exv10w19






Exhibit 10.19




SECURITY AGREEMENT




     This SECURITY AGREEMENT (this “Agreement”), dated as of September 3, 2009, among the
Grantors listed on the signature pages hereof and those additional entities that hereafter become
parties hereto by executing the form of Supplement attached hereto as Annex 1 (the
“Grantors” and each, individually, a “Grantor”), and WELLS FARGO FOOTHILL, LLC, a
Delaware limited liability company, as agent for the Lender Group and the Bank Product Providers
(in such capacity, together with its successors and assigns in such capacity, the “Agent”).



W I T N E S S E T H:




     WHEREAS, pursuant to that certain Credit Agreement of even date herewith (as amended,
restated, supplemented, or otherwise modified from time to time, and including all schedules
thereto, the “Credit Agreement”) among RealPage, Inc., as borrower (“Borrower”),
the lenders party thereto as “Lenders” (such Lenders, together with their respective successors and
assigns, are referred to hereinafter each individually as a “Lender” and collectively as
the “Lenders”), and Agent, the Lender Group has agreed to make certain financial
accommodations available to Borrower from time to time pursuant to the terms and conditions
thereof,



     WHEREAS, Agent has agreed to act as agent for the benefit of the Lender Group and the Bank
Product Providers in connection with the transactions contemplated by the Credit Agreement and this
Agreement,



     WHEREAS, in order to induce the Lender Group to enter into the Credit Agreement and the other
Loan Documents and to induce the Lender Group to make financial accommodations to Borrower as
provided for in the Credit Agreement, Grantors have agreed to grant a continuing security interest
in and to the Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, the Secured Obligations, and



     NOW, THEREFORE, for and in consideration of the recitals made above and other good and
valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:



     1. Defined Terms. All capitalized terms used herein (including in the preamble and
recitals hereof) without definition shall have the meanings ascribed thereto in the Credit
Agreement. Any terms used in this Agreement that are defined in the Code shall be construed and
defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement;
provided, however, that to the extent that the Code is used to define any term
herein and if such term is defined differently in different Articles of the Code, the definition of
such term contained in Article 9 of the Code shall govern. In addition to those terms defined
elsewhere in this Agreement, as used in this Agreement, the following terms shall have the
following meanings:



          (a) “Account” means an account (as that term is defined in Article 9 of the Code).




          (b) “Account Debtor” means an account debtor (as that term is defined in the Code).




          (c) “Activation Instruction” has the meaning specified therefor in Section
6(l).




          (d) “Agent” has the meaning specified therefor in the preamble to this Agreement.




          (e) “Agent’s Lien” has the meaning specified therefor in the Credit Agreement.




          (f) “Agreement” has the meaning specified therefor in the preamble hereto.




 









 








          (g) “Bank Product Obligations” has the meaning specified therefor in the Credit
Agreement.




          (h) “Bank Product Provider” has the meaning specified therefor in the Credit
Agreement.




          (i) “Books” means books and records (including each Grantor’s Records indicating,
summarizing, or evidencing such Grantor’s assets (including the Collateral) or liabilities, each
Grantor’s Records relating to such Grantor’s business operations or financial condition, and each
Grantor’s goods or General Intangibles related to such information).




          (j) “Borrower” has the meaning specified therefor in the recitals to this Agreement.




          (k) “Cash Equivalents” has the meaning specified therefor in the Credit Agreement.




          (l) “Chattel Paper” means chattel paper (as that term is defined in the Code) and
includes tangible chattel paper and electronic chattel paper.




          (m) “Code” means the California Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory provisions
of law, any or all of the attachment, perfection, priority, or remedies with respect to Agent’s
Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of California, the term “Code” shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority, or remedies.




          (n) “Collateral” has the meaning specified therefor in Section 2.




          (o) “Collections” has the meaning specified therefor in the Credit Agreement.




          (p) “Commercial Tort Claims” means commercial tort claims (as that term is defined in
the Code), and includes those commercial tort claims listed on Schedule 1.




          (q) “Controlled Account” has the meaning specified therefor in Section 6(l).




          (r) “Controlled Account Agreements” means those certain cash management agreements, in
form and substance reasonably satisfactory to Agent, each of which is among Borrower or one of its
Subsidiaries, Agent, and one of the Controlled Account Banks.




          (s) “Controlled Account Bank” has the meaning specified therefor in Section
6(l).




          (t) “Copyrights” means any and all rights in any works of authorship, including
copyrights and moral rights, including, (i) copyright registrations and recordings thereof and all
applications in connection therewith including those listed on Schedule 2, (ii) income,
license fees, royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in connection therewith and
damages and payments for past, present, or future infringements thereof, (iii) the right to sue for
past, present and future infringements thereof, and (iv) all of each Grantor’s rights corresponding
thereto throughout the world.




          (u) “Copyright Security Agreement” means each Copyright Security Agreement among
Grantors, or any of them, and Agent, for the benefit of each member of the Lender Group and the
Bank Product Providers, in substantially the form of Exhibit A, pursuant to which Grantors
have granted to Agent, for the benefit of the Lender Group and the Bank Product Providers, a
security interest in all their respective Copyrights.




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          (v) “Credit Agreement” has the meaning specified therefor in the recitals to this
Agreement.




          (w) “Deposit Account” means a deposit account (as that term is defined in the Code).




          (x) “Equipment” means equipment (as that term is defined in the Code).




          (y) “Event of Default” has the meaning specified therefor in the Credit Agreement.




          (z) “General Intangibles” means general intangibles (as that term is defined in the
Code) and includes payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill
associated with any Trademark), Intellectual Property, purchase orders, customer lists, monies due
or recoverable from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, including Intellectual Property Licenses, infringement claims,
pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax
refund claims, interests in a partnership or limited liability company which do not constitute a
security under Article 8 of the Code, and any other personal property other than Commercial Tort
Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property,
Negotiable Collateral, and oil, gas, or other minerals before extraction.




