exv10w2






Exhibit 10.2




 


SECURITY AGREEMENT




by




BIG 5 CORP.

as Lead Borrower




and

THE OTHER BORROWERS AND GUARANTORS PARTY HERETO

FROM TIME TO TIME




and




WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Agent




Dated as of October 18, 2010




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	PREAMBLE
	 	 	1	 
	 
	 	 	 	 
	RECITALS
	 	 	1	 
	 
	 	 	 	 
	AGREEMENT
	 	 	2	 
	 
	 	 	 	 
	ARTICLE I
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS AND INTERPRETATION
	 	 	 	 
	 
	 	 	 	 
	SECTION 1.1. Definitions
	 	 	2	 
	SECTION 1.2. Interpretation
	 	 	7	 
	SECTION 1.3. Perfection Certificate
	 	 	7	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	 	 	 	 
	GRANT OF SECURITY AND SECURED OBLIGATIONS
	 	 	 	 
	 
	 	 	 	 
	SECTION 2.1. Pledge
	 	 	7	 
	SECTION 2.2. Secured Obligations
	 	 	8	 
	SECTION 2.3. Security Interest
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	 	 	 	 
	PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
	 	 	 	 
	USE OF COLLATERAL
	 	 	 	 
	 
	 	 	 	 
	SECTION 3.1. Delivery of Certificated Securities Collateral
	 	 	9	 
	SECTION 3.2. Perfection of Uncertificated Securities Collateral
	 	 	10	 
	SECTION 3.3. Financing Statements and Other Filings; Maintenance of Perfected Security Interest
	 	 	10	 
	SECTION 3.4. Other Actions
	 	 	11	 
	SECTION 3.5. Supplements; Further Assurances
	 	 	13	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	 
	 	 	 	 
	REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	 	 
	 
	 	 	 	 
	SECTION 4.1. Limitation on Liens
	 	 	14	 






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	 	 	Page
	SECTION 4.2. Chief Executive Office; Change of Name; Jurisdiction of Organization
	 	 	14	 
	SECTION 4.3. Due Authorization and Issuance
	 	 	15	 
	SECTION 4.4. Consents, etc.
	 	 	15	 
	SECTION 4.5. Insurance
	 	 	15	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
	 	 	 	 
	 
	 	 	 	 
	SECTION 5.1. Pledge of Additional Securities Collateral
	 	 	16	 
	SECTION 5.2. Voting Rights; Distributions; etc.
	 	 	16	 
	SECTION 5.3. Evidence of Pledged Interests
	 	 	17	 
	SECTION 5.4. Certain Agreements of Grantors As Issuers and Holders of Equity Interests
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	CERTAIN PROVISIONS CONCERNING INTELLECTUAL
	 	 	 	 
	PROPERTY COLLATERAL
	 	 	 	 
	 
	 	 	 	 
	SECTION 6.1. Grant of License
	 	 	18	 
	SECTION 6.2. Protection of Collateral Agent’s Security
	 	 	18	 
	SECTION 6.3. After-Acquired Property
	 	 	18	 
	SECTION 6.4. Modifications
	 	 	19	 
	SECTION 6.5. Litigation
	 	 	19	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 
	 	 	 	 
	REMEDIES
	 	 	 	 
	 
	 	 	 	 
	SECTION 7.1. Remedies
	 	 	19	 
	SECTION 7.2. Notice of Sale
	 	 	21	 
	SECTION 7.3. Waiver of Notice and Claims
	 	 	21	 
	SECTION 7.4. Certain Sales of Collateral
	 	 	22	 
	SECTION 7.5. No Waiver; Cumulative Remedies
	 	 	23	 
	SECTION 7.6. Certain Additional Actions Regarding Intellectual Property
	 	 	23	 
	SECTION 7.7. Application of Proceeds
	 	 	24	 






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	 	 	Page
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	SECTION 8.1. Concerning Collateral Agent
	 	 	24	 
	SECTION 8.2. Collateral Agent May Perform; Collateral Agent Appointed Attorney-in-Fact
	 	 	25	 
	SECTION 8.3. Expenses
	 	 	26	 
	SECTION 8.4. Continuing Security Interest; Assignment
	 	 	26	 
	SECTION 8.5. Termination; Release
	 	 	26	 
	SECTION 8.6. Modification in Writing
	 	 	27	 
	SECTION 8.7. Notices
	 	 	27	 
	SECTION 8.8. GOVERNING LAW
	 	 	27	 
	SECTION 8.9. CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL
	 	 	27	 
	SECTION 8.10. Severability of Provisions
	 	 	29	 
	SECTION 8.11. Execution in Counterparts; Effectiveness
	 	 	29	 
	SECTION 8.12. No Release
	 	 	29	 
	SECTION 8.13. Obligations Absolute
	 	 	29	 
	 
	 	 	 	 
	SIGNATURES
	 	 	 	 






	 	 	 
	EXHIBIT 1
	 	Form of Securities Pledge Amendment
	SCHEDULE I
	 	Intercompany Notes
	SCHEDULE II
	 	Filings, Registrations and Recordings
	SCHEDULE III
	 	Pledged Interests






-iii- 









 





SECURITY AGREEMENT



          SECURITY AGREEMENT dated as of October 18, 2010 (as amended, restated, supplemented or
otherwise modified from time to time in accordance with the provisions hereof, this “Security
Agreement”) made by (i) BIG 5 CORP., a Delaware corporation having an office at 2525 El Segundo
Boulevard, El Segundo, California 90245, as lead borrower for itself and the other Borrowers (the
“Lead Borrower”), (ii) THE OTHER BORROWERS LISTED ON THE SIGNATURE PAGES HERETO (together
with the Lead Borrower, the “Original Borrowers”) OR FROM TIME TO TIME PARTY HERETO BY
EXECUTION OF A JOINDER AGREEMENT (the “Additional Borrowers,” and together with the
Original Borrowers, the “Borrowers”), and (iii) THE GUARANTOR LISTED ON THE SIGNATURE PAGES
HERETO (the “Original Guarantor”) AND THE OTHER GUARANTORS FROM TIME TO TIME PARTY HERETO
BY EXECUTION OF A JOINDER AGREEMENT (the “Additional Guarantors,” and together with the
Original Guarantor, the “Guarantors”), as pledgors, assignors and debtors (the Borrowers,
together with the Guarantors, in such capacities and together with any successors in such
capacities, the “Grantors,” and each, a “Grantor”), in favor of WELLS FARGO BANK,
NATIONAL ASSOCIATION, having an office at One Boston Place, 18th Floor, Boston, Massachusetts
02108, in its capacity as collateral agent for the Credit Parties (as defined in the Credit
Agreement defined below) pursuant to the Credit Agreement, as pledgee, assignee and secured party
(in such capacities and together with any successors in such capacities, the “Collateral
Agent”).



R E C I T A L S:


          A. The Borrowers, the Collateral Agent, Wells Fargo Bank, National Association, as
Administrative Agent, and the Lenders party thereto, among others, have, in connection with the
execution and delivery of this Security Agreement, entered into that certain Credit Agreement dated
as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time,
the “Credit Agreement”).


          B. The Guarantor has, pursuant to that certain Guaranty dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”),
among other things, unconditionally guaranteed the Guaranteed Obligations (as defined in the
Guaranty).


          C. The Borrowers and the Guarantor will receive substantial benefits from the execution,
delivery and performance of the Obligations and the Guaranteed Obligations and each is, therefore,
willing to enter into this Security Agreement.


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


          E. It is a condition to the obligations of the Lenders to make the Loans under the Credit
Agreement and a condition to the L/C Issuer issuing Letters of Credit under the Credit



 









 







Agreement that each Grantor execute and deliver the applicable Loan Documents, including this
Security Agreement.



A G R E E M E N T:


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



ARTICLE I




DEFINITIONS AND INTERPRETATION



          SECTION 1.1. Definitions.




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


          (b) Capitalized terms used but not otherwise defined herein that are defined in
the Credit Agreement shall have the meanings given to them in the Credit Agreement.


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


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


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


          “Claims” shall mean any and all property taxes and other taxes, assessments and
special assessments, levies, fees and all governmental charges imposed upon or assessed against,
and all claims (including, without limitation, landlords’, carriers’, mechanics’, workmen’s,
repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arising
by operation of law) against, all or any portion of the Collateral.


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


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



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


          “Control” shall mean (i) in the case of each DDA, “control,” as such term is defined
in Section 9-104 of the UCC, and (ii) in the case of any security entitlement, “control,” as such
term is defined in Section 8-106 of the UCC.


          “Control Agreements” shall mean, collectively, the Blocked Account Agreements and the
Securities Account Control Agreements.


