exv10w2



 







EXECUTION VERSION




PLEDGE AND SECURITY AGREEMENT




dated as of July 20, 2006




between




EACH OF THE GRANTORS PARTY HERETO




and




CIT HEALTHCARE LLC




as Administrative Agent and Collateral Agent




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1.
	 	DEFINITIONS; GRANT OF SECURITY	 	 	1	 
	1.1
	 	General Definitions	 	 	1	 
	1.2
	 	Definitions; Interpretation	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 2.
	 	GRANT OF SECURITY	 	 	8	 
	2.1
	 	Grant of Security	 	 	8	 
	2.2
	 	Certain Limited Exclusions	 	 	9	 
	 
	 	 	 	 	 	 
	SECTION 3.
	 	SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE	 	 	9	 
	3.1
	 	Security for Obligations	 	 	9	 
	3.2
	 	Continuing Liability Under Collateral	 	 	10	 
	 
	 	 	 	 	 	 
	SECTION 4.
	 	REPRESENTATIONS AND WARRANTIES AND COVENANTS	 	 	10	 
	4.1
	 	Generally	 	 	10	 
	4.2
	 	Equipment and Inventory	 	 	13	 
	4.3
	 	Receivables	 	 	15	 
	4.4
	 	Investment Related Property	 	 	17	 
	4.5
	 	Pledged Equity Interests	 	 	19	 
	4.6
	 	Pledged Debt	 	 	22	 
	4.7
	 	Investment Accounts	 	 	22	 
	4.8
	 	Material Contracts	 	 	24	 
	4.9
	 	Letter of Credit Rights	 	 	25	 
	4.10
	 	Intellectual Property	 	 	26	 
	4.11
	 	Commercial Tort Claims	 	 	30	 
	 
	 	 	 	 	 	 
	SECTION 5.
	 	ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS	 	 	30	 
	5.1
	 	Access; Right of Inspection	 	 	30	 
	5.2
	 	Further Assurances	 	 	30	 
	5.3
	 	Additional Grantors	 	 	32	 
	 
	 	 	 	 	 	 
	SECTION 6.
	 	COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT	 	 	32	 
	6.1
	 	Power of Attorney	 	 	32	 
	6.2
	 	No Duty on the Part of Collateral Agent or Secured Parties	 	 	33	 
	 
	 	 	 	 	 	 
	SECTION 7.
	 	REMEDIES	 	 	33	 
	7.1
	 	Generally	 	 	33	 
	7.2
	 	Application of Proceeds	 	 	35	 
	7.3
	 	Sales on Credit	 	 	35	 
	7.4
	 	Deposit Accounts	 	 	35	 
	7.5
	 	Investment Related Property	 	 	35	 






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	 	 	 	 	Page
	7.6
	 	Intellectual Property	 	 	36	 
	7.7
	 	Cash Proceeds	 	 	38	 
	 
	 	 	 	 	 	 
	SECTION 8.
	 	COLLATERAL AGENT	 	 	38	 
	 
	 	 	 	 	 	 
	SECTION 9.
	 	CONTINUING SECURITY INTEREST; TRANSFER OF LOANS	 	 	39	 
	 
	 	 	 	 	 	 
	SECTION 10.
	 	STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM	 	 	40	 
	 
	 	 	 	 	 	 
	SECTION 11.
	 	MISCELLANEOUS	 	 	40	 






SCHEDULE 4.1 — GENERAL INFORMATION




SCHEDULE 4.2 — LOCATION OF EQUIPMENT AND INVENTORY




SCHEDULE 4.4 — INVESTMENT RELATED PROPERTY




SCHEDULE 4.5 — MATERIAL CONTRACTS




SCHEDULE 4.6 — DESCRIPTION OF LETTERS OF CREDIT




SCHEDULE 4.7 — INTELLECTUAL PROPERTY — EXCEPTIONS




SCHEDULE 4.8 — COMMERCIAL TORT CLAIMS




EXHIBIT A — PLEDGE SUPPLEMENT




EXHIBIT B — UNCERTIFICATED SECURITIES CONTROL AGREEMENT




EXHIBIT C — SECURITIES ACCOUNT CONTROL AGREEMENT




EXHIBIT D — DEPOSIT ACCOUNT CONTROL AGREEMENT




EXHIBIT E — TRADEMARK AND SECURITY AGREEMENT




EXHIBIT F — COPYRIGHT SECURITY AGREEMENT




EXHIBIT G — PATENT SECURITY AGREEMENT




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          This PLEDGE AND SECURITY AGREEMENT, dated as of July ___, 2006 (this “Agreement”), between
EACH OF THE UNDERSIGNED, whether as an original signatory hereto or as an Additional Grantor (as
herein defined) (each, a “Grantor”), and CIT HEALTHCARE LLC (“CIT Healthcare”), as collateral agent
for the Secured Parties (as herein defined) (in such capacity, together with its successors and
assigns in such capacity, the “Collateral Agent”).




RECITALS:




          WHEREAS, reference is made to that certain Credit and Guaranty Agreement, dated as of the date
hereof (as it may be amended, amended and restated, joined, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among AMERICAN MEDICAL SYSTEMS, INC., a Delaware corporation
(the “Borrower”), AMERICAN MEDICAL SYSTEMS HOLDINGS, INC., a Delaware corporation (“Holdings”),
CERTAIN SUBSIDIARIES OF HOLDINGS, as guarantors (together with Holdings, the “Guarantors,” and the
Borrower and the Guarantors sometimes hereinafter referred to collectively as the “Credit Parties”
and individually as a “Credit Party”), CIT CAPITAL SECURITIES LLC, as Co-Lead Arranger and as Sole
Bookrunner, KEYBANK NATIONAL ASSOCIATION, as Co-Lead Arranger and as Syndication Agent, GENERAL
ELECTRIC CAPITAL CORPORATION, as Documentation Agent, and CIT HEALTHCARE LLC (“CIT Healthcare”), as
administrative agent for the lenders (in such capacity, together with its successors and assigns in
such capacity, the “Administrative Agent”) and as collateral agent for the lenders (in such
capacity, together with its successors and assigns in such capacity, the “Collateral Agent”), and
the other Lenders party thereto from time to time;




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




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




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



SECTION 1. DEFINITIONS; GRANT OF SECURITY.




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



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




          “Accounts”
shall mean all “accounts” as defined in Article 9 of the UCC.




 









 








          “Additional Grantors” shall have the meaning assigned in Section 5.3.




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




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




          “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as now
and hereafter in effect, or any successor statute.




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




          “Cash Proceeds” shall have the meaning assigned in Section 7.7.




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




          “Collateral” shall have the meaning assigned in Section 2.1.




          “Collateral Account” shall mean any account established by the Collateral Agent.




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




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




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




          “Commercial Tort Claims” shall mean all “commercial tort claims” as defined in Article 9 of
the UCC, including, without limitation, all commercial tort claims listed on Schedule 4.8 (as such
schedule may be amended or supplemented from time to time).




          “Commodities Accounts” (i) shall mean all “commodity accounts” as defined in Article 9 of the
UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.4 under
the heading “Commodities Accounts” (as such schedule may be amended or supplemented from time to
time).




          “Controlled Foreign Corporation” shall mean “controlled foreign corporation” as defined in the
Tax Code.




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          “Copyright Licenses” shall mean any and all agreements providing for the granting of any right
in or to Copyrights (whether such Grantor is licensee or licensor thereunder) including, without
limitation, each agreement referred to in Schedule 4.7(B) (as such schedule may be amended or
supplemented from time to time).




          “Copyrights” shall mean all United States, and foreign copyrights (including Community
designs), including but not limited to copyrights in software and databases, and all Mask Works (as
defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and,
with respect to any and all of the foregoing: (i) all registrations and applications therefor
including, without limitation, the registrations and applications referred to in Schedule 4.7(A)
(as such schedule may be amended or supplemented from time to time), (ii) all extensions and
renewals thereof, (iii) all rights corresponding thereto throughout the world, (iv) all rights to
sue for past, present and future infringements thereof, and (v) all Proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims, damages and proceeds
of suit.




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




          “Deposit Accounts” (i) shall mean all “deposit accounts” as defined in Article 9 of the UCC
and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.4 under the
heading “Deposit Accounts” (as such schedule may be amended or supplemented from time to time).




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




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




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




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




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




          “Indemnitee” shall mean the Collateral Agent, and its and its Affiliates’ officers, partners,
directors, trustees, employees, and agents.




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




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




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




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




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




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




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




          “Lender Counterparty” shall mean each Lender or any Affiliate of a Lender counterparty to a
Hedge Agreement including, without limitation, each such Affiliate that enters into a joinder
agreement with the Collateral Agent.




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




          “Lien” shall mean (i) any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement, and any lease in the nature thereof) and any option, trust or
other preferential arrangement having the practical effect of any of the foregoing and (ii) in the
case of Pledged Equity Interests, any purchase option, call or similar right of a third party with
respect to such Pledged Equity Interests.




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




          “Non-Assignable Contract” shall mean any material agreement, contract or license to which any
Grantor is a party that by its terms purports to restrict or prevent the

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assignment or granting of a security interest therein (either by its terms or by any federal
or state statutory prohibition or otherwise irrespective of whether such prohibition or restriction
is enforceable under Section 9-406 through 409 of the UCC).