          (aa) “Grantor” and “Grantors” have the respective meanings specified therefor
in the preamble to this Agreement.




          (bb) “Guaranty” has the meaning specified therefor in the Credit Agreement.




          (cc) “Insolvency Proceeding” has the meaning specified therefor in the Credit
Agreement.




          (dd) “Intellectual Property” means any and all Patents, Copyrights, Trademarks
(including the goodwill associated with such Trademarks), trade secrets, know-how, inventions
(whether or not patentable), algorithms, software programs (including source code and object code),
processes, product designs, industrial designs, blueprints, drawings, data, customer lists, URLs
and domain names, specifications, documentations, reports, catalogs, and any other forms of
technology or proprietary information of any kind, including all rights therein and all
applications for registration or registrations thereof.




          (ee) “Intellectual Property Licenses” means (i) any licenses or other similar rights
in Intellectual Property owned or controlled by any Grantor provided to any third party and
(ii) any licenses or other similar rights in Intellectual Property owned by any third party
provided to any Grantor, including any software license agreements (other than for commercially
available off-the-shelf software that is generally available to the public which have been licensed
to a Grantor pursuant to end-user licenses), including the license agreements listed on
Schedule 3, and the right to use the foregoing, subject to the terms of the applicable
licenses, in connection with the enforcement of the Lender Group’s rights under the Loan Documents,
including the right to prepare for sale and sell any and all Inventory and Equipment now or
hereafter owned by any Grantor and now or hereafter covered by such licenses.




          (ff) “Inventory” means inventory (as that term is defined in the Code).




          (gg) “Investment Related Property” means (i) any and all investment property (as that
term is defined in the Code), and (ii) any and all of the following (regardless of whether
classified as investment property under the Code): all Pledged Interests, Pledged Operating
Agreements, and Pledged Partnership Agreements.




          (hh) “Lender Group” has the meaning specified therefor in the Credit Agreement.




          (ii) “Lenders” has the meaning specified therefor in the recitals to this Agreement.




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          (jj) “Loan Document” has the meaning specified therefor in the Credit Agreement.




          (kk) “Loan Party” has the meaning specified therefor in the Credit Agreement.




          (ll) “Minor Release” means any new version or release of a software program that
consists of only minor functionality updates, bug fixes, patches or defect corrections or any
“a.0.x” releases.




          (mm) “Negotiable Collateral” means letters of credit, letter-of-credit rights,
instruments, promissory notes, drafts and documents (as each such term is defined in the Code).




          (nn) “Obligations” has the meaning specified therefor in the Credit Agreement.




          (oo) “Patents” means patents and patent applications, including, (i) the patents and
patent applications listed on Schedule 4, (ii) all continuations, divisionals,
continuations-in-part, re-examinations, reissues, and renewals thereof and improvements thereon,
(iii) all income, royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in connection therewith and
damages and payments for past, present, or future infringements thereof, (iv) the right to sue for
past, present and future infringements thereof, and (v) all of each Grantor’s rights corresponding
thereto throughout the world.




          (pp) “Patent Security Agreement” means each Patent Security Agreement among Grantors,
or any of them, and Agent, for the benefit of each member of the Lender Group and the Bank Product
Providers, in substantially the form of Exhibit B, pursuant to which Grantors have granted
to Agent, for the benefit of the Lender Group and the Bank Product Providers, a security interest
in all their respective Patents.




          (qq) “Permitted Liens” has the meaning specified therefor in the Credit Agreement.




          (rr) “Person” has the meaning specified therefor in the Credit Agreement.




          (ss) “Pledged Companies” means, each Person listed on Schedule 5 as a “Pledged
Company”, together with each other Person, all or a portion of whose Stock, is acquired or
otherwise owned by a Grantor after the Closing Date and is required to be pledged under the Credit
Agreement.




          (tt) “Pledged Interests” means all of each Grantor’s right, title and interest in and
to all of the Stock now or hereafter owned by such Grantor that is required to be pledged under the
Credit Agreement, regardless of class or designation, including, in each of the Pledged Companies,
and all substitutions therefor and replacements thereof, all proceeds thereof and all rights
relating thereto, also including any certificates representing the Stock, the right to receive any
certificates representing any of the Stock, all warrants, options, share appreciation rights and
other rights, contractual or otherwise, in respect thereof and the right to receive all dividends,
distributions of income, profits, surplus, or other compensation by way of income or liquidating
distributions, in cash or in kind, and all cash, instruments, and other property from time to time
received, receivable, or otherwise distributed in respect of or in addition to, in substitution of,
on account of, or in exchange for any or all of the foregoing.




          (uu) “Pledged Interests Addendum” means a Pledged Interests Addendum substantially in
the form of Exhibit C.




          (vv) “Pledged Operating Agreements” means all of each Grantor’s rights, powers, and
remedies under the limited liability company operating agreements of each of the Pledged Companies
that are limited liability companies.




          (ww) “Pledged Partnership Agreements” means all of each Grantor’s rights, powers, and
remedies under the partnership agreements of each of the Pledged Companies that are partnerships.





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          (xx) “Proceeds” has the meaning specified therefor in Section 2.




          (yy) “Real Property” means any estates or interests in real property now owned or
hereafter acquired by any Grantor or any Subsidiary of any Grantor and the improvements thereto.




          (zz) “Records” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.




          (aaa) “Required Disclosure Set” means, as of any date of determination, the Copyrights
subject to copyright protection owned by any of the Grantors that are based on or
derived from each of those computer software programs or other technology of such Grantor (other
than custom computer software programs that are sold for a one-time fee or customized for a single
customer) that in the aggregate, and on such date of determination, account for $5,000,000 or
greater in TTM Recurring Revenue of the Grantors, in the aggregate, for the most recently completed
trailing twelve consecutive month period calculated as of the last month for which financial
statements have most recently been delivered pursuant to Section 5.1 of the Credit Agreement.




