement, the other Loan Documents (as defined in the Credit Agreement) and
the Hedge Agreements.


 


“Money” shall mean “money” as defined
in the UCC.


 


“Non-Assignable Contract” shall mean
any agreement, contract or license to which any Grantor is a party that by its
terms purport to restrict or prevent the assignment or granting of a security
interest therein (either by its terms or by any federal or state statutory
prohibition or otherwise irrespective of whether such prohibition or
restriction is enforceable under Section 9-406 through 409 of the UCC).


 


“Patent Licenses” shall mean all
agreements providing for the granting of any right in or to Patents (whether
such Grantor is licensee or licensor thereunder) including, without limitation,
each


 


4

















 


agreement
referred to in Schedule 4.10(D) (as such schedule may be amended or
supplemented from time to time).


 


“Patents” shall mean all United States
and foreign patents and certificates of invention, or similar industrial
property rights, and applications for any of the foregoing, including, but not
limited to: (i) each patent and patent application referred to in Schedule
4.10(C) hereto (as such schedule may be amended or supplemented from time to
time), (ii) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals, and reexaminations thereof, (ii) all rights corresponding
thereto throughout the world, (ii) all inventions and improvements described
therein, (iv) all rights to sue for past, present and future infringements
thereof, (v) all licenses, claims, damages, and proceeds of suit arising
therefrom, and (v) all Proceeds of the foregoing, including, without
limitation, licenses, royalties, income, payments, claims, damages, and proceeds
of suit.


 


“Pledge Supplement” shall mean any
supplement to this agreement in substantially the form of Exhibit A.


 


“Pledged Debt” shall mean all
Indebtedness owed to such Grantor, including, without limitation, all
Indebtedness described on Schedule 4.05(A) under the heading “Pledged Debt” (as
such schedule may be amended or supplemented from time to time), issued by the
obligors named therein, the instruments evidencing such Indebtedness, and all
interest, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Indebtedness.


 


“Pledged Equity Interests” shall mean
all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and
Pledged Trust Interests.


 


“Pledged LLC Interests” shall mean all
interests in any limited liability company including, without limitation, all
limited liability company interests listed on Schedule 4.05(A) under the
heading “Pledged LLC Interests” (as such schedule may be amended or
supplemented from time to time) and the certificates, if any, representing such
limited liability company interests and any interest of such Grantor on the
books and records of such limited liability company or on the books and records
of any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such limited
liability company interests, excluding, in any case, interests in any Consent
Subsidiary.


 


“Pledged Partnership Interests” shall
mean all interests in any general partnership, limited partnership, limited
liability partnership or other partnership including, without limitation, all
partnership interests listed on Schedule 4.05(A) under the heading “Pledged
Partnership Interests” (as such schedule may be amended or supplemented from
time to time) and the certificates, if any, representing such partnership
interests and any interest of such Grantor on the books and records of such
partnership or on the books and records of any securities intermediary
pertaining to such interest and all dividends, distributions, cash, warrants,
rights, options, instruments, securities and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such partnership interests, excluding, in any case,
interests in any Consent Subsidiary.


 


“Pledged Stock” shall mean all shares
of capital stock owned by such Grantor, including, without limitation, all
shares of capital stock described on Schedule 4.05(A) under the heading “Pledged
Stock” (as such schedule may be amended or supplemented from time to time), and
the certificates, if any, representing such shares and any interest of such
Grantor in the entries on the books of the issuer of such shares or on the
books of any securities intermediary pertaining to such shares, and all
dividends,


 


5

















 


distributions,
cash, warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares, excluding, in any
case, capital stock of any Consent Subsidiary.


 


“Pledged Trust Interests” shall mean
all interests in a Delaware business trust or other trust including, without
limitation, all trust interests listed on Schedule 4.05(A) under the heading “Pledged
Trust Interests” (as such schedule may be amended or supplemented from time to
time) and the certificates, if any, representing such trust interests and any
interest of such Grantor on the books and records of such trust or on the books
and records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such trust interests, excluding, in any case, trust interests in any Consent
Subsidiary.


 


“Proceeds” shall mean:  (i) all “proceeds” as defined in Article 9 of
the UCC, (ii) payments or distributions made with respect to any
Investment Related Property and (iii) whatever is receivable or received
when Collateral or proceeds are sold, exchanged, collected or otherwise
disposed of, whether such disposition is voluntary or involuntary.


 


“Receivables” shall mean all rights to
payment, whether or not earned by performance, for goods or other property
sold, leased, licensed, assigned or otherwise disposed of, or services rendered
or to be rendered, including, without limitation all such rights constituting
or evidenced by any Account, Chattel Paper, Instrument, General Intangible or
Investment Related Property, together with all of Grantor’s rights, if any, in
any goods or other property giving rise to such right to payment and all
Collateral Support and Supporting Obligations related thereto and all
Receivables Records.


 


“Receivables Records” shall mean (i)
all original copies of all documents, instruments or other writings or
electronic records or other Records evidencing the Receivables, (ii) all books,
correspondence, credit or other files, Records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including, without
limitation, all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of Grantor or any
computer bureau or agent from time to time acting for Grantor or otherwise,
(iii) all evidences of the filing of financing statements and the registration
of other instruments in connection therewith, and amendments, supplements or
other modifications thereto, notices to other creditors or secured parties, and
certificates, acknowledgments, or other writings, including, without
limitation, lien search reports, from filing or other registration officers,
(iv) all credit information, reports and memoranda relating thereto and (v) all
other written or nonwritten forms of information related in any way to the
foregoing or any Receivable.


 


“Record” shall have the meaning
specified in Article 9 of the UCC.


 


“Secured Obligations” shall have the
meaning assigned in Section 3.01.


 


“Secured Parties” shall mean the
Lenders and the Lender Counterparties and shall include, without limitation,
all former Lenders and Lender Counterparties to the extent that any Obligations
owing to such Persons were incurred while such Persons were Lenders or Lender
Counterparties and such Obligations have not been paid or satisfied in full.


 


“Securities Accounts” (i) shall mean
all “securities accounts” as defined in Article 8 of the UCC and
(ii) shall include, without limitation, all of the accounts listed on
Schedule 4.05(A) under the heading “Securities Accounts” (as such schedule may
be amended or supplemented from time to time).


 


6

















 


“Supporting Obligation” shall mean all
“supporting obligations” as defined in Article 9 of the UCC.


 


“Trademark Licenses” shall mean any
and all agreements providing for the granting of any right in or to Trademarks
(whether such Grantor is licensee or licensor thereunder) including, without
limitation, each agreement referred to in Schedule 4.10(F) (as such schedule
may be amended or supplemented from time to time).


 


“Trademarks” shall mean all United
States, state and foreign trademarks, trade names, corporate names, company
names, business names, fictitious business names, internet domain names, trade
styles, service marks, certification marks, collective marks, logos, other
source or business identifiers, designs and general intangibles of a like
nature, all registrations and applications for any of the foregoing including,
but not limited to the registrations and applications referred to in Schedule
4.10(E) (as such schedule may be amended or supplemented from time to time),
all extensions or renewals of any of the foregoing, all of the goodwill of the
business connected with the use of and symbolized by the foregoing, the right
to sue for past, present and future infringement or dilution of any of the
foregoing or for any injury to goodwill, and all proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit.


 


“Trade Secret Licenses” shall mean any
and all agreements providing for the granting of any right in or to Trade
Secrets (whether such Grantor is licensee or licensor thereunder) including,
without limitation, each agreement referred to in Schedule 4.10(G) (as such
schedule may be amended or supplemented from time to time).


 


“Trade Secrets” shall mean all trade
secrets and all other confidential or proprietary information and know-how
whether or not such Trade Secret has been reduced to a writing or other
tangible form, including all documents and things embodying, incorporating, or
referring in any way to such Trade Secret, including but not limited to: (i)
the right to sue for past, present and future misappropriation or other
violation of any Trade Secret, and (ii) all Proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit.


 


“UCC” shall mean the Uniform
Commercial Code as in effect from time to time in the State of New York or,
when the context implies, the Uniform Commercial Code as in effect from time to
time in any other applicable jurisdiction.


 


“United States” shall mean the United
States of America.