          “Off-Site Equipment and Inventory” shall mean those items of Equipment or Inventory, title to
which is retained by a Grantor, but which is held from time to time (i) by customers of such
Grantor’s products on consignment on substantially similar terms as set forth in the sample or
representative “Inventory Agreement” previously provided to the Collateral Agent and used in the
ordinary course of business of such Grantor for customers purchasing products from such Grantor on
consignment, (ii) by salespersons for the purpose of providing demonstration models or samples to
potential customers, or (iii) by hospitals, clinics, physicians’ offices or similar medical
establishments as service loaners, clinical research units, marketing and demo units, and for use
under pay for use agreements.




          “Patent Licenses” shall mean all agreements providing for the granting of any right in or to
Patents (whether such Grantor is licensee or licensor thereunder) including, without limitation,
each agreement referred to in Schedule 4.7(D) (as such schedule may be amended or supplemented from
time to time).




          “Patents” shall mean all United States and foreign patents and certificates of invention, or
similar industrial property rights, and applications for any of the foregoing, including, but not
limited to: (i) each patent and patent application referred to in Schedule 4.7(C) hereto (as such
schedule may be amended or supplemented from time to time), (ii) all reissues, divisions,
continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all
rights corresponding thereto throughout the world, (iv) all inventions and improvements described
therein, (v) all rights to sue for past, present and future infringements thereof, (vi) all
licenses, claims, damages, and proceeds of suit arising therefrom, and (vii) all Proceeds of the
foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages,
and proceeds of suit.




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




          “Pledged Debt” shall mean all Indebtedness owed to such Grantor, including, without
limitation, all Indebtedness described on Schedule 4.4(A) under the heading “Pledged Debt” (as such
schedule may be amended or supplemented from time to time), issued by the obligors named therein,
the instruments evidencing such Indebtedness, and all interest, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such Indebtedness.




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




          “Pledged LLC Interests” shall mean all interests in any limited liability company including,
without limitation, all limited liability company interests listed on Schedule 4.4(A) under the
heading “Pledged LLC Interests” (as such schedule may be amended or supplemented from time to time)
and the certificates, if any, representing such limited liability

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company interests and any interest of such Grantor on the books and records of such limited
liability company or on the books and records of any securities intermediary pertaining to such
interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities
and other property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such limited liability company interests.




          “Pledged Partnership Interests” shall mean all interests in any general partnership, limited
partnership, limited liability partnership or other partnership including, without limitation, all
partnership interests listed on Schedule 4.4(A) under the heading “Pledged Partnership Interests”
(as such schedule may be amended or supplemented from time to time) and the certificates, if any,
representing such partnership interests and any interest of such Grantor on the books and records
of such partnership or on the books and records of any securities intermediary pertaining to such
interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities
and other property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests.




          “Pledged Stock” shall mean all shares of capital stock owned by such Grantor, including,
without limitation, all shares of capital stock described on Schedule 4.4(A) under the heading
“Pledged Stock” (as such schedule may be amended or supplemented from time to time), and the
certificates, if any, representing such shares and any interest of such Grantor in the entries on
the books of the issuer of such shares or on the books of any securities intermediary pertaining to
such shares, and all dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares.




          “Pledged Trust Interests” shall mean all interests in a Delaware business trust or other trust
including, without limitation, all trust interests listed on Schedule 4.4(A) under the heading
“Pledged Trust Interests” (as such schedule may be amended or supplemented from time to time) and
the certificates, if any, representing such trust interests and any interest of such Grantor on the
books and records of such trust or on the books and records of any securities intermediary
pertaining to such interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such trust interests.




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




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

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property giving rise to such right to payment and all Collateral Support and Supporting
Obligations related thereto and all Receivables Records.




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




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




          “Secured Obligations” shall have the meaning assigned in Section 3.1.




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




          “Securities Accounts” (i) shall mean all “securities accounts” as defined in Article 8 of the
UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.4(A) under
the heading “Securities Accounts” (as such schedule may be amended or supplemented from time to
time).




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




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




          “Trademark Licenses” shall mean any and all agreements providing for the granting of any right
in or to Trademarks (whether such Grantor is licensee or licensor thereunder) including, without
limitation, each agreement referred to in Schedule 4.7(F) (as such schedule may be amended or
supplemented from time to time).




          “Trademarks” shall mean all United States, and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, Internet domain names, service
marks, certification marks, collective marks, logos, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for any of the
foregoing including, but not limited to: (i) the registrations and

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applications referred to in Schedule 4.7(E) (as such schedule may be amended or supplemented
from time to time), (ii) all extensions or renewals of any of the foregoing, (iii) all of the
goodwill of the business connected with the use of and symbolized by the foregoing, (iv) the right
to sue for past, present and future infringement or dilution of any of the foregoing or for any
injury to goodwill, and (v) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.




          “Trade Secret Licenses” shall mean any and all agreements providing for the granting of any
right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder) including,
without limitation, each agreement referred to in Schedule 4.7(G) (as such schedule may be amended
or supplemented from time to time).




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




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




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




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



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SECTION 2. GRANT OF SECURITY.




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



          (a) Accounts;




          (b) Chattel Paper;




          (c) Documents;




          (d) General Intangibles;




          (e) Goods;




          (f) Instruments;




          (g) Insurance;




          (h) Intellectual Property;




          (i) Investment Related Property;




          (j) Letter of Credit Rights;




          (k) Money;




          (l) Receivables and Receivable Records;




          (m) Commercial Tort Claims;




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




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




     2.2 Certain Limited Exclusions. Notwithstanding anything herein to the contrary, in no event
shall the Collateral include or the security interest granted under Section 2.1 hereof attach to
(a) any lease, license, contract, property rights or agreement to which any Grantor is a party or
any of its rights or interests thereunder if and for so long as the grant of such security interest
shall constitute or result in (i) the irrevocable abandonment, invalidation or unenforceability of
any right, title or interest of any Grantor therein or (ii) in a breach or termination pursuant to
the terms of, or a default under, any such lease, license, contract property rights or agreement
(other than to the extent that any such term would be rendered ineffective pursuant to Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity),
provided however that the Collateral shall include and such



9









 







security interest shall attach immediately at such time as the condition causing such
irrevocable abandonment, invalidation or unenforceability shall be remedied and to the extent
severable, shall attach immediately to any portion of such Lease, license, contract, property
rights or agreement that does not result in any of the consequences specified in (i) or (ii) above;
or (b) any of the outstanding capital stock of a Controlled Foreign Corporation in excess of 65% of
the voting power of all classes of capital stock of such Controlled Foreign Corporation entitled to
vote; provided that immediately upon the amendment of the Tax Code to allow the pledge of a greater
percentage of the voting power of capital stock in a Controlled Foreign Corporation without adverse
tax consequences, and provided that this Agreement is still in effect, the Collateral shall
include, and the security interest granted by each Grantor shall attach to, such greater percentage
of capital stock of each Controlled Foreign Corporation.


SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.




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



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


SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.




     4.1 Generally.



          (a) Representations and Warranties. Each Grantor hereby represents and warrants on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that:




10









 









          (i) it owns the Collateral purported to be owned by it or otherwise has the rights it
purports to have in each item of Collateral and, as to all Collateral whether now existing
or hereafter acquired, will continue to own or have such rights in each item of the
Collateral, in each case free and clear of any and all Liens, rights or claims of all other
Persons, including, without limitation, liens arising as a result of such Grantor becoming
bound (as a result of merger or otherwise) as debtor under a security agreement entered into
by another Person other than Permitted Liens;




          (ii) it has indicated on Schedule 4.1(A)(as such schedule may be amended or
supplemented from time to time): (w) the type of organization of such Grantor, (x) the
jurisdiction of organization of such Grantor, (y) its organizational identification number
and (z) the jurisdiction where the chief executive office or its sole place of business is
(or the principal residence if such Grantor is a natural person), and for the one-year
period preceding the date hereof has been, located.




          (iii) the full legal name of such Grantor is as set forth on Schedule 4.1(A) and it has
not done in the last five (5) years, and does not do, business under any other name
(including any trade name or fictitious business name) except for those names set forth on
Schedule 4.1(B) (as such schedule may be amended or supplemented from time to time);




          (iv) except as provided on Schedule 4.1(C), it has not changed its name, jurisdiction
of organization, chief executive office or sole place of business (or principal residence if
such Grantor is a natural person) or its corporate structure in any way (e.g., by merger,
consolidation, change in corporate form or otherwise) within the past five (5) years;




          (v) it has not within the last five (5) years become bound (whether as a result of
merger or otherwise) as debtor under a security agreement entered into by another Person,
which has not heretofore been terminated other than the agreements identified on Schedule
4.1(D) hereof (as such schedule may be amended or supplemented from time to time);




          (vi) with respect to each agreement identified on Schedule 4.1(D), it has indicated on
Schedule 4.1 (A) and Schedule 4.1(B) the information required pursuant to Section
4.1(a)(ii), (iii) and (iv) with respect to the debtor under each such agreement;




          (vii) (u) upon the filing of all UCC financing statements naming each Grantor as
“debtor” and the Collateral Agent as “secured party” and describing the Collateral in the
filing offices set forth opposite such Grantor’s name on Schedule 4.1(E) hereof (as such
schedule may be amended or supplemented from time to time) and other filings delivered by
each Grantor, (v) upon delivery of all Instruments, Chattel Paper and certificated Pledged
Equity Interests and Pledged Debt, (w) upon sufficient identification of Commercial Tort
Claims, (x) upon execution of a control agreement establishing the Collateral Agent’s
“control” (within the meaning of Section 8-106, 9-106 or 9-104 of the UCC, as applicable)
with respect to any Investment Account, (y) upon consent of the issuer with respect to
Letter of Credit Rights, and (z) to the extent not subject to Article 9