          (bbb) “Required Library” has the meaning specified therefor in the Credit Agreement.




          (ccc) “Rescission” has the meaning specified therefor in Section 6(1).




          (ddd) “Secured Obligations” means each and all of the following: (a) all of the
present and future obligations of Grantors (or any of them) arising from this Agreement, the Credit
Agreement, or the other Loan Documents (including any Guaranty), (b) all Bank Product Obligations,
and (c) all Obligations of Borrower, including, in the case of each of clauses (a), (b) and (c),
reasonable attorneys fees and expenses and any interest, fees, or expenses that accrue after the
filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part
as a claim in any Insolvency Proceeding.




          (eee) “Securities Account” means a securities account (as that term is defined in the
Code).




          (fff) “Security Interest” has the meaning specified therefor in Section 2.




          (ggg) “Source Code Escrow Agreement” means a Source Code Escrow Agreement (including
the escrow deposit statement of work describing verification services to be performed) among Agent,
certain of the Grantors, and an Escrow Agent reasonably satisfactory to Agent, in form and
substance reasonably satisfactory to Agent.




          (hhh) “Source Code Escrow Termination” has the meaning specified therefor in
Section 6(g)(xii).




          (iii) “Stock” has the meaning specified therefor in the Credit Agreement.




          (jjj) “Supporting Obligations” means supporting obligations (as such term is defined
in the Code) and includes letters of credit and guaranties issued in support of Accounts, Chattel
Paper, documents, General Intangibles, instruments or Investment Related Property.




          (kkk) “Trademarks” means any and all trademarks, trade names, registered trademarks,
trademark applications, service marks, registered service marks and service mark applications,
including (i) the trade names, registered trademarks, trademark applications, registered service
marks and service mark applications listed on Schedule 6, (ii) all renewals thereof,
(iii) all income, royalties, damages and payments now and hereafter due or payable under and with
respect thereto, including payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements or dilutions thereof, (iv) the right to sue
for past, present and future infringements and dilutions thereof, (v) the goodwill of each




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Grantor’s business symbolized by the foregoing or connected therewith, and (vi) all of each
Grantor’s rights corresponding thereto throughout the world.




          (lll) “Trademark Security Agreement” means each Trademark Security Agreement among
Grantors, or any of them, and Agent, for the benefit of the Lender Group and the Bank Product
Providers, in substantially the form of Exhibit D, pursuant to which Grantors have granted
to Agent, for the benefit of the Lender Group and the Bank Product Providers, a security interest
in all their respective Trademarks.




          (mmm) “URL” means “uniform resource locator,” an internet web address.




     2. Grant of Security. Each Grantor hereby unconditionally grants, collaterally
assigns, and pledges to Agent, for the benefit of each member of the Lender Group and each of the
Bank Product Providers a continuing security interest (hereinafter referred to as the “Security
Interest”) in all of such Grantor’s right, title, and interest in and to the following, whether
now owned or hereafter acquired or arising and wherever located (the “Collateral”):



          (a) all of such Grantor’s Accounts;




          (b) all of such Grantor’s Books;




          (c) all of such Grantor’s Chattel Paper;




          (d) all of such Grantor’s Deposit Accounts;




          (e) all of such Grantor’s Equipment and fixtures;




          (f) all of such Grantor’s General Intangibles;




          (g) all of such Grantor’s Inventory;




          (h) all of such Grantor’s Investment Related Property;




          (i) all of such Grantor’s Negotiable Collateral;




          (j) all of such Grantor’s Supporting Obligations;




          (k) all of such Grantor’s Commercial Tort Claims;




          (l) all of such Grantor’s money, Cash Equivalents, or other assets of such Grantor that now or
hereafter come into the possession, custody, or control of Agent or any other member of the Lender
Group;




          (m) all of such Grantor’s other personal property; and




          (n) all of the proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance or Commercial Tort Claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations,
money, or other tangible or intangible property resulting from the sale, lease, license, exchange,
collection, or other disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes or otherwise, and
all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds
thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured
or not insured, and, to the extent not otherwise included, any indemnity, warranty, or guaranty
payable by reason of loss or damage to, or otherwise with respect to any of



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the foregoing (the
“Proceeds”). Without limiting the generality of
the foregoing, the term “Proceeds”
includes whatever is receivable or received when Investment Related Property or proceeds are sold,
exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes proceeds of any indemnity or guaranty payable to any Grantor or Agent
from time to time with respect to any of the Investment Related Property.




     Notwithstanding anything contained in this Agreement to the contrary, the term “Collateral”
shall not include: (i) voting Stock of any CFC, solely to the extent that such Stock is not
required to be pledged pursuant to Section 5.11 of the Credit Agreement; or (ii) any rights or
interest in any contract, lease, permit, license, charter or license agreement covering real or
personal property of any Grantor if under the terms of such contract, lease, permit, license,
charter or license agreement, or applicable law with respect thereto, the grant of a security
interest or lien therein is prohibited as a matter of law or under the terms of such contract,
lease, permit, license, charter or license agreement (provided, that, (A) the foregoing exclusions
of this clause (ii) shall in no way be construed (1) to apply to the extent that any described
prohibition or restriction is unenforceable under Section 9-406, 9-407, 9-408, or 9-409 of the Code
or other applicable law, or (2) to apply to the extent that any consent or waiver has been obtained
that would permit the Security Interest or Lien notwithstanding the prohibition or restriction on
the pledge of such asset and (B) the foregoing exclusions of clauses (i) and (ii) shall in no way
be construed to limit, impair, or otherwise affect any of Agent’s, any other member of the Lender
Group’s or any Bank Product Provider’s continuing security interests in and liens upon any rights
or interests of any Grantor in or to (1) monies due or to become due under or in connection with
any described contract, lease, permit, license, charter, license agreement, asset, or Stock
(including any Accounts or Stock), or (2) any proceeds from the sale, license, lease, or other
dispositions of any such contract, lease, permit, license, charter, license agreement, asset, or
Stock); (iii) any United States intent-to-use trademark applications to the extent that, and solely
during the period in which, the grant of a security interest therein would impair the validity or
enforceability of such intent-to-use trademark applications under applicable federal law; or (iv)
property that is subject to a Lien that is otherwise permitted by clause (f) of the definition of
Permitted Lien under the Credit Agreement; provided, that the governing documents granting
such Liens prohibit the granting of Liens securing the Obligations on such property and upon the
release of any such Lien, such property shall automatically become part of the Collateral.