 


Section 1.02                                Definitions;
Interpretation. All capitalized terms used herein (including the preamble
and recitals hereto) and not otherwise defined herein shall have the meanings
ascribed thereto in the Credit Agreement or, if not defined therein, in the UCC.
References to “Sections,” “Exhibits” and “Schedules” shall be to Sections,
Exhibits and Schedules, as the case may be, of this Agreement unless otherwise
specifically provided. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect. Any of the
terms defined herein may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference. The use herein of the word “include”
or “including”, when following any general statement, term or matter, shall not
be construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as “without limitation” or “but
not limited to” or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that fall within
the broadest possible scope of such general statement, term or matter. Notwithstanding
anything herein to the contrary, the Liens and security


 


7

















 


interest
granted to the Collateral Agent pursuant to this Agreement and the exercise of
any right or remedy by the Collateral Agent hereunder are subject to the provisions
of the Intercreditor Agreement. In the event of any conflict between the terms
of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern and control. If any conflict or
inconsistency exists between this Agreement and the Credit Agreement, the
Credit Agreement shall govern. All references herein to provisions of the UCC
shall include all successor provisions under any subsequent version or
amendment to any Article of the UCC.


 


ARTICLE II



GRANT OF SECURITY


 


Section 2.01                                Grant
of Security. Each Grantor hereby grants to the Collateral Agent, for the
benefit of the Secured Parties, a security interest and continuing lien on all
of such Grantor’s right, title and interest in, to and under all personal
property of such Grantor including, but not limited to the following, in each
case whether now owned or existing or hereafter acquired or arising and
wherever located (all of which being hereinafter collectively referred to as
the “Collateral”):


 


(a)                                  Accounts;


 


(b)                                 Chattel Paper;


 


(c)                                  Documents;


 


(d)                                 General Intangibles;


 


(e)                                  Goods;


 


(f)                                    Instruments;


 


(g)                                 Insurance;


 


(h)                                 Intellectual Property;


 


(i)                                     Investment Related Property;


 


(j)                                     Letter of Credit Rights;


 


(k)                                  Money;


 


(l)                                     Receivables and Receivable Records;


 


(m)                               Commercial Tort Claims;


 


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


 


(o)                                 to the extent not otherwise included
above, all Proceeds, products, accessions, rents and profits of or in respect
of any of the foregoing.


 


Section 2.02                                Certain
Limited Exclusions. Notwithstanding anything herein to the contrary, in no
event shall the Collateral include or the security interest granted under
Section 2.01 hereof


 


8

















 


attach to any
lease, license, Receivable, General Intangible, Investment Account, contract,
property rights or agreement to which any Grantor is a party or any of its
rights or interests thereunder if and for so long as the grant of such security
interest or inclusion in the Collateral shall constitute or result in (i) the
abandonment, invalidation or unenforceability of any right, title or interest
of any Grantor therein or (ii) in a breach or termination pursuant to the terms
of, or a default under, or violate, any lease, license, Receivable, General
Intangible, Investment Account, contract property rights or agreement to which
any Grantor is a party or pursuant to any applicable laws or requirement of a
Governmental Authority or any Governmental Authorization (other than to the
extent that any such term would be rendered ineffective pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law (including
the Bankruptcy Code) or requirement of a Governmental Authority or any
Governmental Authorization or principles of equity), provided however that the
Collateral shall include and such security interest shall attach immediately at
such time as the condition causing such abandonment, invalidation or
unenforceability or breach, termination, default or violation shall be remedied
and to the extent severable, shall attach immediately to any portion of such
Lease, license, Receivable, General Intangible, Investment Account, contract,
property rights, agreement or other property or asset that does not result in
any of the consequences specified in (i) or (ii) above.


 


Section 2.03                                Lien
Subordination. Notwithstanding anything herein to the contrary, it is the
understanding of the parties that the Liens granted pursuant to Section 2.01
herein shall, prior to the Discharge of First Lien Obligations (as defined in
the Intercreditor Agreement), be subject and subordinate to the Liens granted
to the First Lien Collateral Agent for the benefit of the holders of the First
Lien Obligations to secure the First Lien Obligations pursuant to the First
Lien Security Agreement. All other rights and remedies of the Collateral Agent
and the other Secured Parties are further subject to the provisions of the
Intercreditor Agreement.


 


ARTICLE III



SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE


 


Section 3.01                                Security
for Obligations. This Agreement secures, and the Collateral is collateral
security for, the prompt and complete payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. §362(a) (and any successor provision thereof)), of
all Obligations with respect to every Grantor (the “Secured Obligations”).


 


Section 3.02                                Continuing
Liability Under Collateral. Notwithstanding anything herein to the
contrary, (i) each Grantor shall remain liable for all obligations under the
Collateral and nothing contained herein is intended or shall be a delegation of
duties to the Collateral Agent or any Secured Party, (ii) each Grantor shall
remain liable under each of the agreements included in the Collateral,
including, without limitation, any agreements relating to Pledged Partnership
Interests or Pledged LLC Interests, to perform all of the obligations
undertaken by it thereunder all in accordance with and pursuant to the terms
and provisions thereof and neither the Collateral Agent nor any Secured Party
shall have any obligation or liability under any of such agreements by reason
of or arising out of this Agreement or any other document related thereto nor
shall the Collateral Agent nor any Secured Party have any obligation to make
any inquiry as to the nature or sufficiency of any payment received by it or
have any obligation to take any action to collect or enforce any rights under
any agreement included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests,
and (iii) the exercise by the Collateral Agent of any of its rights hereunder
shall not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral.


 


9

















 


ARTICLE IV



REPRESENTATIONS AND WARRANTIES AND COVENANTS


 


Section 4.01                                Generally.


 


(a)                                  Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date, that:


 


(i)                                     it has indicated on Schedule
4.01(A)(as such schedule may be amended or supplemented from time to time): (w)
the type of organization of such Grantor, (x) the jurisdiction of organization
of such Grantor, (y) its organizational identification number and (z) the
jurisdiction where the chief executive office or its sole place of business is
(or the principal residence if such Grantor is a natural person), and for the
one-year period preceding the date hereof has been, located.


 


(ii)                                  the full legal name of such Grantor
is as set forth on Schedule 4.01(A) and it has not done in the last five (5)
years, and does not do, business under any other name (including any trade-name
or fictitious business name) except for those names set forth on Schedule
4.01(B) (as such schedule may be amended or supplemented from time to time);


 


(iii)                               except as provided on Schedule
4.01(C), it has not changed its name, jurisdiction of organization, chief
executive office or sole place of business (or principal residence if such
Grantor is a natural person) or its corporate structure in any way (e.g., by
merger, consolidation, change in corporate form or otherwise) within the past
five (5) years;


 


(iv)                              when executed and delivered, this
Agreement will be effective to create a favor of the Collateral Agent, for the
benefit of the Secured Parties, a valid and enforeceable security interest in
the Collateral;


 


(v)                                 when financing statements in the
appropriate form are filed in the offices specified on Schedule 4.01(D), this
Agreement will create a perfected security interest in all right, title and
interest of the Grantors in the Collateral to the extent perfection can be
obtained by filing financing statements under the UCC in effect in such
jurisdiction, prior and superior in right to any other Person, except for
Permitted Liens;


 


(vi)                              when financing statements in the
appropriate form are filed in the offices specified on Schedule 4.01(D) and
when filings in the appropriate form are made with the United States Patent and
Trademark Office and the United States Copyright Office in respect of
Intellectual Property specified in such filings, this Agreement will create a
perfected security interest in all right, title and interest of the Grantors in
such Intellectual Property to the extent perfection can be obtained by such
filings, prior and superior in right to any other Person, except for Permitted
Liens;


 


(vii)                           none of the Collateral constitutes,
or is the Proceeds of, “farm products” (as defined in the UCC);


 


(viii)                        it does not own any “as extracted
collateral” (as defined in the UCC) or any timber to be cut; and


 


10

















 


(ix)                                such Grantor has been duly organized
as an entity of the type as set forth opposite such Grantor’s name on Schedule
4.01(A) solely under the laws of the jurisdiction as set forth opposite such
Grantor’s name on Schedule 4.01(A) and remains duly existing as such. Such Grantor
has not filed any certificates of domestication, transfer or continuance in any
other jurisdiction.