11









 







of the UCC, upon recordation of the security interests granted hereunder in Patents,
Trademarks and Copyrights in the applicable intellectual property registries, including but
not limited to the United States Patent and Trademark Office and the United States Copyright
Office, the security interests granted to the Collateral Agent hereunder constitute valid
and perfected first priority Liens (subject in the case of priority only to Permitted Liens
and to the rights of the United States government (including any agency or department
thereof) with respect to United States government Receivables) on all of the Collateral;




          (viii) all actions and consents, including all filings, notices, registrations and
recordings necessary or desirable for the exercise by the Collateral Agent of the voting or
other rights provided for in this Agreement or the exercise of remedies in respect of the
Collateral have been made or obtained;




          (ix) other than the financing statements filed in favor of the Collateral Agent, no
effective UCC financing statement, fixture filing or other instrument similar in effect
under any applicable law covering all or any part of the Collateral is on file in any filing
or recording office except for (x) financing statements for which proper termination
statements have been delivered to the Collateral Agent for filing and (y) financing
statements filed in connection with Permitted Liens;




          (x) no authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority or regulatory body is required for either (i) the pledge or grant by
any Grantor of the Liens purported to be created in favor of the Collateral Agent hereunder
or (ii) the exercise by Collateral Agent of any rights or remedies in respect of any
Collateral (whether specifically granted or created hereunder or created or provided for by
applicable law), except (A) for the filings contemplated by clause (vii) above and (B) as
may be required, in connection with the disposition of any Investment Related Property, by
laws generally affecting the offering and sale of Securities;




          (xi) all information supplied by any Grantor with respect to any of the Collateral (in
each case taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects;




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




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




          (xiv) except as described on Schedule 4.1(D), such Grantor has not become bound as a
debtor, either by contract or by operation of law, by a security agreement previously
entered into by another Person; and




          (xv) such Grantor has been duly organized as an entity of the type as set forth
opposite such Grantor’s name on Schedule 4.1(A) solely under the laws of the jurisdiction as
set forth opposite such Grantor’s name on Schedule 4.1(A) and remains
duly existing as such. Such Grantor has not filed any certificates of domestication,
transfer or continuance in any other jurisdiction.



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





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




          (ii) it shall not produce, use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral;




          (iii) it shall not change such Grantor’s name, identity, corporate structure (e.g., by
merger, consolidation, change in corporate form or otherwise) sole place of business (or
principal residence if such Grantor is a natural person), chief executive office, type of
organization or jurisdiction of organization or establish any trade names unless it shall
have (a) notified the Collateral Agent in writing, by executing and delivering to the
Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto, at least thirty (30)
days prior (or such shorter period of time as is consented to by the Collateral Agent in
writing) to any such change or establishment, identifying such new proposed name, identity,
corporate structure, sole place of business (or principal residence if such Grantor is a
natural person), chief executive office, jurisdiction of organization or trade name and
providing such other information in connection therewith as the Collateral Agent may
reasonably request and (b) taken all actions necessary or advisable to maintain the
continuous validity, perfection and the same or better priority of the Collateral Agent’s
security interest in the Collateral intended to be granted and agreed to hereby;




          (iv) if the Collateral Agent or any Secured Party gives value to enable Grantor to
acquire rights in or the use of any Collateral, it shall use such value for such purposes
and such Grantor further agrees that repayment of any Obligation shall apply on a “first-in,
first-out” basis so that the portion of the value used to acquire rights in any Collateral
shall be paid in the chronological order such Grantor acquired rights therein;




          (v) it shall pay promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Collateral, except to the extent the validity thereof
is being contested in good faith; provided, such Grantor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five (5) days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed against
such Grantor or any of the Collateral as a result of the failure to make such payment;



13









 






          (vi) upon any Authorized Officer of Grantor obtaining knowledge thereof, such Grantor
shall promptly notify the Collateral Agent in writing of any event that may have a material
adverse effect on the value of the Collateral or any material portion thereof, the ability
of any Grantor or the Collateral Agent to dispose of the Collateral or any portion thereof,
or the rights and remedies of the Collateral Agent in relation thereto, including, without
limitation, the levy of any legal process against the Collateral or any portion thereof;




          (vii) it shall not take or permit any action which could impair the Collateral Agent’s
rights in the Collateral; and




          (viii) it shall not sell, transfer or assign (by operation of law or otherwise) any
Collateral except as otherwise in accordance with the Credit Agreement.



     4.2 Equipment and Inventory.



          (a) Representations and Warranties. Each Grantor hereby represents and warrants on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that:





          (i) all of the Equipment and Inventory included in the Collateral is kept only at the
locations specified in Schedule 4.2 (as such schedule may be amended or supplemented from
time to time);




          (ii) any Goods now or hereafter produced by any Grantor included in the Collateral have
been and will be produced in compliance with the requirements of the Fair Labor Standards
Act, as amended; and




          (iii) none of the Inventory or Equipment is in the possession of an issuer of a
negotiable document (as defined in Section 7-104 of the UCC) therefor or otherwise in the
possession of a bailee or a warehouseman.



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





          (i) it shall (a) keep the Equipment, Inventory and any Documents evidencing any
Equipment and Inventory in the locations specified or described on Schedule 4.2 (as such
schedule may be amended or supplemented from time to time) unless it shall have (x), with
respect to all such Equipment and Inventory and any Documents evidencing such Equipment and
Inventory (other than Off-Site Equipment and Inventory)) notified the Collateral Agent in
writing, by executing and delivering to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto, at least thirty (30) days prior (or such shorter period of time as is
consented to by the Collateral Agent in writing) to any change in locations, identifying
such new locations and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (y) taken all actions necessary or advisable to
maintain the continuous validity, perfection and the same or better priority of the
Collateral Agent’s security interest in the



14









 







Collateral intended to be granted and agreed to hereby, or to enable the Collateral
Agent to exercise and enforce its rights and remedies hereunder, with respect to such
Equipment and Inventory, and (b) provide the Collateral Agent on a monthly basis an updated
Schedule 4.2 setting forth the locations of all of the Equipment and Inventory of such
Grantor;




          (ii) it shall keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, such Grantor’s cost therefor and (where
applicable) the current list prices for the Inventory, in each case, in reasonable detail as
is customarily maintained under similar circumstances by Persons of established reputation
engaged in similar business, and in any event in conformity with GAAP;




          (iii) it shall not deliver any Document evidencing any Equipment and Inventory to any
Person other than the issuer of such Document to claim the Goods evidenced therefor or the
Collateral Agent;




          (iv) if any Equipment or Inventory is in possession or control of any third party, upon
the occurrence and during the continuation of any Event of Default with respect to any
Off-Site Equipment and Inventory, and upon the written request of the Collateral Agent with
respect to all such other Equipment or Inventory, each Grantor shall join with the
Collateral Agent in notifying the third party of the Collateral Agent’s security interest
and obtaining an acknowledgment from the third party that it is holding the Equipment and
Inventory for the benefit of the Collateral Agent; and




          (v) with respect to any item of Equipment which is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a security interest
on such certificate is required as a condition of perfection thereof, upon the reasonable
request of the Collateral Agent, (A) provide information with respect to any such Equipment
in excess of $50,000 individually or $200,000 in the aggregate, (B) execute and file with
the registrar of motor vehicles or other appropriate authority in such jurisdiction an
application or other document requesting the notation or other indication of the security
interest created hereunder on such certificate of title, and (C) deliver to the Collateral
Agent copies of all such applications or other documents filed during such calendar quarter
and copies of all such certificates of title issued during such calendar quarter indicating
the security interest created hereunder in the items of Equipment covered thereby.



     4.3 Receivables



          (a) Representations and Warranties. Each Grantor hereby represents and warrants on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that:





          (i) each Receivable (a) is and will be the legal, valid and binding obligation of the
Account Debtor in respect thereof, representing an unsatisfied obligation



15









 







of such Account Debtor, (b) is and will be enforceable in accordance with its terms,
(c) is not and will not be subject to any setoffs, defenses, taxes, counterclaims (except
with respect to refunds, returns and allowances in the ordinary course of business with
respect to damaged merchandise) and (d) is and will be in compliance with all applicable
laws, whether federal, state, local or foreign;




          (ii) No Receivable in excess of $250,000 individually or $1,000,000 in the aggregate
requires the consent of the Account Debtor in respect thereof in connection with the pledge
hereunder, except any consent which has been obtained;




          (iii) no Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper
which has not been delivered to, or otherwise subjected to the control of, the Collateral
Agent to the extent required by, and in accordance with Section 4.3(c); and




          (iv) each Grantor has delivered to the Collateral Agent a complete and correct copy of
each standard form of document under which a Receivable may arise.