          “Copyrights” shall mean, collectively, with respect to each Grantor, all copyrights
(whether statutory or common Law, whether established or registered in the United States or any
other country or any political subdivision thereof whether registered or unregistered and whether
published or unpublished) and all copyright registrations and applications made by such Grantor, in
each case, whether now owned or hereafter created or acquired by or assigned to such Grantor,
including, without limitation, the registrations and applications listed in Section IV (if any) of
the Perfection Certificate, together with any and all (i) rights and privileges arising under
applicable Law with respect to such Grantor’s use of such copyrights, (ii) reissues, renewals,
continuations and extensions thereof, (iii) income, fees, royalties, damages, claims and payments
now or hereafter due and/or payable with respect thereto, including, without limitation, damages
and payments for past, present or future infringements thereof, (iv) rights corresponding thereto
throughout the world and (v) rights to sue for past, present or future infringements thereof.


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


          “Distributions” shall mean, collectively, with respect to each Grantor, all Restricted
Payments from time to time received, receivable or otherwise distributed to such Grantor in respect
of or in exchange for any or all of the Pledged Securities or Intercompany Notes.


          “Excluded Property” shall mean the following:




     (a) any license, permit or lease held by any Grantor (i) that validly prohibits the
creation by such Grantor of a security interest therein or thereon or (ii) to the extent
that applicable Law prohibits the creation of a security interest therein or thereon;




     (b) any Intellectual Property Collateral consisting of intent-to-use trademark
applications, for which the creation by a Grantor of a security interest therein is
prohibited without the consent of a third party or by applicable Law;



3









 






provided, however, that in each case described in clause (a) of this
definition, such property shall constitute “Excluded Property” only to the extent and for so
long as such license, permit, lease or applicable Law validly prohibits the creation of a
Lien on such property in favor of the Collateral Agent and, upon the termination of such
prohibition (howsoever occurring), such property shall cease to constitute “Excluded
Property”; provided further, that “Excluded Property” shall not include the
right to receive any proceeds arising therefrom or any other property or rights that would
have otherwise been excludable, but as to which the prohibition that would have rendered
them so excludable are rendered ineffective by reason of Sections 9-406(f), 9-407(a) or
9-408(a) of the UCC, or any Proceeds, substitutions or replacements of any Excluded Property
(unless such Proceeds, substitutions or replacements would otherwise constitute Excluded
Property).


          “Goodwill” shall mean, collectively, with respect to each Grantor, the goodwill
connected with such Grantor’s business including, without limitation, (i) all goodwill connected
with the use of and symbolized by any of the Intellectual Property Collateral in which such Grantor
has any interest, (ii) all know-how, trade secrets, customer and supplier lists, proprietary
information, inventions, methods, procedures, formulae, descriptions, compositions, technical data,
drawings, specifications, name plates, catalogs, confidential information and the right to limit
the use or disclosure thereof by any Person, pricing and cost information, business and marketing
plans and proposals, consulting agreements, engineering contracts and such other assets which
relate to such goodwill and (iii) all product lines of such Grantor’s business.


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


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


          “Guaranty” shall have the meaning assigned to such term in Recital B hereof.


          “Intellectual Property Collateral” shall mean, collectively, the Patents, Trademarks,
Copyrights, Licenses and Goodwill.


          “Intercompany Notes” shall mean, with respect to each Grantor, all intercompany notes
described on Schedule I hereto and each intercompany note hereafter acquired by such
Grantor and all certificates, instruments or agreements evidencing such intercompany notes, and all
assignments, amendments, restatements, supplements, extensions, renewals, replacements or
modifications thereof to the extent permitted pursuant to the terms hereof.


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


          “Letters of Credit” unless the context otherwise requires, shall have the meaning
given to such term in the UCC.



4









 







          “Licenses” shall mean, collectively, with respect to each Grantor, all license and
distribution agreements with any other Person with respect to any Patent, Trademark or Copyright or
any other patent, trademark or copyright, whether such Grantor is a licensor or licensee,
distributor or distributee under any such license or distribution agreement, together with any and
all (i) renewals, extensions, supplements and continuations thereof, (ii) income, fees, royalties,
damages, claims and payments now and hereafter due and/or payable thereunder and with respect
thereto including, without limitation, damages and payments for past, present or future
infringements or violations thereof, (iii) rights to sue for past, present and future infringements
or violations thereof and (iv) other rights to use, exploit or practice any or all of the Patents,
Trademarks or Copyrights or any other patent, trademark or copyright.


          “Patents” shall mean, collectively, with respect to each Grantor, all patents issued
or assigned to and all patent applications made by such Grantor (whether established or registered
or recorded in the United States or any other country or any political subdivision thereof),
including, without limitation, those patents, patent applications listed in Section IV (if any) of
the Perfection Certificate, together with any and all (i) rights and privileges arising under
applicable Law with respect to such Grantor’s use of any patents, (ii) inventions and improvements
described and claimed therein, (iii) reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (iv) income, fees, royalties, damages, claims and payments now or
hereafter due and/or payable thereunder and with respect thereto including, without limitation,
damages and payments for past, present or future infringements thereof, (v) rights corresponding
thereto throughout the world and (vi) rights to sue for past, present or future infringements
thereof.


          “Perfection Certificate” shall mean that certain perfection certificate dated as of
the date hereof, executed and delivered by each Grantor in favor of the Collateral Agent for the
benefit of the Credit Parties, and each other Perfection Certificate (which shall be in form and
substance reasonably acceptable to the Collateral Agent) executed and delivered by the applicable
Borrower or Guarantor in favor of the Collateral Agent for the benefit of the Credit Parties
contemporaneously with the execution and delivery of a joinder agreement hereto, in each case, as
the same may be amended, amended and restated, restated, supplemented or otherwise modified from
time to time in accordance with the Credit Agreement.


          “Pledged Interests” shall mean, collectively, with respect to each Grantor, all Equity
Interests in any issuer now existing or hereafter acquired or formed, including, without
limitation, all Equity Interests of such issuer described in Schedule III hereof, together
with all rights, privileges, authority and powers of such Grantor relating to such Equity Interests
issued by any such issuer under the Organization Documents of any such issuer, and the
certificates, instruments and agreements representing such Equity Interests and any and all
interest of such Grantor in the entries on the books of any financial intermediary pertaining to
such Equity Interests, from time to time acquired by such Grantor in any manner, and all other
Investment Property owned by such Grantor; provided, however, that to the extent
applicable, Pledged Interests shall not include any interest possessing more than 65% of the voting
power or control



5









 







of all classes of interests entitled to vote of any CFC to the extent such pledge would result
in an adverse tax consequence to the Grantor.


          “Pledged Securities” shall mean, collectively, the Pledged Interests and the Successor
Interests.


          “Secured Obligations” shall mean the Obligations (as defined in the Credit Agreement)
and the Guaranteed Obligations; provided, however, that Other Liabilities shall be Secured
Obligations solely to the extent that there is sufficient Collateral following satisfaction of the
Obligations described in clause (a) of the definition of Obligations.


          “Securities Account Control Agreement” shall mean an agreement in form and substance
satisfactory to the Collateral Agent with respect to any Securities Account of a Grantor.


          “Securities Act” means the Securities Exchange Act of 1934, as amended, and the
applicable regulations promulgated by the Securities and Exchange Commission pursuant to such Act.


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


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


          “Successor Interests” shall mean, collectively, with respect to each Grantor, all
shares of each class of the capital stock of the successor corporation or interests or certificates
of the successor limited liability company, partnership or other entity owned by such Grantor
(unless such successor is such Grantor itself) formed by or resulting from any consolidation or
merger in which any Person listed in Section I of the Perfection Certificate is not the surviving
entity; provided, however, that Successor Interests shall not include shares or
interests possessing more than 65% of the voting power or control of all classes of capital stock
or interests entitled to vote of any foreign Subsidiaries to the extent such pledge would result in
an adverse tax consequence to such Grantor.


          “Trademarks” shall mean, collectively, with respect to each Grantor, all trademarks
(including service marks), slogans, logos, certification marks, trade dress, uniform resource
locations (URLs), domain names, corporate names and trade names, whether registered or
unregistered, owned by or assigned to such Grantor and all registrations and applications for the
foregoing (whether statutory or common Law and whether established or registered in the United
States or any other country or any political subdivision thereof), including, without limitation,
the registrations and applications listed in Section IV (if any) of the Perfection Certificate,
together with any and all (i) rights and privileges arising under applicable Law with respect to
such Grantor’s use of any trademarks, (ii) reissues, continuations, extensions and renewals
thereof, (iii) income, fees, royalties, damages and payments now and hereafter due



6









 







and/or payable thereunder and with respect thereto, including, without limitation, damages,
claims and payments for past, present or future infringements thereof, (iv) rights corresponding
thereto throughout the world and (v) rights to sue for past, present and future infringements
thereof.


          “UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in the State of New York; provided, however, that if a
term is defined in Article 9 of the Uniform Commercial Code differently than in another Article
thereof, the term shall have the meaning set forth in Article 9; provided further
that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or
non-perfection, of a security interest in any Collateral or the availability of any remedy
hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection or availability of such remedy, as the case may be.