 


(b)                                 Covenants and
Agreements. Each Grantor hereby covenants and agrees that:


 


(i)                                     except for the security interest
created by this Agreement, it shall not create or suffer to exist any Lien upon
or with respect to any of the Collateral, except Permitted Liens, and such
Grantor shall defend the Collateral against all Persons at any time claiming
any interest therein; and


 


(ii)                                  it shall not change such Grantor’s
name, identity, corporate structure (e.g., by merger, consolidation, change in
corporate form or otherwise), sole place of business (or principal residence if
such Grantor is a natural person), chief executive office, type of organization
or jurisdiction of organization or establish any trade names unless it shall
have (a) notified the Collateral Agent in writing, by executing and delivering
to the Collateral Agent a completed Pledge Supplement, substantially in the
form of Exhibit A attached hereto, together with all Supplements to Schedules
thereto, at least fifteen (15) days prior to any such change or establishment,
identifying such new proposed name, identity, corporate structure, sole place
of business (or principal residence if such Grantor is a natural person), chief
executive office, jurisdiction of organization or trade name and providing such
other information in connection therewith as the Collateral Agent may
reasonably request and (b) taken all actions necessary or advisable to maintain
the continuous validity, perfection and the same or better priority of the
Collateral Agent’s security interest in the Collateral intended to be granted
and agreed to hereby.


 


Section 4.02                                Equipment
and Inventory.


 


(a)                                  Representations
and Warranties. Each Grantor represents and warrants, on the Closing Date,
that:


 


(i)                                     all of the Equipment and Inventory
(other than vehicles) included in the Collateral is kept only at the locations
specified in Schedule 4.02 (as such schedule may be amended or supplemented from
time to time); and


 


(ii)                                  none of the Inventory or Equipment
of such Grantor included in the Collateral and with a value in excess of
$250,000 in the aggregate is in the possession of an issuer of a negotiable
document (as defined in Section 7-104 of the UCC) therefor or otherwise in the
possession of a bailee or a warehouseman (other than Inventory in transit in
the ordinary course and other than in connection with repairs in the ordinary
course) and other than Collateral with respect to which Section 4.02(b)(iv)
has been complied with.


 


(b)                                 Covenants and
Agreements. Each Grantor covenants and agrees that:


 


(i)                                     it shall keep the Equipment,
Inventory and any Documents evidencing any Equipment and Inventory in the
locations specified on Schedule 4.02 (as such schedule may be amended or
supplemented from time to time) unless it shall have


 


11

















 


notified the Collateral Agent in writing, by
executing and delivering to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, at least thirty (30) days prior to any change
in locations, identifying such new locations and providing such other
information in connection therewith as the Collateral Agent may reasonably
request;


 


(ii)                                  if any Grantor’s Equipment or
Inventory (other than Equipment or Inventory in transit or out for repairs in
the ordinary course of business) is in possession or control of any third
party, such Grantor shall join with the Collateral Agent in notifying the third
party of the Collateral Agent’s security interest and if reasonably requested
by the Collateral Agent shall use commercially reasonable efforts to obtain an
acknowledgement from the third party that it is holding the Equipment and
Inventory for the benefit of the Collateral Agent;


 


(iii)                               it shall keep correct and accurate
records of the Inventory, as is customarily maintained under similar
circumstances by Persons of established reputation engaged in similar business,
and in any event in conformity with GAAP; and


 


(iv)                              if any Equipment or Inventory is in
possession or control of any third party, any time after the occurrence and
during the continuance of an Event of Default, each Grantor shall join with the
Collateral Agent in notifying the third party of the Collateral Agent’s
security interest and obtaining an acknowledgment from the third party that it
is holding the Equipment and Inventory for the benefit of the Collateral Agent.


 


Section 4.03                                Receivables.


 


(a)                                  Representations
and Warranties. Each Grantor represents and warrants, on the Closing Date,
that no Receivable is evidenced by, or constitutes, an Instrument or Chattel
Paper which has not been delivered to, or otherwise subjected to the control
of, the Collateral Agent to the extent required by, and in accordance with
Section 4.03(c).


 


(b)                                 Covenants and
Agreements:  Each Grantor hereby
covenants and agrees that it shall continue to collect all amounts due or to
become due to such Grantor under the Receivables and any Supporting Obligation.
Notwithstanding the foregoing, the Collateral Agent shall have the right,
subject to the terms of the Intercreditor Agreement, at any time after and
during the continuance of an Event of Default to:  (1) notify, or require any Grantor to notify,
any Account Debtor of the Collateral Agent’s security interest in the
Receivables and any Supporting Obligation and direct the Account Debtors under
any Receivables to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent; (2) notify, or require any
Grantor to notify, each Person maintaining a lockbox or similar arrangement to
which Account Debtors under any Receivables have been directed to make payment
to remit all amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other arrangement
directly to the Collateral Agent; and (3) enforce, at the expense of such
Grantor, collection of any such Receivables and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as
such Grantor might have done. If the Collateral Agent notifies any Grantor that
it has elected to collect the Receivables in accordance with the preceding
sentence, any payments of Receivables received by such Grantor shall be
forthwith (and in any event within two (2) Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the Collateral
Agent if required, and, subject to the terms of the Intercreditor Agreement, in
the Collateral Account maintained under the sole dominion and control of the
Collateral Agent, and until so turned over, all amounts and proceeds (including
checks and other


 


12

















 


instruments)
received by such Grantor in respect of the Receivables, any Supporting
Obligation or Collateral Support shall be received in trust for the benefit of
the Collateral Agent hereunder and shall be segregated from other funds of such
Grantor and such Grantor shall not adjust, settle or compromise the amount or
payment of any Receivable, or release wholly or partly any Account Debtor or
obligor thereof, or allow any credit or discount thereon. Notwithstanding any
of the foregoing to the contrary, the Collateral Agent shall not be permitted
to take any of the foregoing actions to the extent they would be prohibited by
applicable law or Governmental Authorization.


 


(c)                                  Delivery and
Control of Receivables. With respect to any Receivables in excess of
$250,000 individually or $500,000 in the aggregate that is evidenced by, or
constitutes, Chattel Paper or Instruments, each Grantor shall cause each
originally executed copy thereof to be delivered to the First Lien Collateral
Agent or the Collateral Agent (or its agent or designee), as applicable, in
accordance with the terms of the Intercreditor Agreement, appropriately
indorsed to the First Lien Collateral Agent, the Collateral Agent or indorsed in
blank:  (i) with respect to any such
Receivables in existence on the date hereof, on or prior to the date hereof and
(ii) with respect to any such Receivables hereafter arising, within ten (10)
days of such Grantor acquiring rights therein. Subject to the Intercreditor
Agreement, with respect to any Receivables in excess of $250,000 individually
or $500,000 in the aggregate which would constitute “electronic chattel paper”
under Article 9 of the UCC, each Grantor shall take all steps reasonably
requested by the Collateral Agent to give the Collateral Agent control over
such Receivables (within the meaning of Section 9-105 of the UCC):  (i) with respect to any such Receivables in
existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within ten (10) days of
such Grantor acquiring rights therein. Any Receivable not otherwise required to
be delivered or subjected to the control of the Collateral Agent in accordance
with this subsection (c) shall be delivered or subjected to such control upon
the reasonable request of the Collateral Agent.


 


Section 4.04                                Investment
Related Property.


 


(a)                                  Covenants and
Agreements. Each Grantor hereby covenants and agrees that:


 


(i)                                     in the event it acquires rights in
any Investment Related Property after the date hereof, it shall deliver to the
Collateral Agent, no less frequently than on a quarterly basis or as otherwise
expressly required by the Credit Agreement, a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, reflecting such new Investment Related
Property and all other Investment Related Property. Notwithstanding the
foregoing, it is understood and agreed that the security interest of the
Collateral Agent shall attach to all Investment Related Property immediately
upon any Grantor’s acquisition of rights therein and shall not be affected by
the failure of any Grantor to deliver a supplement to Schedule 4.05 as required
hereby;


 


(ii)                                  except as provided in the next
sentence, in the event such Grantor receives any dividends, interest or
distributions on any Investment Related Property, or any securities or other
property upon the merger, consolidation, liquidation or dissolution of any
issuer of any Investment Related Property, then (a) such dividends, interest or
distributions and securities or other property shall be included in the
definition of Collateral without further action and (b) such Grantor shall
promptly take all steps, if any, reasonably requested by the Collateral Agent
to ensure the validity, perfection, priority and, if applicable, control of the
Collateral Agent over such Investment Related Property (including, without
limitation, delivery thereof to the Collateral Agent) and pending any such
action such Grantor shall be deemed to hold such dividends, interest,
distributions,


 


13

















 


securities or other property in trust for the
benefit of the Collateral Agent and shall segregate such dividends,
distributions, Securities or other property from all other property of such
Grantor. Notwithstanding the foregoing, so long as no Event of Default shall
have occurred and be continuing, the Collateral Agent authorizes, subject to
the terms of the Intercreditor Agreement, each Grantor to retain all ordinary
cash dividends and distributions paid in the normal course of the business of
the issuer and consistent with the past practice of the issuer and all
scheduled payments of interest;


 


(iii)                               each Grantor consents to the grant
by each other Grantor to the Collateral Agent of a security interest in all
Investment Related Property.