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





          (i) it shall keep and maintain at its own cost and expense satisfactory and complete
records of the Receivables, including, but not limited to, the originals of all
documentation or Records thereof with respect to all Receivables and records of all payments
received and all credits granted on the Receivables, all merchandise returned and all other
dealings therewith;




          (ii) it shall mark conspicuously, in form and manner reasonably satisfactory to the
Collateral Agent, all Chattel Paper, Instruments and other evidence of Receivables (other
than any delivered to the Collateral Agent as provided herein), as well as the Receivables
Records with an appropriate reference to the fact that the Collateral Agent has a security
interest therein;




          (iii) it shall perform in all material respects all of its obligations with respect to
the Receivables;




          (iv) it shall not amend, modify, terminate or waive any provision of any Receivable (in
excess of $250,000 individually or $1,000,000 in the aggregate with other Receivables) in
any manner which could reasonably be expected to have a material adverse effect on the value
of such Receivable as Collateral. Other than in the ordinary course of business as
generally conducted by it on and prior to the date hereof, and except as otherwise provided
in subsection (v) below, following an Event of Default, such Grantor shall not (w) grant any
extension or renewal of the time of payment of any Receivable, (x) compromise or settle any
dispute, claim or legal proceeding with respect to any Receivable for less than the total
unpaid balance thereof, (y) release, wholly or partially, any Person liable for the payment
thereof, or (z) allow any credit or discount thereon;



16









 






          (v) except as otherwise provided in this subsection, each Grantor shall continue to
collect all amounts due or to become due to such Grantor under the Receivables and any
Supporting Obligation and diligently exercise each material right it may have under any
Receivable, any Supporting Obligation or Collateral Support, in each case, at its own
expense, and in connection with such collections and exercise, such Grantor shall take such
action as such Grantor or the Collateral Agent may deem necessary or advisable.
Notwithstanding the foregoing, upon the occurrence and during the continuation of any Event
of Default, the Collateral Agent shall have the right at any time to notify, or require any
Grantor to notify, any Account Debtor of the Collateral Agent’s security interest in the
Receivables and any Supporting Obligation and, in addition, at any time following the
occurrence and during the continuation of an Event of Default, the Collateral Agent may:
(1) direct the Account Debtors under any Receivables to make payment of all amounts due or
to become due to such Grantor thereunder directly to the Collateral Agent; (2) notify, or
require any Grantor to notify, each Person maintaining a lockbox or similar arrangement to
which Account Debtors under any Receivables have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to time sent to
or deposited in such lockbox or other arrangement directly to the Collateral Agent; and (3)
enforce, at the expense of such Grantor, collection of any such Receivables and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. If the Collateral Agent notifies any Grantor that
it has elected to collect the Receivables in accordance with the preceding sentence, any
payments of Receivables received by such Grantor shall be forthwith (and in any event within
two (2) Business Days) deposited by such Grantor in the exact form received, duly indorsed
by such Grantor to the Collateral Agent if required, in the Collateral Account maintained
under the sole dominion and control of the Collateral Agent, and until so turned over, all
amounts and proceeds (including checks and other instruments) received by such Grantor in
respect of the Receivables, any Supporting Obligation or Collateral Support shall be
received in trust for the benefit of the Collateral Agent hereunder and shall be segregated
from other funds of such Grantor and such Grantor shall not adjust, settle or compromise the
amount or payment of any Receivable, or release wholly or partly any Account Debtor or
obligor thereof, or allow any credit or discount thereon; and




          (vi) it shall use its best efforts to keep in full force and effect any Supporting
Obligation or Collateral Support relating to any Receivable.



          (c) Delivery and Control of Receivables. With respect to any Receivables in excess of
$25,000 individually or $100,000 in the aggregate that is evidenced by, or constitutes, Chattel
Paper or Instruments, each Grantor shall, upon the request of the Collateral Agent, cause each
originally executed copy thereof to be delivered to the Collateral Agent (or its agent or designee)
appropriately indorsed to the Collateral Agent or indorsed in blank: (i) with respect to any such
Receivables in existence on the date hereof, on or prior to the date hereof and (ii) with respect
to any such Receivables hereafter arising, within ten (10) days of such Grantor acquiring rights
therein. With respect to any Receivables in excess of $25,000 individually or $100,000 in the
aggregate which would constitute “electronic chattel paper” under Article 9 of the UCC, each
Grantor shall, upon the request of the Collateral Agent, take all steps necessary to give the
Collateral Agent control over such Receivables (within the meaning of Section 9-105 of the

17









 








UCC): (i) with respect to any such Receivables in existence on the date hereof, on or prior
to the date hereof and (ii) with respect to any such Receivables hereafter arising, within ten (10)
days of such Grantor acquiring rights therein. Any Receivable not otherwise required to be
delivered or subjected to the control of the Collateral Agent in accordance with this subsection
(c) shall be delivered or subjected to such control upon request of the Collateral Agent.




     4.4 Investment Related Property.



          4.4.1 Investment Related Property Generally




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





          (i) in the event it acquires rights in any Investment Related Property after the date
hereof, it shall deliver to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto, reflecting such new Investment Related Property and all other Investment
Related Property. Notwithstanding the foregoing, it is understood and agreed that the
security interest of the Collateral Agent shall attach to all Investment Related Property
immediately upon any Grantor’s acquisition of rights therein and shall not be affected by
the failure of any Grantor to deliver a supplement to Schedule 4.4 as required hereby;




          (ii) except as provided in the next sentence, in the event such Grantor receives any
dividends, interest or distributions on any Investment Related Property, or any securities
or other property upon the merger, consolidation, liquidation or dissolution of any issuer
of any Investment Related Property, then (a) such dividends, interest or distributions and
securities or other property shall be included in the definition of Collateral without
further action and (b) such Grantor shall immediately take all steps, if any, necessary or
advisable to ensure the validity, perfection, priority and, if applicable, control of the
Collateral Agent over such Investment Related Property (including, without limitation,
delivery thereof to the Collateral Agent) and pending any such action such Grantor shall be
deemed to hold such dividends, interest, distributions, securities or other property in
trust for the benefit of the Collateral Agent and shall segregate such dividends,
distributions, Securities or other property from all other property of such Grantor.
Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be
continuing, the Collateral Agent authorizes each Grantor to retain and use to the extent
remitted under the Credit Documents, all ordinary cash dividends and distributions paid in
the normal course of the business of the issuer and consistent with the past practice of the
issuer and all scheduled payments of interest;




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



          (b) Delivery and Control.





          (i) Each Grantor agrees that with respect to any Investment Related Property in which
it currently has rights it shall comply with the provisions of this



18









 







Section 4.4.1(b) on or before the Effective Date and with respect to any Investment
Related Property hereafter acquired by such Grantor it shall comply with the provisions of
this Section 4.4.1(b) immediately upon acquiring rights therein, in each case in form and
substance satisfactory to the Collateral Agent. With respect to any Investment Related
Property that is represented by a certificate or that is an “instrument” (other than any
Investment Related Property credited to a Securities Account) it shall cause such
certificate or instrument to be delivered to the Collateral Agent, indorsed in blank by an
“effective indorsement” (as defined in Section 8-107 of the UCC), regardless of whether such
certificate constitutes a “certificated security” for purposes of the UCC. With respect to
any Investment Related Property that is an “uncertificated security” for purposes of the UCC
(other than any “uncertificated securities” credited to a Securities Account), it shall
cause the issuer of such uncertificated security to either (i) register the Collateral Agent
as the registered owner thereof on the books and records of the issuer or (ii) execute an
agreement substantially in the form of Exhibit B hereto, pursuant to which such issuer
agrees to comply with the Collateral Agent’s instructions with respect to such
uncertificated security without further consent by such Grantor.



          (c) Voting and Distributions.





          (i) So long as no Event of Default shall have occurred and be continuing:




          (1) except as otherwise provided under the covenants and agreements relating to
Investment Related Property in this Agreement or elsewhere herein or in the Credit
Agreement, each Grantor shall be entitled to exercise or refrain from exercising any
and all voting and other consensual rights pertaining to the Investment Related
Property or any part thereof for any purpose not inconsistent with the terms of this
Agreement or the Credit Agreement; provided, no Grantor shall exercise or refrain
from exercising any such right if the Collateral Agent shall have notified such
Grantor that, in the Collateral Agent’s reasonable judgment, such action would have
a material adverse effect on the value of the Investment Related Property or any
part thereof; and provided further, such Grantor shall give the Collateral Agent at
least five (5) Business Days prior written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right; it being
understood, however, that neither the voting by such Grantor of any Pledged Stock
for, or such Grantor’s consent to, the election of directors (or similar governing
body) at a regularly scheduled annual or other meeting of stockholders or with
respect to incidental matters at any such meeting, nor such Grantor’s consent to or
approval of any action otherwise permitted under this Agreement and the Credit
Agreement, shall be deemed inconsistent with the terms of this Agreement or the
Credit Agreement within the meaning of this Section 4.4(c)(i)(1), and no notice of
any such voting or consent need be given to the Collateral Agent; and




          (2) the Collateral Agent shall promptly execute and deliver (or cause to be
executed and delivered) to each Grantor all proxies, and other instruments as such
Grantor may from time to time reasonably request for the



19









 







purpose of enabling such Grantor to exercise the voting and other consensual
rights when and to the extent which it is entitled to exercise pursuant to clause
(1) above;




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




      (A) all rights of each Grantor to exercise or refrain from
exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant hereto shall cease and all
such rights shall thereupon become vested in the Collateral Agent who
shall thereupon have the sole right to exercise such voting and other
consensual rights; and




      (B) in order to permit the Collateral Agent to exercise the
voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and other
distributions which it may be entitled to receive hereunder: (1) each
Grantor shall promptly execute and deliver (or cause to be executed
and delivered) to the Collateral Agent all proxies, dividend payment
orders and other instruments as the Collateral Agent may from time to
time reasonably request and (2) each Grantor acknowledges that the
Collateral Agent may utilize the power of attorney set forth in
Section 6.1.