          SECTION 1.2. Interpretation. The rules of interpretation specified in Article I of
the Credit Agreement shall be applicable to this Security Agreement.


          SECTION 1.3. Perfection Certificate. The Collateral Agent and each Grantor agree that
the Perfection Certificate, and all schedules, amendments and supplements thereto are and shall at
all times remain a part of this Security Agreement.



ARTICLE II




GRANT OF SECURITY AND SECURED OBLIGATIONS



          SECTION 2.1. Pledge; Grant of Security Interest. As collateral security for the
payment and performance in full of all the Secured Obligations, each Grantor hereby pledges and
grants to the Collateral Agent for its benefit and for the benefit of the other Credit Parties, a
lien on and security interest in and to all of the right, title and interest of such Grantor in, to
and under all personal property and interests in such personal property, wherever located, and
whether now existing or hereafter arising or acquired from time to time (collectively, the
“Collateral”), including, without limitation:




	 	(i)	 	all Accounts;

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

	 
	 	(iii)	 	all Documents, Instruments and Chattel Paper;

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





7









 






	 	(v)	 	all Securities Collateral;

	 
	 	(vi)	 	all Investment Property;

	 
	 	(vii)	 	all Intellectual Property Collateral;

	 
	 	(viii)	 	all Commercial Tort Claims, including, without limitation, those described
in Section V of the Perfection Certificate (if any);

	 
	 	(ix)	 	all General Intangibles;

	 
	 	(x)	 	all Deposit Accounts;

	 
	 	(xi)	 	all Supporting Obligations;

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

	 
	 	(xiii)	 	to the extent not covered by clauses (i) through (xii) of this sentence,
all other personal property of such Grantor, whether tangible or intangible
and all Proceeds and products of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of, each
of the foregoing, any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to such Grantor from time to time with respect to any of
the foregoing.





          Notwithstanding anything to the contrary contained in clauses (i) through (xiii) above, the
security interest created by this Security Agreement shall not extend to, and the term “Collateral”
shall not include, any Excluded Property and the Grantors shall from time to time at the request of
the Collateral Agent give written notice to the Collateral Agent identifying in reasonable detail
the Excluded Property and shall provide to the Collateral Agent such other information regarding
the Excluded Property as the Collateral Agent may reasonably request.


          SECTION 2.2. Secured Obligations. This Security Agreement secures, and the Collateral
is collateral security for, the payment and performance in full when due of the Secured
Obligations.


          SECTION 2.3. Security Interest. (a) Each Grantor hereby irrevocably authorizes the
Collateral Agent at any time and from time to time to authenticate and file in any relevant
jurisdiction any financing statements (including fixture filings) and amendments thereto that
contain the information required by Article 9 of the Uniform Commercial Code of each applicable
jurisdiction for the filing of any financing statement or amendment relating to the Collateral,
including, without limitation, (i) whether such Grantor is an organization, the type of
organization and any organizational identification number issued to such Grantor, (ii) a
description of the Collateral as “all assets of the Grantor, wherever located, whether now owned or
hereafter acquired” and (iii) in the case of a financing statement filed as a fixture filing, a



8









 







sufficient description of the real property to which such Collateral relates. Each Grantor
agrees to provide all information described in the immediately preceding sentence to the Collateral
Agent promptly upon request.




     (b) Each Grantor hereby ratifies its prior authorization for the Collateral Agent to
file in any relevant jurisdiction any financing statements or amendments thereto relating to
the Collateral if filed prior to the date hereof.


          (c) Each Grantor hereby further authorizes the Collateral Agent to file filings
with the United States Patent and Trademark Office and United States Copyright Office (or any
successor office or any similar office in any other country) or other necessary documents for the
purpose of perfecting, confirming, continuing, enforcing or protecting the security interest
granted by such Grantor hereunder in any Intellectual Property Collateral, without the signature of
such Grantor, and naming such Grantor, as debtor, and the Collateral Agent, as secured party.



ARTICLE III




PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;

USE OF COLLATERAL



          SECTION 3.1. Delivery of Certificated Securities Collateral. Each Grantor represents
and warrants that all certificates, agreements or instruments representing or evidencing the
Securities Collateral in existence on the date hereof have been delivered to the Collateral Agent
in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer
or assignment in blank and that the Collateral Agent has a perfected first priority security
interest therein. Each Grantor hereby agrees that all certificates, agreements or instruments
representing or evidencing Securities Collateral acquired by such Grantor after the date hereof,
shall promptly (and in any event within three (3) Business Days) upon receipt thereof by such
Grantor be delivered to and held by or on behalf of the Collateral Agent pursuant hereto. All
certificated Securities Collateral shall be in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to the Collateral Agent. The Collateral Agent shall have the
right, at any time upon the occurrence and during the continuance of any Event of Default and in
connection with the exercise of its remedies hereunder, to endorse, assign or otherwise transfer to
or to register in the name of the Collateral Agent or any of its nominees or endorse for
negotiation any or all of the Securities Collateral, without any indication that such Securities
Collateral is subject to the security interest hereunder. In addition, the Collateral Agent shall
have the right with written notice to exchange certificates representing or evidencing Securities
Collateral for certificates of smaller or larger denominations, accompanied by instruments of
transfer or assignment and letters of direction duly executed in blank.



9









 







          SECTION 3.2. Perfection of Uncertificated Securities Collateral. Each Grantor
represents and warrants that the Collateral Agent has a perfected first priority security interest
in all uncertificated Pledged Securities pledged by it hereunder that is in existence on the date
hereof and that the applicable Organization Documents do not require the consent of the other
shareholders, members, partners or other Person to permit the Collateral Agent or its designee to
be substituted for the applicable Grantor as a shareholder, member, partner or other equity owner,
as applicable, thereto. Each Grantor hereby agrees that if any of the Pledged Securities are at
any time not evidenced by certificates of ownership, then each applicable Grantor shall, to the
extent permitted by applicable Law and upon the request of the Collateral Agent, cause such pledge
to be recorded on the equityholder register or the books of the issuer, execute customary pledge
forms or other documents necessary or reasonably requested to complete the pledge and give the
Collateral Agent the right to transfer such Pledged Securities under the terms hereof and, if
requested by the Collateral Agent, provide to the Collateral Agent an opinion of counsel, in form
and substance reasonably satisfactory to the Collateral Agent, confirming such pledge and
perfection thereof.


          SECTION 3.3. Financing Statements and Other Filings; Maintenance of Perfected Security
Interest. Each Grantor represents and warrants that the only filings, registrations and
recordings necessary and appropriate to perfect the security interest granted by each Grantor to
the Collateral Agent (for the benefit of the Credit Parties) pursuant to this Security Agreement in
respect of the Collateral are listed on Schedule II hereto. Each Grantor represents and
warrants that all such filings, registrations and recordings have been delivered to the Collateral
Agent in completed and, to the extent necessary or appropriate, duly executed form for filing in
each governmental, municipal or other office specified in Schedule II. Each Grantor agrees
that at the sole cost and expense of the Grantors, (i) such Grantor will maintain the security
interest created by this Security Agreement in the Collateral as a perfected first priority
security interest and shall defend such security interest against the claims and demands of all
Persons (other than with respect to Permitted Encumbrances), (ii) such Grantor shall furnish to the
Collateral Agent from time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail and (iii) at any time and from time to time, upon the
written request of the Collateral Agent, such Grantor shall promptly and duly execute and deliver,
and file and have recorded, such further instruments and documents and take such further action as
the Collateral Agent may reasonably request, including the filing of any financing statements,
continuation statements and other documents (including this Security Agreement) under the UCC (or
other applicable Laws) in effect in any jurisdiction with respect to the security interest created
hereby and the execution and delivery of Control Agreements, all in form reasonably satisfactory to
the Collateral Agent and in such offices (including, without limitation, the United States Patent
and Trademark Office and the United States Copyright Office) wherever required by applicable Law in
each case to perfect, continue and maintain a valid, enforceable, first priority security interest
in the Collateral as provided herein and to preserve the other rights and interests granted to the
Collateral Agent hereunder, as against the Grantors and third parties (other than with respect to
Permitted Encumbrances), with respect to the Collateral.



10









 







          SECTION 3.4. Other Actions. In order to further evidence the attachment, perfection
and priority of, and the ability of the Collateral Agent to enforce, the Collateral Agent’s
security interest in the Collateral, each Grantor represents, warrants and agrees, in each case at
such Grantor’s own expense, with respect to the following Collateral that:




     (a) Instruments and Tangible Chattel Paper. As of the date hereof (i) no
amount payable under or in connection with any of the Collateral is evidenced by any
Instrument or Tangible Chattel Paper other than such Instruments and Tangible Chattel Paper
listed in Section III. D. of the Perfection Certificate and (ii) each Instrument and each
item of Tangible Chattel Paper listed in Section III. D. of the Perfection Certificate, to
the extent requested by the Collateral Agent, has been properly endorsed, assigned and
delivered to the Collateral Agent, accompanied by instruments of transfer or assignment and
letters of direction duly executed in blank. If any amount payable under or in connection
with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper,
the Grantor acquiring such Instrument or Tangible Chattel Paper shall forthwith endorse,
assign and deliver the same to the Collateral Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as the Collateral Agent may reasonably request
from time to time.