 


(b)                                 Delivery and
Control.


 


(i)                                     Each Grantor agrees that with
respect to any Investment Related Property in which it currently has rights it
shall comply with the provisions of this Section 4.04(b) on or before the
Closing Date and with respect to any Investment Related Property hereafter
acquired by such Grantor it shall comply with the provisions of this Section
4.04(b) promptly after acquiring rights therein, in each case in form and
substance reasonably satisfactory to the Collateral Agent. With respect to any
Investment Related Property that is represented by a certificate or that is an
“instrument” (other than any Investment Related Property credited to a
Securities Account) it shall cause such certificate or instrument to be
delivered to the First Lien Collateral Agent or the Collateral Agent, as
applicable, in accordance with the Intercreditor Agreement, indorsed in blank
by an “effective endorsement” (as defined in Section 8-107 of the UCC),
regardless of whether such certificate constitutes a “certificated security”
for purposes of the UCC. With respect to any Investment Related Property that is
an “uncertificated security” for purposes of the UCC  (other than any “uncertificated securities”
credited to a Securities Account), it shall cause the issuer of such
uncertificated security which is a Subsidiary, and shall use commercially
reasonable efforts to cause any issuer of such uncertificated security which is
not a Subsidiary, to either (i) register the Collateral Agent as the registered
owner thereof on the books and records of the issuer or (ii) execute an
uncertificated securities control agreement in a form to be approved by the
Collateral Agent in its reasonable discretion, pursuant to which such issuer
agrees, after the occurrence and during the continuance of an Event of Default,
to comply with the Collateral Agent’s instructions with respect to such
uncertificated security without further consent by such Grantor.


 


(c)                                  Voting and
Distributions.


 


(i)                                     So long as no Event of Default shall
have occurred and be continuing, except as otherwise provided under the
covenants and agreements relating to Investment Related Property in this
Agreement or elsewhere herein or in the Credit Agreement, each Grantor shall be
entitled to exercise or refrain from exercising any and all voting and other
consensual rights pertaining to the Investment Related Property or any part
thereof for any purpose not inconsistent with the terms of this Agreement or
the Credit Agreement.


 


(ii)                                  Upon the occurrence and during the
continuation of an Event of Default:


 


(1)                                  Upon written notice
from the Collateral Agent with respect thereto, all rights of each Grantor to
exercise or refrain from exercising the voting


 


14
















 


and other consensual rights which it would
otherwise be entitled to exercise pursuant hereto shall cease and all such
rights shall thereupon become vested in the First Lien Collateral Agent or the
Collateral Agent, as applicable, in accordance with the Intercreditor
Agreement, who shall thereupon have the sole right to exercise such voting and
other consensual rights; and


 


(2)                                  in order to permit the Collateral
Agent to exercise the voting and other consensual rights which it may be
entitled to exercise pursuant hereto and to receive all dividends and other
distributions which it may be entitled to receive hereunder: (A) upon the
request of the Collateral Agent, each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to the Collateral Agent all
proxies, dividend payment orders and other instruments as the Collateral Agent
may from time to time reasonably request and (B) each Grantor acknowledges that
the Collateral Agent may utilize the power of attorney set forth in Section 6.01.


 


Section 4.05                                Pledged
Equity Interests.


 


(a)                                  Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date, that:


 


(i)                                     Schedule 4.05(A) (as such schedule
may be amended or supplemented from time to time) sets forth under the headings
“Pledged Stock, “Pledged LLC Interests,” “Pledged Partnership Interests” and
“Pledged Trust Interests,” respectively, all of the Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests owned by
any Grantor and such Pledged Equity Interests constitute the percentage of
issued and outstanding shares of stock, percentage of membership interests,
percentage of partnership interests or percentage of beneficial interest of the
respective issuers thereof indicated on such Schedule;


 


(ii)                                  except as set forth on Schedule
4.05(B), it has not acquired any equity interests of another entity or
substantially all the assets of another entity within the past five (5) years;


 


(iii)                               it is the record and beneficial owner
of the Pledged Equity Interests free of all Liens, rights or claims of other
Persons other than Permitted Liens and there are no outstanding warrants,
options or other rights to purchase, or shareholder, voting trust or similar
agreements outstanding with respect to, or property that is convertible into,
or that requires the issuance or sale of, any Pledged Equity Interests;


 


(iv)                              without limiting the generality of
Section 4.01(a)(v), no consent of any Person including any other general or
limited partner, any other member of a limited liability company, any other
shareholder or any other trust beneficiary is necessary or desirable in
connection with the creation, perfection or Second Priority status of the
security interest of the Collateral Agent in any Pledged Equity Interests or
the exercise by the Collateral Agent of the voting or other rights provided for
in this Agreement or the exercise of remedies in respect thereof; and


 


(v)                                 none of the Pledged LLC Interests
nor Pledged Partnership Interests are or represent interests in issuers
that:  (a) are registered as investment
companies, (b) are


 


15

















 


dealt in or traded on securities exchanges or
markets or (c) have opted to be treated as securities under the uniform
commercial code of any jurisdiction.


 


(b)                                 Covenants and
Agreements. Each Grantor hereby covenants and agrees that:


 


(i)                                     without the prior written consent of
the First Lien Collateral Agent or the Collateral Agent, as applicable, in
accordance with the Intercreditor Agreement, it shall not vote to enable or
take any other action to:  (a) amend,
waive any default under, breach, or terminate any partnership agreement,
limited liability company agreement, certificate of incorporation, by-laws or
other organizational documents in any way that adversely affects the validity,
perfection or priority of the Collateral Agent’s security interest,
(b) other than as permitted under the Credit Agreement, permit any issuer
of any Pledged Equity Interest to dispose of all or a material portion of their
assets, or (c) cause any issuer of any Pledged Partnership Interests or
Pledged LLC Interests which are not securities (for purposes of the UCC) on the
date hereof to elect or otherwise take any action to cause such Pledged
Partnership Interests or Pledged LLC Interests to be treated as securities for
purposes of the UCC; provided, however, notwithstanding the foregoing, if any
issuer of any Pledged Partnership Interests or Pledged LLC Interests takes any
such action in violation of the foregoing in this clause (e), such Grantor
shall promptly notify the Collateral Agent in writing of any such election or
action and, in such event, shall take all steps necessary or advisable to
establish the Collateral Agent’s “control” thereof;


 


(ii)                                  without the prior written consent of
the First Lien Collateral Agent or the Collateral Agent, as applicable, in
accordance with the Intercreditor Agreement, it shall not permit any issuer of
any Pledged Equity Interest to merge or consolidate unless (i) such issuer
creates a security interest that is perfected by a filed financing statement
(that is not effective solely under section 9-508 of the UCC) in Collateral in
which such new debtor has or acquires rights, and (ii) all the outstanding
capital stock or other equity interests of the surviving or resulting
corporation, limited liability company, partnership or other entity is, upon
such merger or consolidation, pledged hereunder;


 


(iii)                               each Grantor consents to the grant
by each other Grantor of a security interest in all Investment Related Property
to the Collateral Agent and, without limiting the foregoing, consents to the
transfer of any Pledged Partnership Interest and any Pledged LLC Interest to
the First Lien Collateral Agent or the Collateral Agent or its respective
nominee, as applicable, in accordance with the Intercreditor Agreement
following and during the continuance of an Event of Default and to the
substitution of the First Lien Collateral Agent or the Collateral Agent or its
respective nominee, as applicable, in accordance with the Intercreditor
Agreement, as a partner in any partnership or as a member in any limited
liability company with all the rights and powers related thereto following and
during the continuance of an Event of Default; and


 


(iv)                              it shall notify the Collateral Agent
of any default under any Pledged Debt that has caused, either in any case or in
the aggregate, a Material Adverse Effect.