     3. Security for Obligations. The Security Interest created hereby secures the payment
and performance of the Secured Obligations, whether now existing or arising hereafter. Without
limiting the generality of the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Secured Obligations and would be owed by Grantors, or any of them, to Agent,
the Lender Group, the Bank Product Providers or any of them, but for the fact that they are
unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any
Grantor.



     4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each
of the Grantors shall remain liable under the contracts and agreements included in the Collateral,
including the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform all
of the duties and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Agent or any other member of the Lender Group of any of the rights
hereunder shall not release any Grantor from any of its duties or obligations under such contracts
and agreements included in the Collateral, and (c) none of the members of the Lender Group shall
have any obligation or liability under such contracts and agreements included in the Collateral by
reason of this Agreement, nor shall any of the members of the Lender Group be obligated to perform
any of the obligations or duties of any Grantors thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder. Until an Event of Default shall occur and be
continuing, except as otherwise provided in this Agreement, the Credit Agreement, or other Loan
Documents, Grantors shall have the right to possession and enjoyment of the Collateral for the
purpose of conducting the ordinary course of their respective businesses, subject to and upon the
terms hereof and of the Credit Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, it is the intention of the parties hereto that record and beneficial
ownership of the Pledged Interests, including all voting, consensual, and dividend rights, shall
remain in the applicable Grantor until the occurrence of an Event of Default and until Agent shall



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notify the applicable Grantor of Agent’s exercise of voting, consensual, or dividend rights with
respect to the Pledged Interests pursuant to Section 15.




     5. Representations and Warranties. Each Grantor hereby represents and warrants as
follows:



          (a) The exact legal name of each of the Grantors is set forth on the signature pages of this
Agreement or a written notice provided to Agent pursuant to Section 6.5 of the Credit
Agreement.




          (b) Schedule 7 sets forth all Real Property owned by Grantors as of the Closing Date.




          (c) As of the Closing Date: (i) Schedule 2 provides a complete and correct list of
all registered Copyrights and applications for registration of Copyrights; (ii) Schedule 3
provides a complete and correct list of all material Intellectual Property Licenses entered into by
any Grantor in which (A) any Grantor has provided any license or other rights in Intellectual
Property owned or controlled by such Grantor to a third party other than non-exclusive software
licenses granted in the ordinary course of business or (B) any third party has granted to any
Grantor any license or other rights in Intellectual Property owned or controlled by the third party
that is material to the business of such Grantor, including any Intellectual Property that is
incorporated in any software or product marketed, sold, or distributed by such Grantor;
(iii) Schedule 4 provides a complete and correct list of all Patents and applications for
Patents owned by any Grantor; and (iv) Schedule 6 provides a complete and correct list of
all registered Trademarks and applications for registration of Trademarks.




          (d) As of the Closing Date and as of the date of the making of each Advance under the Credit
Agreement:




               (i) Each Grantor exclusively owns all right, title and interest in and to the Copyrights
listed on Schedule 2, Patents listed on Schedule 4, and Trademarks listed on
Schedule 6 set forth below such Grantor’s name on such Schedules, free and clear of any
Liens, other than the Permitted Liens;



               (ii) each Grantor owns or holds licenses in all Intellectual Property that are necessary to
the conduct of its business as currently conducted;



               (iii) to each Grantor’s knowledge, no third party has infringed or misappropriated or is
currently infringing or misappropriating any Intellectual Property rights owned by such Grantor
that is material to the business of such Grantor and which could reasonably be expected to result
in a Material Adverse Effect;



               (iv) to each Grantor’s knowledge, (A) such Grantor is not currently infringing or
misappropriating any Intellectual Property rights of any third party, and (B) no product
manufactured, used, distributed, licensed, or sold by or service provided by such Grantor has ever
infringed or misappropriated or is currently infringing or misappropriating any Intellectual
Property rights of any third party, in each case, in a manner which could reasonably be expected to
result in a Material Adverse Effect;



               (v) there are no pending, or to any Grantor’s knowledge, threatened in writing infringement or
misappropriation claims or proceedings pending against any Grantor which could reasonably be
expected to result in a Material Adverse Effect, and no Grantor has received any notice or other
communication of any actual or alleged infringement or misappropriation of any Intellectual
Property rights of any third party which could reasonably be expected to result in a Material
Adverse Effect;



               (vi) to each Grantor’s knowledge, all registered Copyrights, registered Trademarks, and issued
Patents that are owned by such Grantor are valid, subsisting and enforceable and in compliance with
all legal requirements, filings, and payments and other actions that are required to maintain such
Intellectual Property in full force and effect, except for such Copyrights, Trademarks and Patents
that are the subject of a Permitted Disposition;



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               (vii) each Grantor has taken reasonable steps to maintain the confidentiality of and otherwise
protect and enforce its rights in all material trade secrets owned by such Grantor, and in
particular, no portion of the source code for any software owned and distributed by such Grantor
that is material to the business of Grantor (“Grantor Distributed Software”) has been
disclosed or licensed to any third party, other than end user customers and escrow agents pursuant
to Grantor’s standard form of escrow agreement;



               (viii) all employees and contractors of each Grantor who were involved in the creation or
development of any Intellectual Property for such Grantor that is material to the business of the
Grantor have signed agreements containing assignment of Intellectual Property rights and
obligations of confidentiality;