     (b) Investment Property. (i) As of the date hereof (1) it has no Securities
Accounts other than those listed in Section III.B. of the Perfection Certificate, (2) it
does not hold, own or have any interest in any certificated securities or uncertificated
securities other than those constituting Pledged Securities with respect to which the
Collateral Agent has a perfected first priority security interest in such Pledged
Securities, and (3) it has entered into a duly authorized, executed and delivered Securities
Account Control Agreement with respect to each Securities Account listed in Section III.B.
of the Perfection Certificate with respect to which the Collateral Agent has a perfected
first priority security interest in such Securities Accounts by Control.




          (ii) If any Grantor shall at any time hold or acquire any certificated securities,
other than any securities of any CFC not required to be pledged hereunder, such Grantor
shall promptly (a) notify the Collateral Agent thereof and endorse, assign and deliver the
same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly
executed in blank, all in form and substance reasonably satisfactory to the Collateral Agent
or (b) deliver such securities into a Securities Account with respect to which a Securities
Account Control Agreement is in effect in favor of the Collateral Agent. If any securities
now or hereafter acquired by any Grantor, other than any securities of any CFC not required
to be pledged hereunder, are uncertificated, such Grantor shall promptly notify the
Collateral Agent thereof and pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (a) grant Control to the Collateral Agent and
cause the issuer to agree to comply with instructions from the Collateral Agent as to such
securities, without further consent of any Grantor or such nominee, (b) cause a security
entitlement with respect to such uncertificated security to be held in a Securities Account
with respect to which the Collateral Agent has Control



11









 







or (c) arrange for the Collateral Agent to become the registered owner of the securities.
Grantor shall not hereafter make a deposit in any Securities Account with any Securities
Intermediary unless (1) the applicable Grantor shall have given the Collateral Agent ten
(10) Business Days’ prior written notice of its intention to make such deposit and (2) such
Securities Intermediary and such Grantor shall have duly executed and delivered a Control
Agreement with respect to such Securities Account. Each Grantor shall accept any cash and
Investment Property which are proceeds of the Pledged Interests in trust for the benefit of
the Collateral Agent and promptly upon receipt thereof, deposit any cash received by it into
an account in which the Collateral Agent has Control, or with respect to any Investment
Properties or additional securities, take such actions as required above with respect to
such securities. The Collateral Agent agrees with each Grantor that the Collateral Agent
shall not give any entitlement orders or instructions or directions to any issuer of
uncertificated securities or Securities Intermediary, and shall not withhold its consent to
the exercise of any withdrawal or dealing rights by such Grantor, unless a Cash Dominion
Event has occurred and is continuing. No Grantor shall grant control over any Pledged
Securities to any Person other than the Collateral Agent.




          (iii) As between the Collateral Agent and the Grantors, the Grantors shall bear the
investment risk with respect to the Investment Property and Pledged Securities, and the risk
of loss of, damage to, or the destruction of the Investment Property and Pledged Securities,
whether in the possession of, or maintained as a security entitlement or deposit by, or
subject to the control of, the Collateral Agent, a Securities Intermediary, any Grantor or
any other Person; provided, however, that nothing contained in this SECTION
3.4(b) shall release or relieve any Securities Intermediary of its duties and obligations to
the Grantors or any other Person under any Control Agreement or under applicable Law. Each
Grantor shall promptly, as and when due, pay all Claims and fees of whatever kind or nature
with respect to the Pledged Securities pledged by it under this Security Agreement. In the
event any Grantor shall fail to make such payment contemplated in the immediately preceding
sentence, the Collateral Agent may do so for the account of such Grantor and the Grantors
shall promptly reimburse and indemnify the Collateral Agent for all costs and expenses
incurred by the Collateral Agent under this SECTION 3.4(b) and under SECTION 8.3 hereof.




     (c) Electronic Chattel Paper and Transferable Records. As of the date hereof
no amount payable under or in connection with any of the Collateral is evidenced by any
Electronic Chattel Paper or any “transferable record” (as that term is defined in Section
201 of the Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction). If any amount payable under or in connection with any of the Collateral
shall be evidenced by any Electronic Chattel Paper or any transferable record, the Grantor
acquiring such Electronic Chattel Paper or transferable record shall promptly notify the
Collateral Agent thereof and shall take such action as the Collateral Agent may reasonably
request to vest in the Collateral Agent control under UCC Section 9-105 of such Electronic
Chattel Paper or control under Section 201 of the Federal Electronic



12









 







Signatures in Global and National Commerce Act or, as the case may be, Section 16 of
the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record. The Collateral Agent agrees with such Grantor that the Collateral
Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent
and so long as such procedures will not result in the Collateral Agent’s loss of control,
for the Grantor to make alterations to the Electronic Chattel Paper or transferable record
permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform
Electronic Transactions Act for a party in control to allow without loss of control, unless
an Event of Default has occurred and is continuing or would occur after taking into account
any action by such Grantor with respect to such Electronic Chattel Paper or transferable
record.




     (d) If any Loan Party is a beneficiary under a Letter of Credit issued in favor of such
Loan Party (which, for the avoidance of doubt, shall not include any Letter of Credit issued
pursuant to the Credit Agreement), such Loan Party shall, at the request of the Collateral
Agent, pursuant to an agreement in form and substance reasonably satisfactory to the
Collateral Agent, either (i) arrange for the issuer and any confirmer of such Letter of
Credit to consent to an assignment to the Collateral Agent of, and to pay to the Collateral
Agent, the proceeds of, any drawing under the Letter of Credit or (ii) arrange for the
Collateral Agent to become the beneficiary of such Letter of Credit, with the Collateral
Agent agreeing, in each case, that the proceeds of any drawing under the Letter of Credit
are to be applied as provided in the Credit Agreement.




     (e) If any Loan Party hereafter holds any Commercial Tort Claim(s), such Loan Party
shall, at the request of the Collateral Agent, grant to the Collateral Agent in such writing
a security interest therein and in the Proceeds thereof, with such writing to be in form and
substance reasonably satisfactory to the Collateral Agent.


          SECTION 3.5. Supplements; Further Assurances. Each Grantor shall take such further
actions, and execute and deliver to the Collateral Agent such additional assignments, agreements,
supplements, powers and instruments, as the Collateral Agent may in its reasonable judgment deem
necessary or appropriate, wherever required by Law, in order to perfect, preserve and protect the
security interest in the Collateral as provided herein and the rights and interests granted to the
Collateral Agent hereunder, to carry into effect the purposes hereof or better to assure and
confirm unto the Collateral Agent or permit the Collateral Agent to exercise and enforce its
rights, powers and remedies hereunder with respect to any Collateral. If an Event of Default has
occurred and is continuing, the Collateral Agent may institute and maintain, in its own name or in
the name of any Grantor, such suits and proceedings as the Collateral Agent may be advised by
counsel shall be necessary or expedient to prevent any impairment of the security interest in or
the perfection thereof in the Collateral. All of the foregoing shall be at the sole cost and
expense of the Grantors. The Grantors and the Collateral Agent acknowledge that this Security
Agreement is intended to grant to the Collateral Agent for the benefit of the Credit



13









 







Parties a security interest in and Lien upon the Collateral and shall not constitute or create
a present assignment of any of the Collateral.



ARTICLE IV




REPRESENTATIONS, WARRANTIES AND COVENANTS



          In addition to, and without limitation of, each of the representations, warranties and
covenants set forth in the Credit Agreement and the other Loan Documents, each Grantor represents,
warrants and covenants as follows:


          SECTION 4.1. Limitation on Liens. Each Grantor is as of the date hereof, and, as to
Pledged Interests acquired by it from time to time after the date hereof, such Grantor will be, the
sole direct and beneficial owner of all such Pledged Interests free from any Lien or other right,
title or interest of any Person other than the Liens and security interest created by this Security
Agreement and Permitted Encumbrances.