 


Section 4.06                                Pledged
Debt.


 


(a)                                  Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date, that Schedule 4.05(A) (as such schedule may be amended or supplemented
from time to time) sets forth under the heading “Pledged Debt” all of the
Pledged Debt evidenced by promissory notes.


 


16

















 


(b)                                 Covenants and
Agreements. Each Grantor hereby covenants and agrees that it shall notify
the Collateral Agent of any default under any Pledged Debt that has caused,
either in any individual case or in the aggregate, a Material Adverse Effect.


 


Section 4.07                                Investment
Accounts.


 


(a)                                  Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date, that:


 


(i)                                     Schedule 4.05(A) hereto (as such
schedule may be amended or supplemented from time to time) sets forth under the
headings “Securities Accounts” and “Commodities Accounts,” respectively, all of
the Securities Accounts and Commodities Accounts in which each Grantor has an
interest. Each Grantor is the sole entitlement holder of each such Securities
Account and Commodity Account, and such Grantor has not consented to, and is
not otherwise aware of, any Person (other than the First Lien Collateral Agent
or the Collateral Agent pursuant hereto) having “control” (within the meanings
of Sections 8-106 and 9-106 of the UCC) over, or any other interest in, any
such Securities Account or Commodity Account or securities or other property
credited thereto;


 


(ii)                                  Schedule 4.05(A) hereto (as such
schedule may be amended or supplemented from time to time) sets forth under the
headings “Deposit Accounts” all of the Deposit Accounts in which each Grantor
has an interest. Each Grantor is the sole account holder of each such Deposit
Account and such Grantor has not consented to, and is not otherwise aware of,
any Person (other than the First Lien Collateral Agent or the Collateral Agent
pursuant hereto) having either sole dominion and control (within the meaning of
common law) or “control” (within the meanings of Section 9-104 of the UCC)
over, or any other interest in, any such Deposit Account or any money or other
property deposited therein; and


 


(iii)                               To the extent required by
Section 5.15 of the Credit Agreement, each Grantor has taken all actions
necessary or otherwise reasonably requested by Collateral Agent, to: (a)
establish Collateral Agent’s “control” (within the meanings of Sections 8-106
and 9-106 of the UCC) over any portion of the Investment Related Property
constituting Certificated Securities, Uncertificated Securities, Securities Accounts,
Securities Entitlements or Commodities Accounts (each as defined in the UCC);
(b) establish the Collateral Agent’s “control” (within the meaning of
Section 9-104 of the UCC) over all Deposit Accounts; and (c) deliver all
Instruments to the Collateral Agent.


 


(b)                                 Delivery and
Control. With respect to any Investment Related Property consisting of
Securities Accounts or Securities Entitlements, it shall cause the securities
intermediary maintaining such Securities Account or Securities Entitlement to enter
into a securities account control agreement in a form to be approved by the
Collateral Agent in its reasonable discretion pursuant to which it shall agree
to comply with the Collateral Agent’s “entitlement orders” without further
consent by such Grantor after and during the continuance of an Event of Default.
To the extent required by Section 5.15 of the Credit Agreement, with respect to
any Investment Related Property that is a “Deposit Account,” it shall cause the
depositary institution maintaining such account to enter into a deposit account
control agreement in a form to be approved by the Collateral Agent in its
reasonable discretion, pursuant to which the Collateral Agent shall have
“control” (within the meaning of Section 9-104 of the UCC) over such
Deposit Account. Each Grantor shall have entered into such control agreement or
agreements required above with respect to: 
(i) any Securities Accounts, Securities Entitlements or Deposit Accounts
that exist


 


17

















 


on the Closing
Date, within 60 days after the Closing Date and (ii) any Securities Accounts,
Securities Entitlements or Deposit Accounts that are created or acquired after
the Closing Date, as of or prior to the deposit or transfer of any such Securities
Entitlements or funds, whether constituting moneys or investments, into such
Securities Accounts or Deposit Accounts.


 


(c)                                  Certain Rights of Collateral Agent. Upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have the right,
without notice to any Grantor, to transfer all or any portion of the Investment
Related Property to its name or the name of its nominee or agent. In addition,
the Collateral Agent shall have the right, subject to the Intercreditor Agreement,
at any time, upon the occurrence and during the continuance of an Event of
Default, without notice to any Grantor, to exchange any certificates or
instruments representing any Investment Related Property for certificates or
instruments of smaller or larger denominations.


 


Section 4.08                                Material
Contracts.


 


(a)                                  Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date, that no Material Contract prohibits assignment or requires consent of or
notice to any Person in connection with the assignment to the Collateral Agent
hereunder, except such consent or notice as has been given or made or is
currently sought pursuant to Section 4.08(b)(vii) hereof.


 


(b)                                 Covenants and
Agreements. Each Grantor hereby covenants and agrees that:


 


(i)                                     in addition to any rights under this
Agreement relating to Receivables, the Collateral Agent may, subject to the
Intercreditor Agreement, at any time after the occurrence and during the
continuance of an Event of Default, notify, or require any Grantor to so
notify, the counterparty on any Material Contract of the security interest of
the Collateral Agent therein. In addition, after the occurrence and during the
continuance of an Event of Default, the Collateral Agent may, subject to the Intercreditor
Agreement, upon written notice to the applicable Grantor, notify, or require
any Grantor to notify, such counterparty to make all payments under such
Material Contracts directly to the First Lien Collateral Agent or the
Collateral Agent, as applicable, in accordance with the terms of the
Intercreditor Agreement; and


 


(ii)                                  each Grantor shall, within thirty
(30) days of the date hereof with respect to any material Non-Assignable
Contract in effect on the date hereof and within thirty (30) days after
entering into any material Non-Assignable Contract after the Closing Date,
request in writing the consent of the counterparty or counterparties to the
Non-Assignable Contract pursuant to the terms of such Non-Assignable Contract
or applicable law to the assignment or granting of a security interest in such
Non-Assignable Contract or the property or assets of any Grantor subject
thereto, as the case may be, to the Collateral Agent, for the benefit of the
Secured Parties, and use its commercially reasonable efforts to obtain such
consent as soon as practicable thereafter (it being understood that such
consent may not be obtainable).


 


Section 4.09                                Letter
of Credit Rights.


 


(a)                                  Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date, that:


 


18

















 


(i)                                     all material letters of credit to
which such Grantor has rights is listed on Schedule 4.09 (as such schedule may
be amended or supplemented from time to time) hereto; and


 


(ii)                                  it has used commercially reasonable
efforts to obtain the consent of each issuer of any material letter of credit
to the assignment as collateral of the proceeds of the letter of credit to the
First Lien Collateral Agent or the Collateral Agent, as applicable, in
accordance with the Intercreditor Agreement.


 


(b)                                 Covenants and
Agreements. Each Grantor hereby covenants and agrees that with respect to
any letter of credit hereafter arising for an amount in excess of $250,000, it
shall use commercially reasonable efforts to obtain the consent of the issuer
thereof to the assignment as collateral of the proceeds of the letter of credit
to the First Lien Collateral Agent or the Collateral Agent, as applicable, in
accordance with the Intercreditor Agreement, and shall deliver to the
Collateral Agent a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto.


 


Section 4.10                                Intellectual
Property.


 


(a)                                  Representations
and Warranties. Except as disclosed in Schedule 4.10(H) (as such schedule
may be amended or supplemented from time to time), each Grantor hereby
represents and warrants, on the Closing Date, that:


 


(i)                                     Schedule 4.10 (as such schedule may
be amended or supplemented from time to time) sets forth a true and complete
list of (i) all United States, state and foreign registrations of and
applications for registered Patents, registered Trademarks, and registered
Copyrights owned by each Grantor and (ii) all Patent Licenses, Trademark Licenses,
Trade Secret Licenses and Copyright Licenses material to the business of
Borrower and its Subsidiaries, taken as a whole;


 


(ii)                                  it is the sole and exclusive owner
of the entire right, title, and interest in and to all Intellectual Property
listed on Schedule 4.10 (as such schedule may be amended or supplemented from
time to time); and


 


(iii)                               all registrations and applications
for Copyrights, Patents and Trademarks are standing in the name of each Grantor
and none of the Trademarks, Patents, Copyrights or Trade Secrets has been
licensed by any Grantor to any affiliate or third party, except as disclosed in
Schedule 4.10(B), (D), (F), or (G) (as each may be amended or supplemented from
time to time).