               (ix) no Grantor Distributed Software is subject to any “copyleft” or other obligation or
condition (including any obligation or condition under any “open source” license such as the GNU
Public License, Lesser GNU Public License, or Mozilla Public License) that would require, or
condition the use or distribution of such software, on the disclosure, licensing or distribution of
any source code for any portion of the Grantor Distributed Software; and



               (x) this Agreement is effective to create a valid and continuing Lien on all Intellectual
Property and Intellectual Property Licenses in which any Grantor has any right, title, or interest.
Upon filing of the Copyright Security Agreement with the United States Copyright Office, filing of
the Patent Security Agreement and the Trademark Security Agreement with the United States Patent
and Trademark Office, and the filing of appropriate financing statements in the jurisdictions
listed on Schedule 8, all action necessary to protect and perfect the Security Interest in
and to on each Grantor’s Patents, Trademarks, or Copyrights has been taken.



          (e) This Agreement creates a valid security interest in the Collateral of each of the
Grantors, to the extent a security interest therein can be created under the Code, securing the
payment of the Secured Obligations. Except to the extent a security interest in the Collateral
cannot be perfected by the filing of a financing statement under the Code, all filings and other
actions necessary or desirable to perfect and protect such security interest have been duly taken
or will have been taken upon the filing of financing statements listing each applicable Grantor, as
a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor’s name on
Schedule 8. Upon the making of such filings, Agent shall have a first priority perfected
security interest in the Collateral of each Grantor to the extent such security interest can be
perfected by the filing of a financing statement. All action by any Grantor requested by Agent to
protect and perfect such security interest on each item of Collateral has been duly taken.




          (f) Except for the Security Interest created hereby, (i) each Grantor is and will at all times
be (except as otherwise permitted under the Credit Agreement) the sole holder of record and the
legal and beneficial owner, free and clear of all Liens other than Permitted Liens, of the Pledged
Interests indicated on Schedule 5 as being owned by such Grantor and, when acquired by such
Grantor, any Pledged Interests acquired after the Closing Date; (ii) all of the Pledged Interests
are duly authorized, validly issued, fully paid and nonassessable and the Pledged Interests
constitute the percentage of the issued and outstanding Stock of the Pledged Companies of such
Grantor identified on Schedule 5 as supplemented or modified by any Pledged Interests
Addendum or any Supplement to this Agreement; (iii) such Grantor has the right and requisite
authority to pledge, the Investment Related Property pledged by such Grantor to Agent as provided
herein; (iv) all actions necessary or desirable to perfect, establish the first priority (subject
to Permitted Liens) of, or otherwise protect, Agent’s Liens in the Investment Related Property, and
the proceeds thereof, have been duly taken, (A) upon the execution and delivery of this Agreement;
(B) upon the taking of possession by Agent of any certificates constituting the Pledged Interests,
to the extent such Pledged Interests are represented by certificates, together with undated powers
endorsed in blank by the applicable Grantor; (C) upon the filing of financing statements in the
applicable jurisdiction set forth on Schedule 8 for such Grantor with respect to the
Pledged Interests of such Grantor that are not represented by certificates, and (D) with respect to
any Securities Accounts and uncertificated securities, upon the delivery of Control Agreements with
respect thereto; and




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(v) each Grantor has delivered to and deposited with Agent (or, with respect
to any Pledged Interests created or obtained after the Closing Date, will deliver and deposit in
accordance with Sections 6(a) and 8) all certificates representing the Pledged
Interests owned by such Grantor to the extent such Pledged Interests are represented by
certificates, and undated powers endorsed in blank with respect to such certificates. None of the
Pledged Interests owned or held by such Grantor has been issued or transferred in violation of any
securities registration, securities disclosure, or similar laws of any jurisdiction to which such
issuance or transfer may be subject.




          (g) No consent, approval, authorization, or other order or other action by, and no notice to
or filing with, any Governmental Authority or any other Person is required (i) for the grant of a
Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the
execution, delivery, or performance of this Agreement by such Grantor, except as may have been
obtained and remain in full force and effect, or (ii) for the exercise by Agent of the voting or
other rights provided for in this Agreement with respect to the Investment Related Property or the
remedies in respect of the Collateral pursuant to this Agreement, except as may have been obtained
and remain in full force and effect and as may be required in connection with such disposition of
Investment Related Property by laws affecting the offering and sale of securities generally. No
Intellectual Property License to which such Grantor is a party requires any consent for such
Grantor to grant the security interest granted hereunder in such Grantor’s right, title or interest
in or to any Copyrights, Patents, Trademarks or material Intellectual Property Licenses, which
requirement is effective under applicable law.




     6. Covenants. Each Grantor, jointly and severally, covenants and agrees with Agent
that from and after the date of this Agreement and until the date of termination of this Agreement
in accordance with Section 22:



          (a) Possession of Collateral. In the event that any Collateral with an aggregate
value in excess of $250,000, including proceeds, is evidenced by or consists of Negotiable
Collateral, Investment Related Property, or Chattel Paper, and if and to the extent that perfection
or priority of Agent’s Security Interest is dependent on or enhanced by possession, the applicable
Grantor, immediately upon the request of Agent, shall execute such other documents and instruments
as shall be requested by Agent or, if applicable, endorse and deliver physical possession of such
Negotiable Collateral, Investment Related Property, or Chattel Paper to Agent, together with such
undated powers endorsed in blank as shall be requested by Agent;




          (b) Chattel Paper.




               (i) Each Grantor shall take all steps reasonably necessary to grant Agent control of all
electronic Chattel Paper with an aggregate value in excess of $250,000 in accordance with the Code
and all “transferable records” as that term is defined in Section 16 of the Uniform Electronic
Transaction Act and Section 201 of the federal Electronic Signatures in Global and National
Commerce Act as in effect in any relevant jurisdiction;



               (ii) If any Grantor retains possession of any Chattel Paper or instruments (which retention of
possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly
upon the request of Agent, such Chattel Paper and instruments shall be marked with the following
legend: “This writing and the obligations evidenced or secured hereby are subject to the Security
Interest of Wells Fargo Foothill, LLC, as Agent for the benefit of the Lender Group and the Bank
Product Providers”;



          (c) Control Agreements.