          SECTION 4.2. Chief Executive Office; Change of Name; Jurisdiction of Organization.
(a) The exact legal name, type of organization, jurisdiction of organization, federal taxpayer
identification number, organizational identification number and chief executive office of such
Grantor is indicated next to its name in Sections I.A. and I.B. of the Perfection Certificate.
Such Grantor shall furnish to the Collateral Agent prompt written notice of any change in (i) its
corporate name, (ii) the location of its chief executive office, (iii) its identity or type of
organization or corporate structure, (iv) its federal taxpayer identification number or
organizational identification number or (v) its jurisdiction of organization (in each case,
including, without limitation, by merging with or into any other entity, reorganizing, dissolving,
liquidating, reincorporating or incorporating in any other jurisdiction). Such Grantor agrees (A)
not to effect or permit any such change unless all filings have been made under the UCC or
otherwise that are required in order for the Collateral Agent to continue, following such change,
to have a valid, legal and perfected security interest in all the Collateral of the type, scope and
priority that it had before such change and (B) to take all action reasonably satisfactory to the
Collateral Agent to maintain the perfection and priority of the security interest of the Collateral
Agent for the benefit of the Credit Parties in the Collateral intended to be granted hereunder.
Each Grantor agrees to promptly provide the Collateral Agent with certified Organization Documents
reflecting any of the changes described in the preceding sentence.


          (b) The Collateral Agent may rely on opinions of counsel as to whether any or
all UCC financing statements of the Grantors need to be amended as a result of any of the changes
described in SECTION 4.2(a). If any Grantor fails to provide information to the Collateral Agent
about such changes on a timely basis, the Collateral Agent shall not be liable or responsible to
any party for any failure to maintain a perfected security interest in such Grantor’s property
constituting Collateral, for which the Collateral Agent needed to have information



14









 







relating to such changes. The Collateral Agent shall have no duty to inquire about such changes if
any Grantor does not inform the Collateral Agent of such changes, the parties acknowledging and
agreeing that it would not be feasible or practical for the Collateral Agent to search for
information on such changes if such information is not provided by any Grantor.


          SECTION 4.3. Due Authorization and Issuance. All of the Pledged Interests have been,
and to the extent any Pledged Interests are hereafter issued, such shares or other equity interests
will be, upon such issuance, duly authorized, validly issued and, to the extent applicable, fully
paid and non-assessable. All of the Pledged Interests have been fully paid for, and there is no
amount or other obligation owing by any Grantor to any issuer of the Pledged Interests in exchange
for or in connection with the issuance of the Pledged Interests or any Grantor’s status as a
partner or a member of any issuer of the Pledged Interests.


          SECTION 4.4. Consents, etc. Following the occurrence and during the continuation of
an Event of Default, if the Collateral Agent desires to exercise any remedies, voting or consensual
rights or attorney-in-fact powers set forth in this Security Agreement and determines it necessary
to obtain any approvals or consents of any Governmental Authority or any other Person therefor,
then, upon the reasonable request of the Collateral Agent, such Grantor agrees to use commercially
reasonable efforts to assist and aid the Collateral Agent to obtain as soon as commercially
practicable any necessary approvals or consents for the exercise of any such remedies, rights and
powers.


          SECTION 4.5. Insurance. Such Grantor shall maintain or shall cause to be maintained
such insurance as is required pursuant to Section 6.07 of the Credit Agreement. Each Grantor
hereby irrevocably makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent
(and attorney-in-fact), exercisable only after the occurrence and during the continuance of an
Event of Default, for the purpose of making, settling and adjusting claims in respect of the
Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft,
instrument or other item of payment for the proceeds of such policies of insurance and for making
all determinations and decisions with respect thereto. In the event that any Grantor at any time
or times shall fail to obtain or maintain any of the policies of insurance required hereby or to
pay any premium in whole or in part relating thereto, the Collateral Agent may, without waiving or
releasing any obligation or liability of the Grantors hereunder or any Default or Event of Default,
in its sole discretion, obtain and maintain such policies of insurance and pay such premium and
take any other actions with respect thereto as the Collateral Agent deems advisable. All sums
disbursed by the Collateral Agent in connection with this SECTION 4.5, including reasonable
attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional Secured Obligations secured
hereby.



15









 








ARTICLE V




CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL



          SECTION 5.1. Pledge of Additional Securities Collateral. Each Grantor shall, upon
obtaining any Pledged Securities or Intercompany Notes of any Person required to be pledged
hereunder, accept the same in trust for the benefit of the Collateral Agent and forthwith deliver
to the Collateral Agent a pledge amendment, duly executed by such Grantor, in substantially the
form of Exhibit 1 annexed hereto (each, a “Pledge Amendment”), and the certificates
and other documents required under SECTION 3.1 and SECTION 3.2 hereof in respect of the additional
Pledged Securities or Intercompany Notes which are to be pledged pursuant to this Security
Agreement, and confirming the attachment of the Lien hereby created on and in respect of such
additional Pledged Securities or Intercompany Notes. Each Grantor hereby authorizes the Collateral
Agent to attach each Pledge Amendment to this Security Agreement and agrees that all Pledged
Securities or Intercompany Notes listed on any Pledge Amendment delivered to the Collateral Agent
shall for all purposes hereunder be considered Collateral.


          SECTION 5.2. Voting Rights; Distributions; etc.




     (a) So long as no Event of Default shall have occurred and be continuing, each Grantor
shall be entitled to exercise any and all voting and other consensual rights pertaining to
the Securities Collateral or any part thereof for any purpose not inconsistent with the
terms or purposes hereof, the Credit Agreement or any other Loan Document evidencing the
Secured Obligations. The Collateral Agent shall be deemed without further action or
formality to have granted to each Grantor all necessary consents relating to voting rights
and shall, if necessary, upon written request of any Grantor and at the sole cost and
expense of the Grantors, from time to time execute and deliver (or cause to be executed and
delivered) to such Grantor all such instruments as such Grantor may reasonably request in
order to permit such Grantor to exercise the voting and other rights which it is entitled to
exercise pursuant to this SECTION 5.2(a).




     (b) Upon the occurrence and during the continuance of any Event of Default, all rights
of each Grantor to exercise the voting and other consensual rights it would otherwise be
entitled to exercise pursuant to SECTION 5.2(a) hereof without any action, other than, in
the case of any Securities Collateral, or the giving of any notice shall immediately cease,
and all such rights shall thereupon become vested in the Collateral Agent, which shall
thereupon have the sole right to exercise such voting and other consensual rights;
provided that the Collateral Agent shall have the right, in its sole discretion,
from time to time following the occurrence and continuance of an Event of Default to permit
such Grantor to exercise such rights under SECTION 5.2(a). After such Event of Default is
no longer continuing, each Grantor shall have the right to



16









 







exercise the voting, managerial and other consensual rights and powers that it would
otherwise be entitled to pursuant to SECTION 5.2(a) hereof.




     (c) Each Grantor shall be entitled to receive and retain, and to utilize free and clear
of the Lien hereof, any and all Distributions, but only if and to the extent made in
accordance with, and to the extent permitted by, the provisions of the Credit Agreement;
provided, however, that any and all such Distributions consisting of rights
or interests in the form of securities shall be forthwith delivered to the Collateral Agent
to hold as Collateral and shall, if received by any Grantor, be received in trust for the
benefit of the Collateral Agent, be segregated from the other property or funds of such
Grantor and be forthwith delivered to the Collateral Agent as Collateral in the same form as
so received (with any necessary endorsement). The Collateral Agent shall, if necessary,
upon written request of any Grantor and at the sole cost and expense of the Grantors, from
time to time execute and deliver (or cause to be executed and delivered) to such Grantor all
such instruments as such Grantor may reasonably request in order to permit such Grantor to
receive the Distributions which it is authorized to receive and retain pursuant to this
SECTION 5.2(c).




     (d) Each Grantor shall, at its sole cost and expense, from time to time execute and
deliver to the Collateral Agent appropriate instruments as the Collateral Agent may
reasonably request in order to permit the Collateral Agent to exercise the voting and other
rights which it may be entitled to exercise pursuant to SECTION 5.2(b) hereof and to receive
all Distributions which it may be entitled to receive under SECTION 5.2(c) hereof.




     (e) All Distributions which are received by any Grantor contrary to the provisions of
SECTION 5.2(b) hereof shall be received in trust for the benefit of the Collateral Agent,
shall be segregated from other funds of such Grantor and shall immediately be paid over to
the Collateral Agent as Collateral in the same form as so received (with any necessary
endorsement).


          SECTION 5.3. Evidence of Pledged Interests. As of the date hereof, there are no other
certificates or other writings that represent an ownership interest in the entities whose shares
constitute Pledged Interests other than the stock certificates, if any, delivered to the Collateral
Agent.


          SECTION 5.4. Certain Agreements of Grantors As Issuers and Holders of Equity
Interests.




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



17









 






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



ARTICLE VI




CERTAIN PROVISIONS CONCERNING INTELLECTUAL

PROPERTY COLLATERAL



          SECTION 6.1. Grant of License. Without limiting the rights of Collateral Agent as the
holder of a Lien on the Intellectual Property Collateral, for the purpose of enabling the
Collateral Agent, during the continuance of an Event of Default, to exercise rights and remedies
under ARTICLE IX hereof at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the
Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use, assign, license or
sublicense any of the Intellectual Property Collateral now owned or hereafter acquired by such
Grantor, wherever the same may be located, including in such license access to all media in which
any of the licensed items may be recorded or stored and to all computer programs used for the
compilation or printout hereof.