          4.4.2 Pledged Equity Interests




          (a) Representations and Warranties. Each Grantor hereby represents and warrants on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that:





          (i) Schedule 4.4(A) (as such schedule may be amended or supplemented from time to time)
sets forth under the headings “Pledged Stock, “Pledged LLC Interests,” “Pledged Partnership
Interests” and “Pledged Trust Interests,” respectively, all of the Pledged Stock, Pledged
LLC Interests, Pledged Partnership Interests and Pledged Trust Interests owned by any
Grantor and such Pledged Equity Interests constitute the percentage of issued and
outstanding shares of stock, percentage of membership interests, percentage of partnership
interests or percentage of beneficial interest of the respective issuers thereof indicated
on such Schedule;




          (ii) except as set forth on Schedule 4.4(B), it has not acquired any equity interests
of another entity or substantially all the assets of another entity within the past five (5)
years;




          (iii) it is the record and beneficial owner of the Pledged Equity Interests free of all
Liens, rights or claims of other Persons other than Permitted Liens and there are no
outstanding warrants, options or other rights to purchase, or shareholder, voting



20









 







trust or similar agreements outstanding with respect to, or property that is
convertible into, or that requires the issuance or sale of, any Pledged Equity Interests;




          (iv) without limiting the generality of Section 4.1(a)(v), no consent of any Person
including any other general or limited partner, any other member of a limited liability
company, any other shareholder or any other trust beneficiary is necessary or desirable in
connection with the creation, perfection or first priority status of the security interest
of the Collateral Agent in any Pledged Equity Interests or the exercise by the Collateral
Agent of the voting or other rights provided for in this Agreement or the exercise of
remedies in respect thereof;




          (v) none of the Pledged LLC Interests nor Pledged Partnership Interests are or
represent interests in issuers that: (a) are registered as investment companies or (b) are
dealt in or traded on securities exchanges or markets; and




          (vi) except as otherwise set forth on Schedule 4.4(C), all of the Pledged LLC Interests
and Pledged Partnership Interests are or represent interests in issuers that have opted to
be treated as securities under the uniform commercial code of any jurisdiction.



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





          (i) without the prior written consent of the Collateral Agent, it shall not vote to
enable or take any other action to: (a) amend or terminate any partnership agreement,
limited liability company agreement, certificate of incorporation, by-laws or other
organizational documents in any way that materially changes the rights of such Grantor with
respect to any Investment Related Property or adversely affects the validity, perfection or
priority of the Collateral Agent’s security interest, (b) other than as permitted under the
Credit Agreement, permit any issuer of any Pledged Equity Interest controlled by a Grantor
to issue any additional stock, partnership interests, limited liability company interests or
other equity interests of any nature or to issue securities convertible into or granting the
right of purchase or exchange for any stock or other equity interest of any nature of such
issuer, (c) other than as permitted under the Credit Agreement, permit any issuer of any
Pledged Equity Interest controlled by a Grantor to dispose of all or a material portion of
their assets, (d) waive any default under or breach of any terms of organizational document
relating to the issuer of any Pledged Equity Interest controlled by a Grantor or the terms
of any Pledged Debt, or (e) cause any issuer of any Pledged Partnership Interests or Pledged
LLC Interests which are not securities (for purposes of the UCC) on the date hereof to elect
or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC
Interests to be treated as securities for purposes of the UCC; provided, however,
notwithstanding the foregoing, if any issuer of any Pledged Partnership Interests or Pledged
LLC Interests takes any such action in violation of the foregoing in this clause (e), such
Grantor shall promptly notify the Collateral Agent in writing of any such election or action
and, in such event, shall take all steps necessary or advisable to establish the Collateral
Agent’s “control” thereof;



21









 






          (ii) it shall comply with all of its obligations under any partnership agreement or
limited liability company agreement relating to Pledged Partnership Interests or Pledged LLC
Interests and shall enforce all of its rights with respect to any Investment Related
Property;




          (iii) without the prior written consent of the Collateral Agent, it shall not permit
any issuer of any Pledged Equity Interest controlled by a Grantor to merge or consolidate
unless (i) such issuer creates a security interest that is perfected by a filed financing
statement (that is not effective solely under section 9-508 of the UCC) in collateral in
which such new debtor has or acquires rights, and (ii) all the outstanding capital stock or
other equity interests of the surviving or resulting corporation, limited liability company,
partnership or other entity is, upon such merger or consolidation, pledged hereunder and no
cash, securities or other property is distributed in respect of the outstanding equity
interests of any other constituent Grantor; provided that if the surviving or resulting
Person upon any such merger or consolidation involving an issuer which is a Controlled
Foreign Corporation, then such Grantor shall only be required to pledge equity interests in
accordance with Section 2.2;




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




          (v) in addition to the foregoing, if any issuer of any Investment Related Property is
located in a jurisdiction outside of the United States, the applicable Grantor shall take
such additional actions, including, without limitation, causing the issuer to register the
pledge on its books and records or making such filings or recordings, in each case as may be
reasonably necessary or advisable, under the laws of such issuer’s jurisdiction to insure
the validity, perfection and priority of the security interest of the Collateral Agent.
Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent
shall have the right, without notice to any Grantor, to transfer all or any portion of the
Investment Related Property to its name or the name of its nominee or agent. In addition,
the Collateral Agent shall have the right at any time, without notice to any Grantor, to
exchange any certificates or instruments representing any Investment Related Property for
certificates or instruments of smaller or larger denominations.



          4.4.3 Pledged Debt




          (a) Representations and Warranties. Each Grantor hereby represents and warrants on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that Schedule 4.4 (as such schedule may
be amended or supplemented from time to time) sets forth under the


22









 







heading “Pledged Debt” all of the Pledged Debt owned by any Grantor and all of such Pledged
Debt has been duly authorized, authenticated or issued, and delivered and is the legal, valid and
binding obligation of the issuers thereof and is not in default and constitutes all of the issued
and outstanding inter-company Indebtedness;




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




          4.4.4 Investment Accounts




          (a) Representations and Warranties. Each Grantor hereby represents and warrants on the
Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that:




          (b) Schedule 4.4 hereto (as such schedule may be amended or supplemented from time to time)
sets forth under the headings “Securities Accounts” and “Commodities Accounts,” respectively, all
of the Securities Accounts and Commodities Accounts in which each Grantor has an interest. Each
Grantor is the sole entitlement holder of each such Securities Account and Commodity Account, and
such Grantor has not consented to, and is not otherwise aware of, any Person (other than the
Collateral Agent pursuant hereto) having “control” (within the meanings of Sections 8-106 and 9-106
of the UCC) over, or any other interest in, any such Securities Account or Commodity Account or
securities or other property credited thereto;





          (i) Schedule 4.4 hereto (as such schedule may be amended or supplemented from time to
time) sets forth under the headings “Deposit Accounts” all of the Deposit Accounts in which
each Grantor has an interest. Each Grantor is the sole account holder of each such Deposit
Account and such Grantor has not consented to, and is not otherwise aware of, any Person
(other than the Collateral Agent pursuant hereto or the relevant depository bank) having
either sole dominion and control (within the meaning of common law) or “control” (within the
meanings of Section 9-104 of the UCC) over, or any other interest in, any such Deposit
Account or any money or other property deposited therein; and




          (ii) Each Grantor has taken all actions necessary or desirable, including those
specified in Section 4.4.4(c), to: (a) establish Collateral Agent’s “control” (within the
meanings of Sections 8-106 and 9-106 of the UCC) over any portion of the Investment Related
Property constituting Certificated Securities, Uncertificated Securities, Securities
Accounts, Securities Entitlements or Commodities Accounts (each as defined in the UCC); (b)
establish the Collateral Agent’s “control” (within the meaning of Section 9-104 of the UCC)
over all Deposit Accounts; and (c) deliver all Instruments to the Collateral Agent.




          (iii) Covenant and Agreement. Each Grantor hereby covenants and agrees with
the Collateral Agent and each other Secured Party that it shall not close or terminate any
Investment Account without the prior consent of the Collateral Agent and



23









 







unless a successor or replacement account has been established with the consent of the
Collateral Agent with respect to which successor or replacement account a control agreement
has been entered into by the appropriate Grantor, Collateral Agent and securities
intermediary or depository institution at which such successor or replacement account is to
be maintained in accordance with the provisions of Section 4.4.4(c).



          (c) Delivery and Control





          (i) With respect to any Investment Related Property consisting of Securities Accounts
or Securities Entitlements, it shall cause the securities intermediary maintaining such
Securities Account or Securities Entitlement to enter into an agreement substantially in the
form of Exhibit C hereto pursuant to which it shall agree to comply with the Collateral
Agent’s “entitlement orders” without further consent by such Grantor. With respect to any
Investment Related Property that is a “Deposit Account,” it shall cause the depositary
institution maintaining such account to enter into an agreement substantially in the form of
Exhibit D hereto, pursuant to which the Collateral Agent shall have both dominion and
control over such Deposit Account (within the meaning of the common law) and “control”
(within the meaning of Section 9-104 of the UCC) over such Deposit Account (it being
understood that the relevant depository bank shall also have control). Each Grantor shall
have entered into such control agreement or agreements with respect to: (i) any Securities
Accounts, Securities Entitlements or Deposit Accounts that exist on the Credit Date, as of
or prior to the Credit Date and (ii) any Securities Accounts, Securities Entitlements or
Deposit Accounts that are created or acquired after the Credit Date, as of or prior to the
deposit or transfer of any such Securities Entitlements or funds, whether constituting
moneys or investments, into such Securities Accounts or Deposit Accounts.