               (i) Except to the extent not required by the Credit Agreement, each Grantor shall obtain an
authenticated Control Agreement, from each bank maintaining a Deposit Account for such Grantor;



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               (ii) Except to the extent not required by the Credit Agreement, each Grantor shall obtain an
authenticated Control Agreement, from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial assets or commodities to
or for any Grantor;



          (d) Letter-of-Credit Rights. Each Grantor that is or becomes the beneficiary of a
letter of credit with a face amount in excess of $250,000 shall promptly (and in any event within
two (2) Business Days after becoming a beneficiary), notify Agent thereof and, upon the request by
Agent, enter into a tri-party agreement with Agent and the issuer or confirming bank with respect
to letter-of-credit rights assigning such letter-of-credit rights to Agent and directing all
payments thereunder to Agent’s Account, all in form and substance satisfactory to Agent;




          (e) Commercial Tort Claims. Each Grantor shall promptly (and in any event within two
(2) Business Days of receipt thereof), notify Agent in writing upon incurring or otherwise
obtaining a Commercial Tort Claim with a value in excess of $250,000 after the date hereof and,
upon request of Agent, promptly amend Schedule 1 to describe such after-acquired Commercial
Tort Claim in a manner that reasonably identifies such Commercial Tort Claim, and hereby authorizes
the filing of additional financing statements or amendments to existing financing statements
describing such Commercial Tort Claims, and agrees to do such other acts or things deemed necessary
or desirable by Agent to give Agent a first priority (subject to Permitted Liens), perfected
security interest in any such Commercial Tort Claim;




          (f) Government Contracts. If any Account or Chattel Paper arises out of a contract or
contracts with the United States of America or any department, agency, or instrumentality thereof
pursuant to which more than $250,000 may be paid in any calendar year, Grantors shall promptly (and
in any event within two (2) Business Days of the creation thereof) notify Agent thereof in writing
and execute any instruments or take any steps reasonably required by Agent in order that all moneys
due or to become due under such contract or contracts shall be assigned to Agent, for the benefit
of the Lender Group and the Bank Product Providers, and shall provide written notice thereof under
the Assignment of Claims Act or other applicable law;




          (g) Intellectual Property.




               (i) Upon the request of Agent, in order to facilitate filings with the United States Patent
and Trademark Office and the United States Copyright Office, each Grantor shall execute and deliver
to Agent one or more Copyright Security Agreements, Trademark Security Agreements, or Patent
Security Agreements to further evidence Agent’s Lien on such Grantor’s Patents, Trademarks, or
Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby;



               (ii) Each Grantor shall have the duty, to the extent necessary or economically desirable in
the operation of such Grantor’s business in Grantor’s reasonable business judgment, to protect and
diligently enforce and defend at such Grantor’s expense its Intellectual Property, including (A) to
diligently enforce and defend, including promptly suing for infringement, misappropriation, or
dilution and to recover any and all damages for such infringement, misappropriation, or dilution,
and filing for opposition, interference, and cancellation against conflicting Intellectual Property
rights of any third party, (B) to prosecute diligently any trademark application or service mark
application that is part of the Trademarks pending as of the date hereof or hereafter until the
termination of this Agreement except with respect to Trademarks that are the subject of a Permitted
Disposition, (C) to prosecute diligently any patent application that is part of the Patents pending
as of the date hereof or hereafter until the termination of this Agreement except with respect to
Patents that are the subject of a Permitted Disposition, and (D) to take all reasonable and
necessary action to preserve and maintain all of such Grantor’s Trademarks, Patents, Copyrights,
Intellectual Property Licenses, and its rights therein, including paying all maintenance fees and
filing of applications for renewal, affidavits of use, and affidavits of noncontestability except
with respect to Intellectual Property that is the subject of a Permitted Disposition. Each Grantor
shall promptly file an application with the United States Copyright Office for any Copyright that
has not been registered with the United States Copyright Office that comprises the Required Library
(other than a Minor Release) when required by the Credit Agreement. Any



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expenses incurred in
connection with the foregoing shall be borne by the appropriate Grantor. Each Grantor further
agrees not to abandon any Trademark, Patent, Copyright, or Intellectual Property License that is
necessary or economically desirable in the operation of such Grantor’s business in Grantor’s
reasonable business judgment, except with respect to Intellectual Property that is the subject of a
Permitted Disposition;




               (iii) Grantors acknowledge and agree that the Lender Group shall have no duties with respect
to the Trademarks, Patents, Copyrights, or Intellectual Property Licenses. Without limiting the
generality of this Section 6(g), Grantors acknowledge and agree that no member of the
Lender Group shall be under any obligation to take any steps necessary to preserve rights in the
Trademarks, Patents, Copyrights, or Intellectual Property Licenses against any other Person, but
any member of the Lender Group may do so at its option from and after the occurrence and during the
continuance of an Event of Default, and all expenses incurred in connection therewith (including
reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of
Borrower and shall be chargeable to the Loan Account;



               (iv) Each Grantor hereby agrees to take those steps described in Section 6(g)(ii) with respect
to all new or acquired Intellectual Property to which it or any of its Subsidiaries is now or later
becomes entitled which is described in Section 6(g)(ii). Any expenses incurred in connection with
such activities shall be borne solely by such Grantor. Notwithstanding the foregoing, in no event
shall any Grantor, either itself or through any agent, employee, licensee, or designee, (A) file an
application for the registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in another country without giving Agent written
notice thereof promptly thereafter as required by Section 6(g)(vii) and complying with
Section 6(g)(i); or (B) file an application for the registration of any Copyright with the
United States Copyright Office or any similar office or agency in another country without giving
Agent written notice thereof at least three (3) Business Days prior to such filing and complying
with Section 6(g)(i);