 


(b)                                 Covenants and
Agreements. Each Grantor hereby covenants and agrees as follows:


 


(i)                                     it shall not do any act or omit to
do any act whereby any of the Intellectual Property which is material to the
business of Borrower and its Subsidiaries, taken as a whole, may lapse, or
become abandoned, dedicated to the public, or unenforceable, or which would
adversely affect the validity, grant, or enforceability of the security
interest granted therein;


 


(ii)                                  it shall not, with respect to any
Trademarks which are material to the business of any Borrower and its Subsidiaries,
taken as a whole, cease the use of any of


 


19

















 


such Trademarks or fail to maintain the level
of the quality of products sold and services rendered under any of such
Trademarks at a level at least substantially consistent with the quality of
such products and services as of the date hereof, and each Grantor shall use
commercially reasonable efforts to cause licensees of such Trademarks use such
consistent standards of quality;


 


(iii)                               it shall, within thirty (30) days of
the creation or acquisition of any Copyrightable work which is material to the
business of Grantor, apply to register the Copyright in the United States
Copyright Office except for works with respect to which the Grantor has
determined with the exercise of its commercially reasonable judgment that it
shall not so apply;


 


(iv)                              it shall promptly notify the
Collateral Agent if it knows that any item of the Intellectual Property that is
material to the business of Borrower and its Subsidiaries, taken as a whole,
may become (a) abandoned or dedicated to the public or placed in the public
domain, (b) invalid or unenforceable, or (c) subject to any adverse
determination or development (including the institution of proceedings) in any
action or proceeding in the United States Patent and Trademark Office, the
United States Copyright Office, any state registry, any foreign counterpart of
the foregoing, or any court;


 


(v)                                 it shall take commercially
reasonable steps in the United States Patent and Trademark Office, the United
States Copyright Office, any state registry or any foreign counterpart of the
foregoing, to pursue any application and maintain any registration of each
Trademark, Patent, and Copyright owned by any Grantor and material to its business
which is now or shall become included in the Intellectual Property including,
but not limited to, those items on Schedule 4.10(A), (C) and (E) (as each may
be amended or supplemented from time to time) except for works with respect to
which the Grantor has determined with the exercise of its commercially
reasonable judgment that it shall not so apply;


 


(vi)                              in the event that any Intellectual
Property owned by or exclusively licensed to any Grantor that is material to
the business of such Grantor is, to such Grantor’s knowledge, infringed,
misappropriated, or diluted by a third party, such Grantor shall promptly take
all reasonable actions to stop such infringement, misappropriation, or dilution
and protect its rights in such Intellectual Property including, but not limited
to, the initiation of a suit for injunctive relief and to recover damages
except for works with respect to which the Grantor has determined with the
exercise of its commercially reasonable judgment that it shall not take such
actions;


 


(vii)                           it shall promptly (but in no event
more than thirty (30) days after any Grantor obtains knowledge thereof) report
to the Collateral Agent (i) the filing of any application to register any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office, or any state registry or foreign counterpart of
the foregoing (whether such application is filed by such Grantor or through any
agent, employee, licensee, or designee thereof) and (ii) the registration of any
Intellectual Property by any such office, in each case by executing and
delivering to the Collateral Agent a completed Pledge Supplement, substantially
in the form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto;


 


(viii)                        it shall, subject to the
Intercreditor Agreement, execute and deliver to the Collateral Agent any
document reasonably requested by the Collateral Agent to


 


20

















 


acknowledge, confirm, register, record, or
perfect the Collateral Agent’s interest in any part of the Intellectual
Property, whether now owned or hereafter acquired (including, but not limited
to Trademark Security Agreements, Copyright Security Agreements and Patent
Security Agreements), in the form of Exhibits B, C and D, respectively);


 


(ix)                                except with the prior consent of the
Collateral Agent or as permitted under the Credit Agreement, each Grantor shall
not execute, and there will not be on file in any public office, any financing
statement or other document or instruments, except financing statements or
other documents or instruments filed or to be filed in favor of the First Lien
Collateral Agent and except as permitted in the Credit Agreement each Grantor
shall not sell, assign, transfer, license, grant any option, or create or
suffer to exist any Lien upon or with respect to the Intellectual Property,
except for the Lien created by and under this Agreement, the other Loan
Documents, the First Lien Credit Agreement and the related documents;


 


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


 


(xi)                                it shall continue to collect, at its
own expense, all amounts due or to become due to such Grantor in respect of the
Intellectual Property or any portion thereof. In connection with such
collections, each Grantor may take (and, at the Collateral Agent’s reasonable
direction, after the occurrence and during the continuance of an Event of
Default shall take) such action as such Grantor or the Collateral Agent may
deem reasonably necessary or advisable to enforce collection of such amounts. Notwithstanding
the foregoing, the Collateral Agent shall have the right at any time, after the
occurrence and during the continuance of an Event of Default, to notify, or
require any Grantor to notify, any obligors with respect to any such amounts of
the existence of the security interest created hereby.


 


Section 4.11                                Commercial
Tort Claims.


 


(a)                                  Representations
and Warranties. Each Grantor hereby represents and warrants, on the Closing
Date, that Schedule 4.11 (as such schedule may be amended or supplemented from
time to time) sets forth all Commercial Tort Claims with a value that is
reasonably expected to be in excess of $250,000 of each Grantor; and


 


(b)                                 Covenants and
Agreements. Each Grantor hereby covenants and agrees that with respect to
any Commercial Tort Claim with a value that is reasonably expected to be in
excess of $250,000 hereafter arising it shall deliver to the Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A attached
hereto, together with all Supplements to Schedules thereto, identifying such
new Commercial Tort Claims.


 


21

















 


ARTICLE V



FURTHER ASSURANCES; ADDITIONAL GRANTORS


 


Section 5.01                                Further
Assurances.


 


(a)                                  Each Grantor agrees that from time
to time, at the expense of such Grantor, that it shall promptly execute and
deliver all further instruments and documents, and take all further action,
that the Collateral Agent may reasonably request (such request, in all events,
shall not be in contravention of the Intercreditor Agreement), in order to
create and/or maintain the validity, perfection or priority of and protect any
security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
each Grantor shall:


 


(i)                                     file such financing or continuation
statements, or amendments thereto, and execute and deliver such other
agreements, instruments, endorsements, powers of attorney or notices, as the
Collateral Agent may reasonably request, in order to perfect and preserve the
security interests granted or purported to be granted hereby; and


 


(ii)                                  take all actions reasonably
requested by the Collateral Agent to ensure the recordation of appropriate
evidence of the liens and security interest granted hereunder in the
Intellectual Property with any intellectual property registry in which said
Intellectual Property is registered or in which an application for registration
is pending including, without limitation, the United States Patent and Trademark
Office, the United States Copyright Office, the various Secretaries of State,
and the foreign counterparts on any of the foregoing.


 


(b)                                 Each Grantor hereby authorizes the
Collateral Agent to file a Record or Records, including, without limitation, financing
or continuation statements, and amendments thereto, in any jurisdictions and
with any filing offices as the Collateral Agent may determine, in its sole
discretion, are necessary or advisable to perfect the security interest granted
to the Collateral Agent herein. 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 Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Collateral Agent herein, including, without
limitation, describing such property as “all assets” or “all personal property,
whether now owned or hereafter acquired.”


 


(c)                                  Each Grantor hereby authorizes the
Collateral Agent to modify this Agreement after obtaining such Grantor’s
written approval of or signature to such modification by amending Schedule 4.10
(as such schedule may be amended or supplemented from time to time) to include
reference to any right, title or interest in any existing Intellectual Property
or any Intellectual Property acquired or developed by any Grantor after the
execution hereof or to delete any reference to any right, title or interest in
any Intellectual Property in which any Grantor no longer has or claims any
right, title or interest.


 


Section 5.02                                Additional
Grantors. From time to time subsequent to the date hereof, additional
Persons may become parties hereto as additional Grantors (each, an “Additional
Grantor”), by executing a Counterpart Agreement. Upon delivery of any such
counterpart agreement to the Collateral Agent, notice of which is hereby waived
by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a
party hereto as if Additional Grantor were an original signatory hereto. Each
Grantor expressly agrees that its Obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Collateral Agent not to cause any Subsidiary
of Borrower to become an Additional Grantor hereunder. This Agreement shall be
fully effective as to any Grantor that is or becomes a party hereto regardless
of whether any other Person becomes or fails to become or ceases to be a
Grantor hereunder.