     In addition to the foregoing, if any issuer of any Investment Related Property is
located in a jurisdiction outside of the United States, each Grantor shall take such
additional actions, including, without limitation, causing the issuer to register the pledge
on its books and records or making such filings or recordings, in each case as may be
necessary or advisable, under the laws of such issuer’s jurisdiction to insure the
validity, perfection and priority of the security interest of the Collateral Agent. Upon
the occurrence of an Event of Default, the Collateral Agent shall have the right, without
notice to any Grantor, to transfer all or any portion of the Investment Related Property to
its name or the name of its nominee or agent. In addition, the Collateral Agent shall have
the right at any time, without notice to any Grantor, to exchange any certificates or
instruments representing any Investment Related Property for certificates or instruments of
smaller or larger denominations.



     4.5 Material Contracts



          (a) Representations and Warranties. Each Grantor hereby represents and warrants on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that:




24









 





          (i) Schedule 4.5 (as such schedule may be amended or supplemented from time to time)
sets forth all of the Material Contracts to which such Grantor has rights;




          (ii) the Material Contracts, true and complete copies (including any amendments or
supplements thereof) of which have been furnished to the Collateral Agent, have been duly
authorized, executed and delivered by all parties thereto, are in full force and effect and
are binding upon and enforceable against all parties thereto in accordance with their
respective terms. To the best knowledge of any Grantor, there exists no default under any
Material Contract by any party thereto and neither such Grantor, nor any other Person party
thereto is likely to become in default thereunder and no Person party thereto has any
defenses, counterclaims or right of set-off with respect to any Material Contract. Each
Person party to a Material Contract (other than any Grantor) has executed and delivered to
the applicable Grantor a consent to the assignment of such Material Contract to the
Collateral Agent pursuant to this Agreement; and




          (iii) no Material Contract prohibits assignment or requires consent of or notice to any
Person in connection with the assignment to the Collateral Agent hereunder, except such as
has been given or made or is currently sought pursuant to Section 4.5 (b)(vii) hereof.



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




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




        (ii) each Grantor shall deliver promptly to the Collateral Agent a copy of each
material demand, notice or document received by it relating in any way to any Material
Contract;




        (iii) each Grantor shall deliver promptly to the Collateral Agent, and in any event
within ten (10) Business Days, after (1) any Material Contract of such Grantor is terminated
or amended in a manner that is materially adverse to such Grantor or (2) any new Material
Contract is entered into by such Grantor, a written statement describing such event, with
copies of such material amendments or new contracts, delivered to the Collateral Agent (to
the extent such delivery is permitted by the terms of any such Material Contract, provided,
no prohibition on delivery shall be effective if it were bargained for by such Grantor with
the intent of avoiding compliance with this Section 4.5(b)(iii)), and an explanation of any
actions being taken with respect thereto;




25









 








          (iv) it shall perform in all material respects all of its obligations with respect to
the Material Contracts;




          (v) it shall promptly and diligently exercise each material right (except the right of
termination) it may have under any Material Contract, any Supporting Obligation or
Collateral Support, in each case, at its own expense, and in connection with such
collections and exercise, such Grantor shall take such action as such Grantor or the
Collateral Agent may deem necessary or advisable;




          (vi) it shall use its best efforts to keep in full force and effect any Supporting
Obligation or Collateral Support relating to any Material Contract; and




          (vii) each Grantor shall, within thirty (30) days of the date hereof with respect to
any Non-Assignable Contract in effect on the date hereof and within thirty (30) days after
entering into any Non-Assignable Contract after the Effective Date, request in writing the
consent of the counterparty or counterparties to the Non-Assignable Contract pursuant to the
terms of such Non-Assignable Contract or applicable law to the assignment or granting of a
security interest in such Non-Assignable Contract to Secured Party and use its best efforts
to obtain such consent as soon as practicable thereafter.




     4.6 Letter of Credit Rights



          (a) Representations and Warranties. Each Grantor hereby represents and warrants on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that:





          (i) all material letters of credit to which such Grantor has rights are listed on
Schedule 4.6 (as such schedule may be amended or supplemented from time to time) hereto; and




          (ii) it has obtained the consent of each issuer of any material letter of credit to the
assignment of the proceeds of the letter of credit to the Collateral Agent.



          (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that with
respect to any material letter of credit hereafter arising it shall obtain the consent of the
issuer thereof to the assignment of the proceeds of the letter of credit to the Collateral Agent
and shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form
of Exhibit A attached hereto, together with all Supplements to Schedules thereto.




     4.7 Intellectual Property.



          (a) Representations and Warranties. Except as disclosed in Schedule 4.7(H) (as such
schedule may be amended or supplemented from time to time), each Grantor hereby represents and
warrants on the Initial Closing Date and on the Second Closing Date (in each case, both immediately
before and immediately after giving effect to the Acquisition and the consummation of the
transactions contemplated by the Tender Offer), and on each Credit Date, that:




26









 









          (i) Schedule 4.7 (as such schedule may be amended or supplemented from time to time)
sets forth a true and complete list of (i) all United States and foreign registrations of
and applications for Patents, Trademarks, and Copyrights owned by each Grantor, and (ii) all
Patent Licenses, Trademark Licenses, Trade Secret Licenses and Copyright Licenses material
to the business of such Grantor;




          (ii) it is the sole and exclusive owner of the entire right, title, and interest in and
to all Intellectual Property identified on Schedule 4.7 as belonging to it (as such schedule
may be amended or supplemented from time to time), and owns or has the valid right to use
all Intellectual Property material to or necessary to conduct its business, free and clear
of all Liens, claims, encumbrances and licenses, except for Permitted Liens and the licenses
set forth on Schedule 4.7(B), (D), (F) and (G) (as each may be amended or supplemented from
time to time);




          (iii) all Intellectual Property is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, and each Grantor has performed all acts and has paid all
renewal, maintenance, and other fees and taxes required to maintain each and every
registration and application of Copyrights, Patents and Trademarks in full force and effect;




          (iv) all Intellectual Property is valid and enforceable; no holding, decision, or
judgment has been rendered in any action or proceeding before any court or administrative
authority challenging the validity of, such Grantor’s right to register, or such Grantor’s
rights to own or use, any Intellectual Property and no such action or proceeding is pending
or, to the best of such Grantor’s knowledge, threatened;




          (v) all registrations and applications for Copyrights, Patents and Trademarks are
standing in the name of each Grantor, to whom they are applicable, as identified on Schedule
4.7, and none of the Trademarks, Patents, Copyrights or Trade Secrets has been licensed by
any such Grantor to any Affiliate or third party, except as disclosed in Schedule 4.7(B),
(D), (F), or (G) (as each may be amended or supplemented from time to time);




          (vi) each Grantor has been using appropriate statutory notice of registration in
connection with its use of registered Trademarks, proper marking practices in connection
with the use of Patents, and appropriate notice of copyright in connection with the
publication of Copyrights material to the business of such Grantor;




          (vii) each Grantor uses adequate standards of quality in the manufacture, distribution,
and sale of all products sold and in the provision of all services rendered under or in
connection with all Trademark Collateral and has taken all action necessary to insure that
all licensees of the Trademark Collateral owned by such Grantor use such adequate standards
of quality;




          (viii) except as disclosed on Schedule 4.7, to the best knowledge of each Grantor, the
conduct of such Grantor’s business does not infringe upon or otherwise violate any
trademark, patent, copyright, trade secret or other intellectual property right



27









 







owned or controlled by a third party; no claim has been made that the use of any
Intellectual Property necessary to the conduct of any material portion of the business of
Grantor (or any of its respective licensees) violates the asserted rights of any third
party;




          (ix) except as disclosed on Schedule 4.7, to the best of each Grantor’s knowledge, no
third party is infringing upon or otherwise violating any rights in any Intellectual
Property owned or used by such Grantor, or any of its respective licensees, and no Grantor
has taken any action against any third party for such infringing;




          (x) no settlement or consents, covenants not to sue, nonassertion assurances, or
releases have been entered into by Grantor or to which Grantor is bound that adversely
affect Grantor’s rights to own or use any Intellectual Property; and




          (xi) each Grantor has not made a previous assignment, sale, transfer or agreement
constituting a present or future assignment, sale, transfer or agreement of any Intellectual
Property that has not been terminated or released other than a Permitted Lien. There is no
effective financing statement or other document or instrument now executed, or on file or
recorded in any public office, granting a security interest in or otherwise encumbering any
part of the Intellectual Property, other than in favor of the Collateral Agent or with
respect to a Permitted Lien.