          SECTION 6.2. Protection of Collateral Agent’s Security. Each Grantor shall maintain,
preserve and protect all of its material Intellectual Property necessary in the operation of its
business, except where the failure to do so could not reasonably be expected to have a Material
Adverse Effect or could not reasonably be expected to materially and adversely affect the ability
of such Grantor or the Collateral Agent to dispose of the Collateral.


          SECTION 6.3. After-Acquired Property. If any Grantor shall, at any time before this
Security Agreement shall have been terminated in accordance with SECTION 8.5(a), (i) obtain any
rights to any additional Intellectual Property Collateral or (ii) become entitled to the benefit of
any additional Intellectual Property Collateral or any renewal or extension thereof, including any
reissue, division, continuation, or continuation-in-part of any Intellectual Property Collateral,
or any improvement on any Intellectual Property Collateral, the provisions hereof shall
automatically apply thereto and any such item enumerated in clause (i) or (ii) of this SECTION 6.3
with respect to such Grantor shall automatically constitute Intellectual Property Collateral if
such would have constituted Intellectual Property Collateral at the time of execution



18









 







hereof and be subject to the Lien and security interest created by this Security Agreement
without further action by any party. With respect to any federally registered Intellectual
Property Collateral, each Grantor shall promptly (a) provide to the Collateral Agent written notice
of any of the foregoing and (b) confirm the attachment of the Lien and security interest created by
this Security Agreement to any rights described in clauses (i) and (ii) of the immediately
preceding sentence of this SECTION 6.3 by execution of an instrument in form reasonably acceptable
to the Collateral Agent.


          SECTION 6.4. Modifications. Each Grantor authorizes the Collateral Agent to modify
this Security Agreement by amending Section IV of the Perfection Certificate to include any
Intellectual Property Collateral acquired or arising after the date hereof of such Grantor
including, without limitation, any of the items listed in SECTION 6.3 hereof.


          SECTION 6.5. Litigation. Upon the occurrence and during the continuance of any Event
of Default, the Collateral Agent shall have the right but shall in no way be obligated to file
applications for protection of the Intellectual Property Collateral and/or bring suit in the name
of any Grantor, the Collateral Agent or the other Credit Parties to enforce the Intellectual
Property Collateral and any license thereunder. In the event of such suit, each Grantor shall, at
the reasonable request of the Collateral Agent, do any and all lawful acts and execute any and all
documents requested by the Collateral Agent in aid of such enforcement and the Grantors shall
promptly reimburse and indemnify the Collateral Agent, as the case may be, for all costs and
expenses incurred by the Collateral Agent in the exercise of its rights under this SECTION 6.5 in
accordance with SECTION 8.3 hereof.



ARTICLE VII




REMEDIES



          SECTION 7.1. Remedies. Upon the occurrence and during the continuance of any Event
of Default the Collateral Agent may, and at the direction of the Required Lenders, shall, from time
to time in respect of the Collateral, in addition to the other rights and remedies provided for
herein, under applicable Law or otherwise available to it:




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



19









 






     (b) Demand, sue for, collect or receive any money or property at any time payable or
receivable in respect of the Collateral including, without limitation, instructing the
obligor or obligors on any agreement, instrument or other obligation constituting part of
the Collateral to make any payment required by the terms of such agreement, instrument or
other obligation directly to the Collateral Agent, and in connection with any of the
foregoing, compromise, settle, extend the time for payment and make other modifications with
respect thereto; provided, however, that in the event that any such payments
are made directly to any Grantor, prior to receipt by any such obligor of such instruction,
such Grantor shall segregate all amounts received pursuant thereto in trust for the benefit
of the Collateral Agent and shall promptly pay such amounts to the Collateral Agent;




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




     (d) Take possession of the Collateral or any part thereof, by directing any Grantor in
writing to deliver the same to the Collateral Agent at any place or places so designated by
the Collateral Agent, in which event such Grantor shall at its own expense: (A) forthwith
cause the same to be moved to the place or places designated by the Collateral Agent and
therewith delivered to the Collateral Agent, (B) store and keep any Collateral so delivered
to the Collateral Agent at such place or places pending further action by the Collateral
Agent and (C) while the Collateral shall be so stored and kept, provide such security and
maintenance services as shall be necessary to protect the same and to preserve and maintain
them in good condition. Each Grantor’s obligation to deliver the Collateral as contemplated
in this SECTION 7.1 is of the essence hereof. Upon application to a court of equity having
jurisdiction, the Collateral Agent shall be entitled to a decree requiring specific
performance by any Grantor of such obligation;




     (e) Withdraw all moneys, instruments, securities and other property in any bank,
financial securities, deposit or other account of any Grantor constituting Collateral for
application to the Secured Obligations;




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




     (g) Exercise any and all rights as beneficial and legal owner of the Collateral,
including, without limitation, perfecting assignment of and exercising any and all voting,
consensual and other rights and powers with respect to any Collateral; and




     (h) Exercise all the rights and remedies of a secured party under the UCC, and the
Collateral Agent may also in its sole discretion, without notice except as specified in
SECTION 7.2 hereof, sell, assign or grant a license to use the Collateral or any part



20









 







thereof in one or more parcels at public or private sale, at any exchange, broker’s
board or at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as the Collateral
Agent may deem commercially reasonable. The Collateral Agent or any other Credit Party or
any of their respective Affiliates may be the purchaser, licensee, assignee or recipient of
any or all of the Collateral at any such sale and shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any portion of the
Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured
Obligations owed to such Person as a credit on account of the purchase price of any
Collateral payable by such Person at such sale. Each purchaser, assignee, licensee or
recipient at any such sale shall acquire the property sold, assigned or licensed absolutely
free from any claim or right on the part of any Grantor, and each Grantor hereby waives, to
the fullest extent permitted by 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 now
existing or hereafter enacted. 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. To the fullest extent permitted by Law, 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, assigned or licensed at such a private sale was
less than the price which might have been obtained at a public sale, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to more than one
offeree.


          SECTION 7.2. Notice of Sale. Each Grantor acknowledges and agrees that, to the extent
notice of sale or other disposition of Collateral shall be required by applicable Law and unless
the Collateral is perishable or threatens to decline speedily in value, or is of a type customarily
sold on a recognized market (in which event the Collateral Agent shall provide such Grantor such
advance notice as may be practicable under the circumstances), ten (10) days’ prior notice to such
Grantor of the time and place of any public sale or of the time after which any private sale or
other intended disposition is to take place shall be commercially reasonable notification of such
matters. No notification need be given to any Grantor if it has signed, after the occurrence of an
Event of Default, a statement renouncing or modifying (as permitted under Law) any right to
notification of sale or other intended disposition.


          SECTION 7.3. Waiver of Notice and Claims. Each Grantor hereby waives, to the fullest
extent permitted by applicable Law, notice or judicial hearing in connection with the Collateral
Agent’s taking possession or the Collateral Agent’s disposition of any of the Collateral,
including, without limitation, any and all prior notice and hearing for any prejudgment remedy or
remedies and any such right which such Grantor would otherwise have under law, and each Grantor
hereby further waives, to the fullest extent permitted by applicable Law: (i) all damages
occasioned by such taking of possession, (ii) all other requirements as to the time, place and
terms of sale or other requirements with respect to the enforcement of the



21









 







Collateral Agent’s rights hereunder and (iii) all rights of redemption, appraisal, valuation,
stay, extension or moratorium now or hereafter in force under any applicable Law. The Collateral
Agent shall not be liable for any incorrect or improper payment made pursuant to this
Article VIII in the absence of gross negligence or willful misconduct. Any sale of, or the
grant of options to purchase, or any other realization upon, any Collateral shall operate to divest
all right, title, interest, claim and demand, either at law or in equity, of the applicable Grantor
therein and thereto, and shall be a perpetual bar both at law and in equity against such Grantor
and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through or under such Grantor.


          SECTION 7.4. Certain Sales of Collateral.




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




     (b) 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 Securities Collateral and Investment
Property, to limit purchasers to Persons who will agree, among other things, to acquire such
Securities Collateral or Investment Property for their own account, for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges that any such
private sales may be at prices and on terms less favorable to the Collateral Agent than
those obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under the Securities
Act), and, notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the Collateral Agent
shall have no obligation to engage in public sales and no obligation to delay the sale of
any Securities Collateral or Investment Property for the period of time necessary to permit
the issuer thereof to register it for a form of public sale requiring registration under the
Securities Act or under applicable state securities Laws, even if such issuer would agree to
do so.