               (v) On each date of the delivery of a Compliance Certificate in respect of a fiscal quarter
pursuant to Section 5.1 of the Credit Agreement, each Grantor shall deliver to Agent a list
reasonably satisfactory to Agent identifying the Copyrights subject to copyright protection,
whether created or acquired before or after the Closing Date, comprising the Required Disclosure
Set (including any supporting documentation reasonably requested by Agent relating to the
determination of the composition of the Required Disclosure Set), and a certification, signed by an
officer of such Grantor, certifying that such list identifies the Copyrights, whether created or
acquired before or after the Closing Date, comprising the Required Disclosure Set;



               (vi) At any time (x) an Event of Default has occurred and is continuing or (y) Excess
Availability plus Qualified Cash is less than $10,000,000, each Grantor shall, at Agent’s request,
(A) file applications and take any and all other actions necessary to register on an expedited
basis (if expedited processing is available in accordance with the applicable regulations and
procedures of the United States Copyright Office and any similar office of any other jurisdiction
in which Copyrights are used) each such Copyright requested by Agent which is not already the
subject of a valid registration or an application therefor with the United States Copyright Office
(or any similar office of any other jurisdiction in which Copyrights are used) identifying such
Grantor as the sole claimant thereof in a manner sufficient to claim in the public record (or as a
co-claimant thereof, if such is the case) such Grantor’s ownership or co-ownership thereof, and
(B) cause to be prepared, executed, and delivered to Agent, with sufficient time to permit Agent to
record no later than three (3) Business Days following the date of registration of or recordation
of transfer of ownership, as applicable, to the applicable Grantor of such Copyrights, (1) a
Copyright Security Agreement or supplemental schedules to the Copyright Security Agreement
reflecting the security interest of Agent in such Copyrights, which supplemental schedules shall be
in form and content suitable for recordation with the United States Copyright Office (or any
similar office of any other jurisdiction in which Copyrights are used) and (2) any other
documentation as Agent reasonably deems necessary and requests in order to perfect and continue
perfected Agent’s Liens on such Copyrights following such recordation;



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               (vii) In addition, on each date on which the Compliance Certificate is delivered by Borrower
pursuant to Section 5.1 of the Credit Agreement, each Grantor shall provide Agent with a written
report of all new Copyrights (to the extent not already covered in Section 6(g)(v) above),
Patents, and Trademarks that are registered or the subject of pending applications for
registrations, which were acquired or filed by any Grantor during the prior period and are material
to the operation of its business and any statement of use or amendment to allege use with respect
to intent-to-use trademark applications. In the case of such registrations or applications
therefor, which were acquired by any Grantor, each such Grantor shall file the necessary documents
with the appropriate Governmental Authority identifying the applicable Grantor as the owner (or as
a co-owner thereof, if such is the case) of such Intellectual Property. In each of the foregoing
cases, the applicable Grantor(s) shall cause to be prepared, executed, and delivered to Agent
supplemental schedules to the applicable Loan Documents to identify such Copyright, Patent and
Trademark registrations and applications therefor (with the exception of Trademark applications
filed on an intent-to-use basis for which no statement of use or amendment to allege use has been
filed) as being subject to the security interests created thereunder;



               (viii) Upon receipt from the United States Copyright Office of notice of registration of any
Copyright(s), each Grantor shall promptly (but in no event later than three (3) Business Days
following such receipt) notify Agent of such registration by delivering, or causing to be delivered
to Agent, via overnight courier, electronic mail or telefacsimile at the addresses designated in
the Credit Agreement, documentation sufficient for Agent to perfect Agent’s Liens on such
Copyright(s);



               (ix) Each Grantor shall take actions reasonably necessary, as determined in such Grantor’s
reasonable business discretion, to protect the confidentiality of the Intellectual Property that is
material to its business, including, as applicable (A) protecting the secrecy and confidentiality
of its confidential information and trade secrets by having and enforcing a policy requiring all
current employees, consultants, licensees, vendors and contractors with access to such information
to execute appropriate confidentiality agreements; (B) taking actions reasonably necessary to
ensure that no trade secret falls into the public domain; and (C) protecting the secrecy and
confidentiality of the source code of all computer software programs and applications of which it
is the owner or licensee by having and enforcing a policy requiring any licensees (or sublicensees)
of such source code to enter into license agreements with commercially reasonable use and
non-disclosure restrictions; and



               (x) No Grantor shall incorporate into any Grantor Distributed Software (defined in Section
5(d)(vii)) any third-party code that is licensed pursuant to any open source license such as the
GNU Public License, Lesser GNU Public License, or Mozilla Public License, in a manner that would
require or condition the use or distribution of such software on, the disclosing, licensing, or
distribution of any source code for any portion of the Grantor Distributed Software.



               (xi) No Grantor shall enter into any material Intellectual Property License to receive any
license or rights in any Intellectual Property of a third party unless such Grantor has used
commercially reasonable efforts to permit the assignment of such Intellectual Property License (and
all rights of Grantor thereunder) to the Lenders or the Agent (and any transferees of the Lenders
or the Agent, as applicable).



               (xii) At any time (x) an Event of Default has occurred and is continuing or (y) Excess
Availability plus Qualified Cash is less than $10,000,000, each Grantor shall execute and deliver
to Agent a Source Code Escrow Agreement and shall deposit with the escrow agent designated under
the Source Code Escrow Agreement the source code for each version or versions of (A) each item of
computer software programs of such Grantor constituting the Required Library (other than Minor
Releases) and any updates thereto and (B) each other computer software program of such Grantor
required by Agent to be registered with the United States Copyright Office (or any similar office
of any other jurisdiction in which Copyrights are used) pursuant to Section 6(g)(vi) above
(other than Minor Releases) and any updates thereto and in accordance with all other terms and
conditions of the Source Code Escrow Agreement. If an escrow agent terminates the Source Code
Escrow Agreement for any reason (“Source Code Escrow Termination”), the



-13-









 




Grantors shall
promptly (but in no event later than thirty (30) days following such Source Code Escrow Termination
(or such later time as may be agreed upon by Agent)) (A) enter into a new Source Code Escrow
Agreement with an escrow agent reasonably satisfactory to Agent and (B) deposit with such escrow
agent all materials that were required to be deposited with the Terminating Escrow Agent;




          (h) Investment Related Property.