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





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




          (ii) it shall not, with respect to any Trademarks which are material to the business of
any Grantor, cease the use of any of such Trademarks (except where, in the ordinary course
and in such Grantor’s reasonable business judgment, cessation of use of a Trademark is
appropriate or advisable) or fail to maintain the level of the quality of products sold and
services rendered under any of such Trademark at a level at least substantially consistent
with the quality of such products and services as of the date hereof, and each Grantor shall
take all steps necessary to insure that licensees of such Trademarks use such consistent
standards of quality;




          (iii) it shall, no later than thirty (30) days before it takes any action to enforce
its rights in or to any copyrightable work which is material to its business, apply to
register the applicable Copyright in the United States Copyright Office;




          (iv) it shall promptly notify the Collateral Agent if it knows or has reason to know
that any item of the Intellectual Property that is material to the business of any Grantor
may become (a) irrevocably abandoned or dedicated to the public or placed in the public
domain, (b) invalid or unenforceable, or (c) subject to any adverse determination or
development (including the institution of proceedings) in any action or



28









 







proceeding in the United States Patent and Trademark Office, the United States
Copyright Office, any state registry, any foreign counterpart of the foregoing, or any
court; provided, however, that the foregoing subsection (c) shall not apply to rejections of
claims given by the United States Patent and Trademark Office, the United States Copyright
Office, or any of their foreign counterparts during the ordinary course of a patent or
trademark prosecution or copyright registration;




          (v) it shall take all reasonable steps in the United States Patent and Trademark
Office, the United States Copyright Office, any state registry or any foreign counterpart of
the foregoing, to pursue any application and maintain any registration of each Trademark,
Patent, and Copyright owned by any Grantor and material to its business which is now or
shall become included in the Intellectual Property including, but not limited to, those
items on Schedule 4.7(A), (C) and (E) (as each may be amended or supplemented from time to
time);




          (vi) in the event that any Intellectual Property owned by or exclusively licensed to
any Grantor is infringed, misappropriated, or diluted by a third party, such Grantor shall
promptly take all reasonable actions to stop such infringement, misappropriation, or
dilution and protect its rights in such Intellectual Property including, but not limited to,
the initiation of a suit for injunctive relief and to recover damages;




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




          (viii) (A) it shall, promptly upon the reasonable request of the Collateral Agent,
execute and deliver to the Collateral Agent any document (including, without limitation,
agreements in the form of Exhibits E, F and G) required to acknowledge, confirm, register,
record, maintain, continue, enforce, protect or perfect the Collateral Agent’s interest in
any part of the Intellectual Property, whether now owned or hereafter acquired, subject to
clause (B) of this paragraph in connection with the foreign Intellectual Property; and (B)
without limiting the foregoing:




          (ix) it shall execute and deliver to the Collateral Agent, within 30 days of the
Initial Closing Date (or such later date as the Collateral Agent, in its reasonable
discretion taking into consideration the good faith best efforts of such Grantor, may
consent), a security agreement or similar instrument governed by the laws of jurisdictions
of material, foreign Intellectual Property, respectively, pursuant to which the Grantor
shall have granted to the Collateral Agent a perfected security interest in its interests in
the trademarks registered in such jurisdictions, each such security agreement or similar
instrument to be in form and substance reasonably satisfactory to the Collateral Agent;



29









 






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




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




          (xii) it shall take all steps reasonably necessary to protect the secrecy of all Trade
Secrets, including, without limitation, by entering into employment agreements containing
confidentiality provisions with those employees and customarily subject to employment
agreements, and by labeling and restricting access to secret information and documents;




          (xiii) it shall use proper statutory notice of registration in connection with its use
of registered Trademarks, proper marking practices in connection with the use of Patents,
and appropriate notice of copyright in connection with the publication of Copyrights, in
each case to the extent the same are material to the business of such Grantor; and




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



     4.8 Commercial Tort Claims



          (a) Representations and Warranties. Each Grantor hereby represents and warrants, on
the Initial Closing Date and on the Second Closing Date (in each case, both immediately before and
immediately after giving effect to the Acquisition and the consummation of the transactions
contemplated by the Tender Offer) and on each Credit Date, that Schedule 4.8 (as such schedule may
be amended or supplemented from time to time) sets forth all Commercial Tort Claims of each Grantor
in excess of $25,000; and




          (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that with
respect to any Commercial Tort Claim in excess of $25,000 hereafter arising it shall


30









 







deliver to the Collateral Agent a completed Pledge
Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto, identifying such new
Commercial Tort Claims.





			
	SECTION 5. ACCESS;	 RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS.





     5.1 Access; Right of Inspection. The Collateral Agent shall at all times have full and free
access during normal business hours to all the books, correspondence and records of each Grantor,
and the Collateral Agent and its representatives may examine the same, take extracts therefrom and
make photocopies thereof, and each Grantor agrees to render to the Collateral Agent, at such
Grantor’s cost and expense, such clerical and other assistance as may be reasonably requested with
regard thereto. The Collateral Agent and its representatives shall at all times also have the
right to enter any premises of each Grantor and inspect any property of each Grantor where any of
the Collateral of such Grantor granted pursuant to this Agreement is located for the purpose of
inspecting the same, observing its use or otherwise protecting its interests therein.



     5.2 Further Assurances.



          (a) Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall
promptly execute and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order
to create and/or maintain the validity, perfection or priority of and protect any security interest
granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each
Grantor shall:





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




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




          (iii) at any reasonable time, upon request by the Collateral Agent, assemble the
Collateral and allow inspection of the Collateral by the Collateral Agent, or persons
designated by the Collateral Agent; and




          (iv) at the Collateral Agent’s request, appear in and defend any action or proceeding
that may affect such Grantor’s title to or the Collateral Agent’s security interest in all
or any part of the Collateral.



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




          (c) Each Grantor hereby authorizes the Collateral Agent to modify this Agreement after
obtaining such Grantor’s approval of or signature to such modification by amending Schedule 4.7 (as
such schedule may be amended or supplemented from time to time) to include reference to any right,
title or interest in any existing Intellectual Property or any Intellectual Property acquired or
developed by any Grantor after the execution hereof or to delete any reference to any right, title
or interest in any Intellectual Property in which any Grantor no longer has or claims any right,
title or interest.




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



SECTION 6. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.




     6.1 Power of Attorney. Each Grantor hereby irrevocably appoints the Collateral Agent (such
appointment being coupled with an interest) as such Grantor’s attorney-in-fact, with full authority
in the place and stead of such Grantor and in the name of such Grantor, the Collateral Agent or
otherwise, from time to time in the Collateral Agent’s discretion to take any action and to execute
any instrument that the Collateral Agent may deem reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, the following:



          (a) upon the occurrence and during the continuance of any Event of Default, to obtain and
adjust insurance required to be maintained by such Grantor or paid to the Collateral Agent pursuant
to the Credit Agreement;




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




          (c) upon the occurrence and during the continuance of any Event of Default, to receive,
endorse and collect any drafts or other instruments, documents and chattel paper in connection with
clause (b) above;




          (d) upon the occurrence and during the continuance of any Event of Default, to file any claims
or take any action or institute any proceedings that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any of the Collateral;




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




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




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




          (h) upon the occurrence and during the continuation of any Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof
for all purposes subject to the compliance with all other provisions hereof; and




          (i) to do, at the Collateral Agent’s option and such Grantor’s expense, at any time or from
time to time, all acts and things that the Collateral Agent deems reasonably necessary to protect,
preserve or realize upon the Collateral and the Collateral Agent’s security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as such Grantor might
do.




     6.2 No Duty on the Part of Collateral Agent or Secured Parties. The powers conferred on the
Collateral Agent hereunder are solely to protect the interests of the Secured Parties in the
Collateral and shall not impose any duty upon the Collateral Agent or any Secured Party to exercise
any such powers. The Collateral Agent and the Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers, and neither they nor
any of their officers, directors, employees or agents shall be responsible to any Grantor for any
act or failure to act hereunder, except for their own gross negligence or willful misconduct.



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SECTION 7. REMEDIES.




     7.1 Generally.



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





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




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




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




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



          (b) The Collateral Agent or any Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent the portion of the Collateral being privately
sold is of a kind that is customarily sold on a recognized market or the subject of widely
distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as
collateral agent for and representative of the Secured Parties, shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Collateral payable by the
Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days notice to such Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable notification.




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




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




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




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



35









 







such Grantor or to whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.



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



     7.4 Deposit Accounts. If any Event of Default shall have occurred and be continuing, the
Collateral Agent may apply the balance from any Deposit Account or instruct the bank at which any
Deposit Account is maintained to pay the balance of any Deposit Account to or for the benefit of
the Collateral Agent.



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



     7.6 Intellectual Property.



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





          (i) the Collateral Agent shall have the right (but not the obligation) to bring suit or
otherwise commence any action or proceeding in the name of any Grantor, the Collateral Agent
or otherwise, in the Collateral Agent’s sole discretion, to enforce any



36









 







Intellectual Property, in which event such Grantor shall, at the request of the
Collateral Agent, do any and all lawful acts and execute any and all documents required by
the Collateral Agent in aid of such enforcement and such Grantor shall promptly, upon
demand, reimburse and indemnify the Collateral Agent as provided in Section 10 hereof in
connection with the exercise of its rights under this Section, and, to the extent that the
Collateral Agent shall elect not to bring suit to enforce any Intellectual Property as
provided in this Section, each Grantor agrees to use all reasonable measures, whether by
action, suit, proceeding or otherwise, to prevent the infringement or other violation of any
of such Grantor’s rights in the Intellectual Property by others;




          (ii) upon written demand from the Collateral Agent, each Grantor shall grant, assign,
convey or otherwise transfer to the Collateral Agent or such Collateral Agent’s designee all
of such Grantor’s right, title and interest in and to the Intellectual Property and shall
execute and deliver to the Collateral Agent such documents as are necessary or appropriate
to carry out the intent and purposes of this Agreement;




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




          (iv) within five (5) Business Days after written notice from the Collateral Agent, each
Grantor shall make available to the Collateral Agent, to the extent within such Grantor’s
power and authority, such personnel in such Grantor’s employ on the date of such Event of
Default as the Collateral Agent may reasonably designate, by name, title or job
responsibility, to permit such Grantor to continue, directly or indirectly, to produce,
advertise and sell the products and services sold or delivered by such Grantor under or in
connection with the Trademarks and Trademark Licenses, such persons to be available to
perform their prior functions on the Collateral Agent’s behalf and to be compensated by the
Collateral Agent at such Grantor’s expense on a per diem, pro-rata basis consistent with the
salary and benefit structure applicable to each as of the date of such Event of Default; and




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




          (1) all amounts and proceeds (including checks and other instruments) received
by Grantor in respect of amounts due to such Grantor in respect of the Collateral or
any portion thereof shall be received in trust for the benefit of the Collateral
Agent hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over or delivered to the Collateral Agent



37









 







in the same form as so received (with any necessary endorsement) to be held as
cash Collateral and applied as provided by Section 7.7 hereof; and




          (2) Grantor shall not adjust, settle or compromise the amount or payment of any
such amount or release wholly or partly any obligor with respect thereto or allow
any credit or discount thereon.