     (c) If the Collateral Agent determines to exercise its right to sell any or all of the
Securities Collateral or Investment Property, upon written request, the applicable Grantor
shall from time to time furnish to the Collateral Agent all such information as the
Collateral Agent may reasonably request in order to determine the number of securities



22









 







included in the Securities Collateral or Investment Property which may be sold by the
Collateral Agent as exempt transactions under the Securities Act and the rules of the
Securities and Exchange Commission thereunder, as the same are from time to time in effect.




     (d) Each Grantor further agrees that a breach of any of the covenants contained in this
SECTION 7.4 will cause irreparable injury to the Collateral Agent and the other Credit
Parties, that the Collateral Agent and the other Credit Parties have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every covenant contained
in this SECTION 7.4 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 Event of Default has occurred and
is continuing.


          SECTION 7.5. No Waiver; Cumulative Remedies.




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




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


          SECTION 7.6. Certain Additional Actions Regarding Intellectual Property. If any Event
of Default shall have occurred and be continuing, upon the written demand of Collateral Agent, each
Grantor shall execute and deliver to Collateral Agent an assignment or assignments of the
registered Patents, Trademarks and/or Copyrights and such other documents as are necessary or
appropriate to carry out the intent and purposes hereof to the extent such assignment does not
result in any loss of rights therein under applicable Law. Within five (5) Business Days of
written notice thereafter from Collateral Agent, each Grantor shall make available to Collateral
Agent, to the extent within such Grantor’s power and authority, such personnel in such Grantor’s
employ on the date of the Event of Default as Collateral Agent may reasonably designate to permit
such Grantor to continue, directly or indirectly, to produce,



23









 







advertise and sell the products and services sold by such Grantor under the registered
Patents, Trademarks and/or Copyrights, and such Persons shall be available to perform their prior
functions on Collateral Agent’s behalf.


          SECTION 7.7. Application of Proceeds. The proceeds received by the Collateral Agent
in respect of any sale of, collection from or other realization upon all or any part of the
Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied,
together with any other sums then held by the Collateral Agent pursuant to this Security Agreement,
in accordance with and as set forth in Section 8.03 of the Credit Agreement.



ARTICLE VIII




MISCELLANEOUS



          SECTION 8.1. Concerning Collateral Agent.




     (a) The Collateral Agent has been appointed as collateral agent pursuant to the Credit
Agreement. The actions of the Collateral Agent hereunder are subject to the provisions of
the Credit Agreement. The Collateral Agent shall have the right hereunder to make demands,
to give notices, to exercise or refrain from exercising any rights, and to take or refrain
from taking action (including, without limitation, the release or substitution of the
Collateral), in accordance with this Security Agreement and the Credit Agreement. The
Collateral Agent may employ agents and attorneys-in-fact in connection herewith and shall
not be liable for the negligence or misconduct of any such agents or attorneys-in-fact. The
Collateral Agent may resign and a successor Collateral Agent may be appointed in the manner
provided in the Credit Agreement. Upon the acceptance of any appointment as the Collateral
Agent by a successor Collateral Agent, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties of the
retiring Collateral Agent under this Security Agreement, and the retiring Collateral Agent
shall thereupon be discharged from its duties and obligations under this Security Agreement.
After any retiring Collateral Agent’s resignation, the provisions hereof shall inure to its
benefit as to any actions taken or omitted to be taken by it under this Security Agreement
while it was the Collateral Agent.




     (b) The Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if such Collateral is accorded
treatment substantially equivalent to that which the Collateral Agent, in its individual
capacity, accords its own property consisting of similar instruments or interests, it being
understood that neither the Collateral Agent nor any of the other Credit Parties shall have
responsibility for, without limitation (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relating



24









 







to any Securities Collateral, whether or not the Collateral Agent or any other Credit
Party has or is deemed to have knowledge of such matters or (ii) taking any necessary steps
to preserve rights against any Person with respect to any Collateral.




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




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


          SECTION 8.2. Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact. If any Grantor shall fail to perform any covenants contained in this
Security Agreement or in the Credit Agreement (including, without limitation, such Grantor’s
covenants to (i) pay the premiums in respect of all required insurance policies hereunder, (ii) pay
Claims, (iii) make repairs, (iv) discharge Liens or (v) pay or perform any other obligations of
such Grantor with respect to any Collateral) or if any warranty on the part of any Grantor
contained herein shall be breached, the Collateral Agent may (but shall not be obligated to) do the
same or cause it to be done or remedy any such breach, and may expend funds for such purpose;
provided, however, that Collateral Agent shall in no event be bound to inquire into
the validity of any tax, lien, imposition or other obligation which such Grantor fails to pay or
perform as and when required hereby. Any and all amounts so expended by the Collateral Agent shall
be paid by the Grantors in accordance with the provisions of SECTION 8.3 hereof. Neither the
provisions of this SECTION 8.2 nor any action taken by Collateral Agent pursuant to the provisions
of this SECTION 8.2 shall prevent any such failure to observe any covenant contained in this
Security Agreement nor any breach of warranty from constituting an Event of Default. Each Grantor
hereby appoints the Collateral Agent its attorney-in-fact, with full authority in the place and
stead of such Grantor and in the name of such Grantor, or otherwise, from time to time after the
occurrence and during the continuation of an Event of Default in the Collateral Agent’s discretion
to take any action and to execute any instrument consistent with the terms of the Credit Agreement
and the other Security Documents which the Collateral Agent may deem necessary to accomplish the
purposes hereof. The foregoing grant of authority is a power of attorney coupled with an interest
and such appointment shall be irrevocable for the term hereof. Each Grantor hereby ratifies all
that such attorney shall lawfully do or cause to be done by virtue hereof.



25









 







          SECTION 8.3. Expenses. Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all amounts required to be paid pursuant to Section 10.04 of the Credit
Agreement.


          SECTION 8.4. Continuing Security Interest; Assignment. This Agreement shall create a
continuing security interest in the Collateral and shall (i) be binding upon the Grantors, their
respective successors and assigns, and (ii) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent and the other Credit Parties and
each of their respective successors, transferees and assigns. No other Persons (including, without
limitation, any other creditor of any Grantor) shall have any interest herein or any right or
benefit with respect hereto. Without limiting the generality of the foregoing clause (ii), any
Credit Party may assign or otherwise transfer any indebtedness held by it secured by this Agreement
to any other Person, and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to such Credit Party, herein or otherwise, subject, however, to the
provisions of the Credit Agreement.


          SECTION 8.5. Termination; Release.




     (a) This Security Agreement, the Lien in favor of the Collateral Agent (for the benefit
of itself and the other Credit Parties) and all other security interests granted hereby
shall terminate with respect to all Secured Obligations when (i) the Commitments shall have
expired or been terminated, (ii) the principal of and interest on each Loan and all fees and
other Secured Obligations shall have been indefeasibly paid in full in cash, other than such
obligations that by their terms continue after the termination of the Credit Agreement,
(iii) all Letters of Credit (as defined in the Credit Agreement) shall have (A) expired or
terminated and have been reduced to zero, (B) been Cash Collateralized to the extent
required by the Credit Agreement, or (C) been supported by another letter of credit in a
manner reasonably satisfactory to the L/C Issuer and the Administrative Agent, and (iv) all
Unreimbursed Amounts shall have been indefeasibly paid in full in cash, provided,
however, that in connection with the termination of this Security Agreement, the
Collateral Agent may require such indemnities as it shall reasonably deem necessary or
appropriate to protect the Credit Parties against (x) loss on account of credits previously
applied to the Secured Obligations that may subsequently be reversed or revoked, (y) any
obligations that may thereafter arise with respect to the Other Liabilities, and (z) any
Secured Obligations that may thereafter arise under Section 10.04 of the Credit Agreement.




     (b) The Collateral shall be released from the Lien of this Security Agreement in
accordance with the provisions of the Credit Agreement. Upon termination hereof or any
release of Collateral in accordance with the provisions of the Credit Agreement, the
Collateral Agent shall, upon the request and at the sole cost and expense of the Grantors,
assign, transfer and deliver to the Grantors, against receipt and without recourse to or
warranty by the Collateral Agent, such of the Collateral to be released (in the case of a
release) or all of the Collateral (in the case of termination of this Security Agreement) as



26









 







may be in possession of the Collateral Agent and as shall not have been sold or
otherwise applied pursuant to the terms hereof, and, with respect to any other Collateral,
proper documents and instruments (including UCC-3 termination statements or releases)
acknowledging the termination hereof or the release of such Collateral, as the case may be.




     (c) At any time that the respective Grantor desires that the Collateral Agent take any
action described in clause (b) of this SECTION 8.5, such Grantor shall, upon request of the
Collateral Agent, deliver to the Collateral Agent an officer’s certificate certifying that
the release of the respective Collateral is permitted pursuant to clause (a) or (b) of this
SECTION 8.5. The Collateral Agent shall have no liability whatsoever to any other Credit
Party as the result of any release of Collateral by it as permitted (or which the Collateral
Agent in good faith believes to be permitted) by this SECTION 8.5.