 


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ARTICLE VI



COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT


 


Section 6.01                                Power
of Attorney. Subject to the Intercreditor Agreement, each Grantor hereby
irrevocably appoints the Collateral Agent (such appointment being coupled with
an interest) as such Grantor’s attorney-in-fact, effective after and during the
continuance of an Event of Default, with full authority in the place and stead
of such Grantor and in the name of such Grantor, the Collateral Agent or
otherwise, from time to time in the Collateral Agent’s discretion, subject to
the Intercreditor Agreement, to take any action and to execute any instrument
that the Collateral Agent may deem reasonably necessary or advisable (and to
the extent permitted by applicable laws) to accomplish the purposes of this
Agreement, including, without limitation, the following:


 


(a)                                  to obtain and adjust insurance
required to be maintained by such Grantor or paid to the Collateral Agent
pursuant to the Credit Agreement;


 


(b)                                 to ask for, demand, collect, sue
for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral;


 


(c)                                  to receive, endorse and collect any
drafts or other instruments, documents and chattel paper in connection with
clause (b) above;


 


(d)                                 to file any claims or take any
action or institute any proceedings that the Collateral Agent may deem necessary
or desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Collateral Agent with respect to any of the
Collateral;


 


(e)                                  to prepare and file any UCC
financing statements against such Grantor as debtor;


 


(f)                                    to prepare, sign, and file for
recordation in any intellectual property registry, appropriate evidence of the
lien and security interest granted herein in the Intellectual Property in the
name of such Grantor as debtor;


 


(g)                                 to take or cause to be taken all
actions necessary to perform or comply or cause performance or compliance with
the terms of this Agreement, including, without limitation, actions to pay or
discharge taxes or Liens (other than Permitted Liens) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Collateral
Agent in its sole discretion, any such payments made by the Collateral Agent to
become Obligations of such Grantor to the Collateral Agent, due and payable
immediately without demand; and


 


(h)                                 generally to sell, transfer, pledge,
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Collateral Agent were the absolute owner
thereof for all purposes, and to do, at the Collateral Agent’s option and such
Grantor’s expense, at any time or from time to time, all acts and things that
the Collateral Agent deems reasonably necessary to protect, preserve or realize
upon the Collateral and the Collateral Agent’s security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.


 


Section 6.02                                No
Duty on the Part of Collateral Agent or Secured Parties. The powers conferred
on the Collateral Agent hereunder are solely to protect the interests of the
Secured Parties in the


 


23

















 


Collateral and
shall not impose any duty upon the Collateral Agent or any Secured Party to
exercise any such powers. The Collateral Agent and the Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.


 


ARTICLE VII



REMEDIES


 


Section 7.01                                Generally.


 


(a)                                  Subject to the Intercreditor
Agreement, if any Event of Default shall have occurred and be continuing, the
Collateral Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it at
law or in equity, all the rights and remedies of the Collateral Agent on
default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing,
whether by acceleration or otherwise, and also may pursue any of the following
separately, successively or simultaneously:


 


(i)                                     require any Grantor to, and each
Grantor hereby agrees that it shall at its expense and promptly upon request of
the Collateral Agent forthwith, assemble all or part of the Collateral as
directed by the Collateral Agent and make it available to the Collateral Agent
at a place to be designated by the Collateral Agent that is reasonably
convenient to both parties;


 


(ii)                                  enter onto the property where any
Collateral is located and take possession thereof with or without judicial process;


 


(iii)                               prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent the
Collateral Agent deems appropriate; and


 


(iv)                              without notice except as specified
below or under the UCC, sell, assign, lease, license (on an exclusive or
nonexclusive basis) or otherwise dispose of the Collateral or any part thereof
in one or more parcels at public or private sale, at any of the Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable.


 


(b)                                 The Collateral Agent or any Secured
Party may be the purchaser of any or all of the Collateral at any public or
private (to the extent the portion of the Collateral being privately sold is of
a kind that is customarily sold on a recognized market or the subject of widely
distributed standard price quotations) sale in accordance with the UCC and the
Collateral Agent, as Collateral Agent for and representative of the Secured
Parties, shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold at
any such sale made in accordance with the UCC, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any
Collateral payable by the Collateral Agent at such sale. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute


 


24

















 


now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Agent shall not
be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. Each Grantor agrees that it would not be commercially
unreasonable for the Collateral Agent to dispose of the Collateral or any
portion thereof by using Internet sites that provide for the auction of assets
of the types included in the Collateral or that have the reasonable capability
of doing so, or that match buyers and sellers of assets. Each Grantor hereby
waives any claims against the Collateral Agent arising by reason of the fact
that the price at which any Collateral may have been sold at such a private
sale was less than the price which might have been obtained at a public sale,
even if the Collateral Agent accepts the first offer received and does not
offer such Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be liable for the deficiency and the fees of any
attorneys employed by the Collateral Agent to collect such deficiency. Each
Grantor further agrees that a breach of any of the covenants contained in this
Section will cause irreparable injury to the Collateral Agent, that the
Collateral Agent has no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section shall
be specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default has occurred
giving rise to the Secured Obligations becoming due and payable prior to their
stated maturities. Nothing in this Section shall in any way alter the rights of
the Collateral Agent hereunder.


 


(c)                                  The Collateral Agent may sell the
Collateral without giving any warranties as to the Collateral. The Collateral
Agent may specifically disclaim or modify any warranties of title or the like. This
procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.


 


(d)                                 The Collateral Agent shall have no
obligation to marshal any of the Collateral.


 


Section 7.02                                Application
of Proceeds. Except as expressly provided elsewhere in this Agreement or in
the Intercreditor Agreement, all proceeds received by the Collateral Agent in
respect of any sale, any collection from, or other realization upon all or any
part of the Collateral shall be applied in full or in part by the Collateral
Agent against, the Secured Obligations in the following order of priority:  first, to the payment of all costs and expenses
of such sale, collection or other realization, including reasonable
compensation to the Collateral Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by the Collateral Agent in
connection therewith, and all amounts for which the Collateral Agent is
entitled to indemnification hereunder (in its capacity as the Collateral Agent
and not as a Lender) and all advances made by the Collateral Agent hereunder
for the account of the applicable Grantor, and to the payment of all costs and
expenses paid or incurred by the Collateral Agent in connection with the
exercise of any right or remedy hereunder or under the Credit Agreement, all in
accordance with the terms hereof or thereof; second, to the extent of any excess
of such proceeds, to the payment of all other Secured Obligations for the
ratable benefit of the Lenders and the Lender Counterparties; and third, to the
extent of any excess of such proceeds, to the payment to or upon the order of
such Grantor or to whosoever may be lawfully entitled to receive the same or as
a court of competent jurisdiction may direct.


 


Section 7.03                                Sales
on Credit. If Collateral Agent sells any of the Collateral upon credit,
Grantor will be credited only with payments actually made by purchaser and
received by Collateral Agent and applied to indebtedness of the purchaser. In
the event the purchaser fails to pay for the


 


25

















 


Collateral,
Collateral Agent may resell the Collateral and Grantor shall be credited with
proceeds of the sale.


 


Section 7.04                                Deposit
Accounts. If any Event of Default shall have occurred and be continuing,
subject to the Intercreditor Agreement, the Collateral Agent may, to the extent
permitted by applicable law, apply the balance from any Deposit Account or
instruct the bank at which any Deposit Account is maintained to pay the balance
of any Deposit Account to or for the benefit of the Collateral Agent.


 


Section 7.05                                Investment
Related Property. Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws, the Collateral Agent may be compelled, with respect to any sale of all or
any part of the Investment Related Property conducted without prior registration
or qualification of such Investment Related Property under the Securities Act
and/or such state securities laws, to limit purchasers to those who will agree,
among other things, to acquire the Investment Related Property for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sale may be at prices
and on terms less favorable than those obtainable through a public sale without
such restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the
sale of any Investment Related Property for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it. Subject to
the Intercreditor Agreement, if the Collateral Agent determines to exercise its
right to sell any or all of the Investment Related Property, upon written
request, each Grantor shall and shall cause each issuer of any Pledged Stock to
be sold hereunder, each partnership and each limited liability company from
time to time to furnish to the Collateral Agent all such information as the
Collateral Agent may request in order to determine the number and nature of
interest, shares or other instruments included in the Investment Related
Property which may be sold by the Collateral Agent in exempt transactions under
the Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.