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




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




     7.7 Cash Proceeds. In addition to the rights of the Collateral Agent specified in Section 4.3
with respect to payments of Receivables, all proceeds of any Collateral received by any Grantor
consisting of cash, checks and other non-cash items (collectively, “Cash Proceeds”) shall be held
by such Grantor and used in accordance with the terms and provisions of the Credit Agreement, and,
upon the occurrence and during the continuation of any Event of Default, shall be held by such
Grantor in trust for the Collateral Agent, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, unless otherwise provided pursuant to Section 4.4.1(a)(ii),
be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by
such Grantor to the Collateral Agent, if required) and held by the Collateral Agent in the
Collateral Account. Any Cash Proceeds received by the Collateral Agent (whether from a Grantor or
otherwise): (i) if no Event of Default shall have occurred and be continuing, released to the
appropriate Grantor and used by such Grantor as otherwise provided by the terms and provisions of
the Credit Agreement, and (ii) if an Event of Default shall have occurred and be continuing, may,
in the sole discretion of the Collateral Agent, (A) be held by



38









 







the Collateral Agent for the ratable benefit of the Secured Parties, as collateral security
for the Secured Obligations (whether matured or unmatured) and/or (B) then or at any time
thereafter may be applied by the Collateral Agent against the Secured Obligations then due and
owing.



SECTION 8. COLLATERAL AGENT.




     The Collateral Agent has been appointed to act as Collateral Agent hereunder by Lenders and,
by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agent shall
be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Documents; provided, the Collateral Agent shall, after payment in full of
all Obligations under the Credit Agreement and the other Credit Documents, exercise, or refrain
from exercising, any remedies provided for herein in accordance with the instructions of the
holders of a majority of the aggregate notional amount (or, with respect to any Hedge Agreement
that has been terminated in accordance with its terms, the amount then due and payable (exclusive
of expenses and similar payments but including any early termination payments then due) under such
Hedge Agreement) under all Hedge Agreements. In furtherance of the foregoing provisions of this
Section, each Secured Party, by its acceptance of the benefits hereof, agrees that it shall have no
right individually to realize upon any of the Collateral hereunder, it being understood and agreed
by such Secured Party that all rights and remedies hereunder may be exercised solely by the
Collateral Agent for the benefit of Secured Parties in accordance with the terms of this Section.
Collateral Agent may resign at any time by giving thirty (30) days’ prior written notice thereof to
Lenders and the Grantors, and Collateral Agent may be removed at any time with or without cause by
an instrument or concurrent instruments in writing delivered to the Grantors and Collateral Agent
signed by the Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five (5) Business Days’ notice to the Administrative
Agent, to appoint a successor Collateral Agent. Upon the acceptance of any appointment as
Collateral Agent hereunder 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 or removed Collateral Agent under this Agreement, and the retiring or removed Collateral
Agent under this Agreement shall promptly (i) transfer to such successor Collateral Agent all sums,
Securities and other items of Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the duties of the
successor Collateral Agent under this Agreement, and (ii) execute and deliver to such successor
Collateral Agent or otherwise authorize the filing of such amendments to financing statements, and
take such other actions, as may be necessary or appropriate in connection with the assignment to
such successor Collateral Agent of the security interests created hereunder, whereupon such
retiring or removed Collateral Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Collateral Agent’s resignation or removal hereunder as
the Collateral Agent, the provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was the Collateral Agent
hereunder.



39









 





SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.




     This Agreement shall create a continuing security interest in the Collateral and shall remain
in full force and effect until the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, be binding upon each Grantor, its successors and assigns, and inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and
its successors, transferees and assigns. Without limiting the generality of the foregoing, but
subject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loans
held by it to any other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of
all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest granted hereby shall
automatically terminate hereunder and of record and all rights to the Collateral shall revert to
Grantors. Upon any such termination the Collateral Agent shall, at Grantors’ expense, execute and
deliver to Grantors or otherwise authorize the filing of such documents as Grantors shall
reasonably request, including financing statement amendments to evidence such termination. Upon
any disposition of property permitted by the Credit Agreement, the Liens granted herein shall be
deemed to be automatically released and such property shall automatically revert to the applicable
Grantor with no further action on the part of any Person. The Collateral Agent shall, at Grantors’
expense, execute and deliver or otherwise authorize the filing of such documents as Grantors shall
reasonably request, in form and substance reasonably satisfactory to the Collateral Agent,
including financing statement amendments to evidence such release.



SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.




     The powers conferred on the Collateral Agent hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its
own property. Neither the Collateral Agent nor any of its directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or otherwise. If any Grantor fails to perform any
agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such
agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be
payable by each Grantor under Section 10.2 of the Credit Agreement.



SECTION 11. MISCELLANEOUS.




     Any notice required or permitted to be given under this Agreement shall be given in accordance
with Section 10.1 of the Credit Agreement. No failure or delay on the part of the Collateral Agent
in the exercise of any power, right or privilege hereunder or under any other Credit Document shall
impair such power, right or privilege or be construed to be a waiver of



40









 







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



     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW
YORK GENERAL OBLIGATION LAWS).




41









 







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




	 	 	 	 	 
	 	 	GRANTORS:
	 
	 	 	 	 
	 	 	AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
	 	 	AMERICAN MEDICAL SYSTEMS, INC.
	 	 	AMS SALES CORPORATION
	 	 	AMS RESEARCH CORPORATION
	 	 	AMERICAN MEDICAL SYSTEMS GYNECOLOGY INC.
	 	 	THERMATRX INC.
	 	 	OVION, INC.
	 	 	SOLARANT MEDICAL, INC.
	 	 	KERMIT MERGER CORP.
	 
	 	 	 	 
	 

	 	By:
	 	  /s/ Carmen L. Diersen
	 

	 	 	 	 
	 

	 	 	 	Name: Carmen L. Diersen

Title: Executive Vice President, Chief

Financial Officer and Secretary






 









 





	 	 	 	 	 
	 	 	LASERSCOPE

LASERSCOPE INTERNATIONAL, INC.
INNOVAQUARTZ INCORPORATED
	 
	 	 	 	 
	 

	 	By:
	 	  /s/ Carmen L. Diersen
	 

	 	 	 	 
	 

	 	 	 	Name: Carmen L. Diersen

Title: Executive Vice President, Chief

Financial Officer and Secretary






 









 





	 	 	 	 	 
	 	 	CIT HEALTHCARE LLC,

as Collateral Agent
	 
	 	 	 	 
	 

	 	By:
	 	   /s/ Robert M. O’Mara
	 

	 	 	 	 
	 	 	Name: Robert M. O’Mara
	 	 	Title: Director






 









 





EXHIBIT A

TO PLEDGE AND SECURITY AGREEMENT




PLEDGE SUPPLEMENT




     This PLEDGE SUPPLEMENT,
dated ___, 20___ is delivered by [NAME OF GRANTOR], a [NAME OF
JURISDICTION OF FORMATION] (the “Grantor”) pursuant to the Pledge and Security Agreement dated as
of July ___, 2006 (as it may be from time to time amended, amended and restated, joined,
supplemented or otherwise modified from time to time, the “Security Agreement”), among AMERICAN
MEDICAL SYSTEMS, INC., a Delaware corporation, AMERICAN MEDICAL SYSTEMS HOLDINGS, INC., a Delaware
corporation, and the other Grantors named therein, and CIT HEALTHCARE LLC, as the collateral agent
for the Secured Parties (in such capacity, together with its successors and assigns in such
capacity, the “Collateral Agent”). Capitalized terms used herein not otherwise defined herein
shall have the meanings ascribed thereto in the Security Agreement.



     Grantor hereby confirms the grant to the Collateral Agent set forth in the Security Agreement
of, and does hereby grant to the Collateral Agent, a security interest in all of Grantor’s right,
title and interest in and to all Collateral to secure the Secured Obligations, in each case whether
now or hereafter existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located. Grantor represents and warrants that the attached Supplements to
Schedules accurately and completely set forth all additional information required pursuant to the
Security Agreement and hereby agrees that such Supplements to Schedules shall constitute part of
the Schedules to the Security Agreement.



     IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly executed and
delivered by its duly authorized officer as of ___, 20___



	 	 	 	 	 	 	 
	 	 	[NAME OF GRANTOR]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 	 	Name:
	 	 	Title:






EXHIBIT A-1