          SECTION 8.6. Modification in Writing. No amendment, modification, supplement,
termination or waiver of or to any provision hereof, nor consent to any departure by any Grantor
therefrom, shall be effective unless the same shall be made in accordance with the terms of the
Credit Agreement and unless in writing and signed by the Collateral Agent and the Grantors. Any
amendment, modification or supplement of or to any provision hereof, any waiver of any provision
hereof and any consent to any departure by any Grantor from the terms of any provision hereof shall
be effective only in the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Security Agreement or any other document
evidencing the Secured Obligations, no notice to or demand on any Grantor in any case shall entitle
any Grantor to any other or further notice or demand in similar or other circumstances.


          SECTION 8.7. Notices. Unless otherwise provided herein or in the Credit Agreement,
any notice or other communication herein required or permitted to be given shall be given in the
manner and become effective as set forth in the Credit Agreement, as to any Grantor, addressed to
it at the address of the Lead Borrower set forth in the Credit Agreement and as to the Collateral
Agent, addressed to it at the address set forth in the Credit Agreement, or in each case at such
other address as shall be designated by such party in a written notice to the other parties hereto
complying as to delivery with the terms of this SECTION 8.7.


          SECTION 8.8. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.


          SECTION 8.9. CONSENT TO JURISDICTION; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.


          (a) EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION



27









 







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


          (b) EACH GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (A) OF THIS SECTION. EACH GRANTOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.


          (c) EACH GRANTOR AGREES THAT ANY ACTION COMMENCED BY ANY GRANTOR ASSERTING ANY CLAIM OR
COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT
SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY
FEDERAL COURT SITTING THEREIN AS THE COLLATERAL AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS
TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.


          (d) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 8.7. NOTHING IN THIS SECURITY AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.


          (e) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY



28









 







HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND WHETHER INITIATED BY OR
AGAINST ANY SUCH PERSON OR IN WHICH ANY SUCH PERSON IS JOINED AS A PARTY LITIGANT). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


          SECTION 8.10. Severability of Provisions. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other jurisdiction.


          SECTION 8.11. Execution in Counterparts; Effectiveness.


          This Security Agreement may be executed in any number of counterparts (and by different
parties hereto in different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. Delivery of an executed counterpart
of a signature page of this Security Agreement by telecopy, pdf or other electronic transmission
shall be as effective as delivery of a manually executed counterpart of this Security Agreement.


          SECTION 8.12. No Release. Nothing set forth in this Security Agreement shall relieve
any Grantor from the performance of any term, covenant, condition or agreement on such Grantor’s
part to be performed or observed under or in respect of any of the Collateral or from any liability
to any Person under or in respect of any of the Collateral or shall impose any obligation on the
Collateral Agent or any other Credit Party to perform or observe any such term, covenant, condition
or agreement on such Grantor’s part to be so performed or observed or shall impose any liability on
the Collateral Agent or any other Credit Party for any act or omission on the part of such Grantor
relating thereto or for any breach of any representation or warranty on the part of such Grantor
contained in this Security Agreement, the Credit Agreement or the other Loan Documents, or under or
in respect of the Collateral or made in connection herewith or therewith. The obligations of each
Grantor contained in this SECTION 8.12 shall survive the termination hereof and the discharge of
such Grantor’s other obligations under this Security Agreement, the Credit Agreement and the other
Loan Documents.


          SECTION 8.13. Obligations Absolute. All obligations of each Grantor hereunder shall
be absolute and unconditional irrespective of:



29









 









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




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




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




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




     (v) any exercise, non-exercise or waiver of any right, remedy, power or privilege under
or in respect hereof, the Credit Agreement or any other Loan Document except as specifically
set forth in a waiver granted pursuant to the provisions of SECTION 8.6 hereof; or




     (vi) any other circumstances which might otherwise constitute a defense available to,
or a discharge of, any Grantor (other than the termination of this Security Agreement in
accordance with SECTION 8.5(a) hereof).



[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]




30









 




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



	 	 	 	 	 
	 	 	BIG 5 CORP., as a Grantor
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Barry D. Emerson
	 

	 	 	 	 
	 

	 	Name:
	 	Barry D. Emerson
	 

	 	Title:
	 	Senior V.P. and CFO
	 
	 	 	 	 
	 	 	BIG 5 SERVICES CORP., as a Grantor
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Barry D. Emerson
	 

	 	 	 	 
	 

	 	Name:
	 	Barry D. Emerson
	 

	 	Title:
	 	Senior V.P. and CFO
	 
	 	 	 	 
	 	 	BIG 5 SPORTING GOODS CORPORATION, as a Grantor
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Barry D. Emerson
	 

	 	 	 	 
	 

	 	Name:
	 	Barry D. Emerson
	 

	 	Title:
	 	Senior V.P. and CFO






Signature Page to Security Agreement




 









 






	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent
	 
	 	 	 	 
	 

	 	By:
	 	/s/ David C. Lipkin
	 

	 	 	 	 
	 

	 	Name:
	 	David C. Lipkin
	 

	 	Title:
	 	Senior Vice President






Signature Page to Security Agreement





 









 








EXHIBIT 1




[Form of]




SECURITIES PLEDGE AMENDMENT



          This Securities Pledge Amendment, dated as of ___, is delivered pursuant to SECTION 5.1
of that certain Security Agreement (as amended, amended and restated, restated, supplemented or
otherwise modified from time to time, the “Security Agreement;” capitalized terms used but
not otherwise defined herein shall have the meanings assigned to such terms in the Security
Agreement), dated as of October 18, 2010, made by (i) BIG 5 CORP., as lead borrower for itself and
the other Borrowers (the “Lead Borrower”), (ii) THE BORROWERS party thereto from time to
time (together with the Lead Borrower, the “Borrowers”, and (iii) THE GUARANTORS party
thereto from time to time (the “Guarantors”), as pledgors, assignors and debtors (the
Borrowers, together with the Guarantors, in such capacities and together with any successors in
such capacities, the “Grantors,” and each, a “Grantor”), in favor of WELLS FARGO
BANK, NATIONAL ASSOCIATION, having an office at One Boston Place, 18th Floor, Boston,
Massachusetts 02108, in its capacity as collateral agent for the Credit Parties, as pledgee,
assignee and secured party (in such capacities and together with any successors in such capacities,
the “Collateral Agent”). The undersigned hereby agrees that this Securities Pledge
Amendment may be attached to the Security Agreement and that the Pledged Securities and/or
Intercompany Notes listed on this Securities Pledge Amendment shall be deemed to be and shall
become part of the Collateral and shall secure all Secured Obligations.



 









 








PLEDGED SECURITIES




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	NUMBER OF	 	PERCENTAGE OF
	 	 	CLASS	 	 	 	 	 	SHARES	 	ALL ISSUED CAPITAL
	 	 	OF STOCK	 	PAR	 	CERTIFICATE	 	OR	 	OR OTHER EQUITY
	ISSUER	 	OR INTERESTS	 	VALUE	 	NO(S).	 	INTERESTS	 	INTERESTS OF ISSUER
	 	 	 	 	 	 	 	 	 	 	 





 









 





INTERCOMPANY NOTES




	 	 	 	 	 	 	 	 	 
	 	 	PRINCIPAL	 	DATE OF	 	INTEREST	 	MATURITY
	ISSUER	 	AMOUNT	 	ISSUANCE	 	RATE	 	DATE
	 	 	 	 	 	 	 	 	 





	 	 	 	 	 
	 	 	[_____________________________],
	 	 	as Grantor

	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:





AGREED TO AND ACCEPTED:


WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent



	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	 
	 

	 	Title:	 	 






 









 





SCHEDULE I




Intercompany Notes



None.



 









 





SCHEDULE II




Filings, Registrations and Recordings







	1.	 	Uniform Commercial Code Filings





	 	 	 
	Grantor/Debtor	 	Jurisdiction/Agency
	 
	 	 
	Big 5 Sporting Goods Corporation

	 	Secretary of State of Delaware
	 
	 	 
	Big 5 Corp.

	 	Secretary of State of Delaware
	 
	 	 
	Big 5 Services Corp.

	 	Virginia State Corporation Commission







	2.	 	Recordation of Trademark Assignment with the
United States Patent and Trademark Office




 









 





SCHEDULE III




Pledged Interests





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	# of	 	 	 	 	 	% of	 	Certificate No.
	 	 	 	 	 	 	Type of	 	Shares	 	Total Shares	 	Interest	 	(if uncertificated,
	Grantor	 	Issuer	 	Organization	 	Owned	 	Outstanding	 	Pledged	 	please indicate so)
	Big 5 Sporting
Goods
Corporation
	 	Big 5 Corp.	 	Corporation	 	1,000	 	 	1,000	 	 	100	 	 	 	3	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Big 5 Corp.
	 	5 Services Corp.	 	Corporation	 	   100	 	 	   100	 	 	100	 	 	 	1