 


Section 7.06                                Intellectual
Property.


 


(a)                                  Anything contained herein to the
contrary notwithstanding, but subject to the Intercreditor Agreement, upon the
occurrence and during the continuation of an Event of Default:


 


(i)                                     the Collateral Agent shall have the
right (but not the obligation) to bring suit or otherwise commence any action
or proceeding in the name of any Grantor, the Collateral Agent or otherwise, in
the Collateral Agent’s sole discretion, to enforce any of such Grantor’s rights
in any Intellectual Property, in which event such Grantor shall, at the request
of the Collateral Agent, do any and all lawful acts and execute any and all
documents required by the Collateral Agent in aid of such enforcement and such
Grantor shall promptly, upon demand, reimburse and indemnify the Collateral
Agent as provided in Article 10 of the Credit Agreement in connection with the
exercise of its rights under this Section;


 


(ii)                                  upon written demand from the
Collateral Agent, each Grantor shall grant, assign, convey or otherwise
transfer to the Collateral Agent an absolute assignment of all of such
Grantor’s right, title and interest in and to the Intellectual Property and
shall


 


26

















 


execute and deliver to the Collateral Agent
such documents as are necessary or appropriate to carry out the intent and
purposes of this Agreement;


 


(iii)                               each Grantor agrees that such a
grant, conveyance, transfer, assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that the
Collateral Agent (or any Secured Party) receives cash proceeds in respect of
the sale of, or other realization upon, the Intellectual Property; and


 


(iv)                              the Collateral Agent shall have the
right to notify, or require each Grantor to notify, any obligors with respect
to amounts due or to become due to such Grantor in respect of the Intellectual
Property, of the existence of the security interest created herein, to direct
such obligors to make payment of all such amounts directly to the Collateral
Agent, and, upon such notification and at the expense of such Grantor, to
enforce collection of any such amounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done.


 


(b)                                 Subject to the Intercreditor
Agreement, if (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Collateral Agent of any rights, title and
interests in and to the Intellectual Property shall have been previously made
and shall have become absolute and effective, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Collateral Agent shall promptly execute and deliver to such
Grantor, at such Grantor’s sole cost and expense, such assignments or other
transfer as may be necessary to reassign to such Grantor any such rights, title
and interests as may have been assigned to the Collateral Agent as aforesaid,
subject to any disposition thereof that may have been made by the Collateral
Agent; provided, after giving effect to such reassignment, the Collateral
Agent’s security interest granted pursuant hereto, as well as all other rights
and remedies of the Collateral Agent granted hereunder, shall continue to be in
full force and effect; and provided further, the rights, title and interests so
reassigned shall be free and clear of any other Liens granted by or on behalf
of the Collateral Agent and the Secured Parties.


 


(c)                                  Solely for the purpose of enabling
the Collateral Agent to exercise rights and remedies under this Article 7 and
at such time as the Collateral Agent shall be lawfully entitled to exercise
such rights and remedies, each Grantor hereby grants to the Collateral Agent,
to the extent it has the right to do so, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to such Grantor),
subject, in the case of Trademarks, to sufficient rights to quality control and
inspection in favor of such Grantor to avoid the risk of invalidation of said
Trademarks, to use, operate under, license, or sublicense any Intellectual
Property  now owned or hereafter acquired
by such Grantor, and wherever the same may be located.


 


Section 7.07                                Cash
Proceeds. In addition to the rights of the Collateral Agent specified in
Section 4.03 with respect to payments of Receivables, any cash, checks and
other near-cash items (collectively, “Cash Proceeds”)  received by the Collateral Agent (whether
from a Grantor or otherwise):  (i) if no
Event of Default shall have occurred and be continuing, shall be paid by the
Collateral Agent to Borrower or as otherwise instructed by Borrower and (ii) if
an Event of Default shall have occurred and be continuing, may, in the sole
discretion of the Collateral Agent, (A) be paid to Borrower, (B) be held by the
Collateral Agent for the ratable benefit of the Secured Parties, as collateral
security for the Secured Obligations (whether matured or unmatured) and/or (C)
then or at any time thereafter may be applied by the Collateral Agent against
the Secured Obligations then due and owing.


 


27

















 


ARTICLE VIII



COLLATERAL AGENT


 


The Collateral Agent has been appointed to
act as Collateral Agent under the Credit Agreement by Lenders and, by their
acceptance of the benefits hereof, the other Secured Parties. The Collateral
Agent shall be obligated, and shall have the right hereunder, to make demands,
to give notices, to exercise or refrain from exercising any rights, and to take
or refrain from taking any action (including, without limitation, the release
or substitution of Collateral), solely in accordance with this Agreement and
the Credit Agreement. In furtherance of the foregoing provisions of this
Section, each Secured Party, by its acceptance of the benefits hereof, agrees
that it shall have no right individually to realize upon any of the Collateral
hereunder, it being understood and agreed by such Secured Party that all rights
and remedies hereunder may be exercised solely by the Collateral Agent for the
benefit of the Secured Parties in accordance with the terms of this Section.


 


ARTICLE IX



CONTINUING SECURITY INTEREST; TRANSFER OF LOANS


 


This Agreement shall create a continuing
security interest in the Collateral and shall remain in full force and effect
until the Termination Date, be binding upon each Grantor, its successors and
assigns, and inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and its successors,
transferees and assigns. Without limiting the generality of the foregoing, but
subject to the terms of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the Termination Date, the security interest
granted hereby shall terminate hereunder and of record and all rights to the
Collateral shall revert to Grantors. Upon any such termination the Collateral
Agent shall, at Grantors’ expense, execute and deliver to Grantors such
documents as Grantors shall reasonably request to evidence such termination.


 


ARTICLE X



STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM


 


The powers conferred on the Collateral Agent
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral in its possession
if such Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property. Neither the Collateral Agent nor any
of its directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon all or any part of the 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 otherwise. If any Grantor
fails to perform any agreement contained herein, if an Event of Default has
occurred and is continuing, the Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by each Grantor under Section
10.02 of the Credit Agreement.


 


28

















 


ARTICLE XI



MISCELLANEOUS.


 


Any notice required or permitted to be given
under this Agreement shall be given in accordance with Section 10.01 of the
Credit Agreement. No failure or delay on the part of the Collateral Agent in
the exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are cumulative
to, and not exclusive of, any rights or remedies otherwise available. In case
any provision in or obligation under this Agreement shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not, subject to the Intercreditor Agreement,
in any way be affected or impaired thereby. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant
shall not, subject to the terms of the Intercreditor Agreement, avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists. This Agreement shall be binding upon and inure to the benefit
of the Collateral Agent and Grantors and their respective successors and
assigns. No Grantor shall, without the prior written consent of the Collateral
Agent given in accordance with the Credit Agreement, or as permitted by the
Credit Agreement, assign any right, duty or obligation hereunder. This
Agreement and the other Loan Documents embody the entire agreement and
understanding between Grantors and the Collateral Agent and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Loan Documents may not be contradicted
by evidence of prior, contemporaneous or subsequent oral agreements of the
parties. There are no unwritten oral agreements between the parties. This
Agreement may be executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.


 


THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAW AND RULES.


 


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


 


	
   

  	
  CHEM RX CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  
	
   

  	
   

  	
  Name: Jerry
  Silva

  
	
   

  	
   

  	
  Title:
  Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  B.J.K. INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  
	
   

  	
   

  	
  Name: Jerry
  Silva

  
	
   

  	
   

  	
  Title:
  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMRX NEW JERSEY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  
	
   

  	
   

  	
  Name:  Jerry
  Silva

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMRX/SALERNO’S, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  
	
   

  	
   

  	
  Name:  Jerry
  Silva

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMRX-BOCA RATON, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  
	
   

  	
   

  	
  Name:  Jerry
  Silva

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMRX CARE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  
	
   

  	
   

  	
  Name:  Jerry
  Silva

  
	
   

  	
   

  	
  Title: President

  



 


30
















 


	
   

  	
  CANADIAN IMPERIAL BANK OF COMMERCE,

  
	
   

  	
  NEW YORK AGENCY,

  
	
   

  	
  as the Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Doug Cornett

  	
   

  
	
   

  	
   

  	
  Name: Doug Cornett

  
	
   

  	
   

  	
  Title: Authorized
  Signatory

  



 


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