               (i) If any Grantor shall receive or become entitled to receive any Pledged Interests after the
Closing Date, it shall promptly (and in any event within five (5) Business Days of receipt thereof)
deliver to Agent a duly executed Pledged Interests Addendum identifying such Pledged Interests;



               (ii) All sums of money and property paid or distributed in respect of the Investment Related
Property which are received by any Grantor after the occurrence and during the continuance of an
Event of Default shall be held by the Grantors in trust for the benefit of Agent segregated from
such Grantor’s other property, and such Grantor shall deliver it forthwith to Agent in the exact
form received;



               (iii) Each Grantor shall promptly deliver to Agent a copy of each notice or other
communication received by it in respect of any Pledged Interests after the occurrence and during
the continuance of an Event of Default;



               (iv) No Grantor shall make or consent to any amendment or other modification or waiver with
respect to any Pledged Interests, Pledged Operating Agreement, or Pledged Partnership Agreement, in
any manner that materially adversely affects the Lenders or would otherwise be prohibited by the
Credit Agreement;



               (v) Each Grantor agrees that it will cooperate with Agent in obtaining all necessary approvals
and making all necessary filings under federal, state, local, or foreign law in connection with the
Security Interest on the Investment Related Property or any sale or transfer thereof made in
accordance with the terms of the Loan Documents; and



               (vi) As to all limited liability company or partnership interests, issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, each Grantor hereby represents, warrants and
covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be
dealt in or traded on securities exchanges or in securities markets, (B) do not and will not
constitute investment company securities, and (C) are not and will not be held by such Grantor in a
securities account. In addition, none of the Pledged Operating Agreements, the Pledged Partnership
Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide that such Pledged
Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any
relevant jurisdiction;



          (i) Real Property; Fixtures. Except to the extent not required by the Credit
Agreement, each Grantor covenants and agrees that upon the acquisition of any fee interest in Real
Property with a fair market value in excess of $500,000 it will promptly (and in any event within
five (5) Business Days of acquisition) notify Agent of the acquisition of such Real Property and
will grant to Agent, for the benefit of the Lender Group and the Bank Product Providers, a first
priority Mortgage on each fee interest in Real Property now or hereafter owned by such Grantor and
shall deliver such other documentation and opinions, in form and substance satisfactory to Agent,
in connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion,
including title insurance policies, financing statements, fixture filings and environmental audits
and such Grantor shall pay all recording costs, intangible taxes and other fees and costs
(including reasonable attorneys fees and expenses) incurred in connection therewith. Each Grantor
acknowledges and agrees that, to the extent permitted by applicable law, all of the Collateral
shall remain personal property regardless of the manner of its attachment or affixation to real
property;





-14-









 








          (j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the
Collateral, except as expressly permitted by the Credit Agreement, or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral of any Grantor, except for Permitted
Liens. The inclusion of Proceeds in the Collateral shall not be deemed to constitute Agent’s
consent to any sale or other disposition of any of the Collateral except as expressly permitted in
this Agreement or the other Loan Documents;




          (k) Other Actions as to Any and All Collateral. Each Grantor shall promptly (and in
any event within five (5) Business Days of acquiring or obtaining such Collateral) notify Agent in
writing upon (i) acquiring or otherwise obtaining any Collateral after the date hereof consisting
of Investment Related Property, Chattel Paper (electronic, tangible or otherwise), documents (as
defined in Article 9 of the Code), promissory notes (as defined in the Code, or instruments (as
defined in the Code), in each case, with a value in excess of $250,000 or (ii) any amount payable
in excess of $250,000 under or in connection with any of the Collateral being or becoming evidenced
after the date hereof by any Chattel Paper, documents, promissory notes, or instruments and, in
each such case upon the request of Agent, promptly execute such other documents, or if applicable,
deliver such Chattel Paper, other documents or certificates evidencing any Investment Related
Property and do such other acts or things deemed necessary or desirable by Agent to protect Agent’s
Security Interest therein;




          (l) Controlled Accounts.




               (i) Each Grantor shall (A) establish and maintain cash management services of a type and on
terms reasonably satisfactory to Agent at one or more of the banks set forth on Schedule
6(l) (each a “Controlled Account Bank”), and shall take reasonable steps to ensure that
all of its Account Debtors forward payment of the amounts owed by them directly to such Controlled
Account Bank, and (B) deposit or cause to be deposited promptly, and in any event no later than the
second Business Day after the date of receipt thereof, all of their Collections (including those
sent directly by their Account Debtors to a Loan Party) into a bank account of such Grantor (each,
a “Controlled Account”) at one of the Controlled Account Banks. As of the Closing Date,
Agent acknowledges that the cash management services maintained by Grantors as of the Closing Date
are satisfactory to Agent;



               (ii) Each Controlled Account Bank shall establish and maintain Controlled Account Agreements
with Agent and the applicable Loan Party, in form and substance reasonably acceptable to Agent.
Each such Controlled Account Agreement shall provide, among other things, that (x) the Controlled
Account Bank will comply with any instructions originated by Agent directing the disposition of the
funds in such Controlled Account without further consent by the applicable Loan Party, (y) the
Controlled Account Bank has no rights of setoff or recoupment or any other claim against the
applicable Controlled Account other than for payment of its service fees and other charges directly
related to the administration of such Controlled Account and for returned checks or other items of
payment, and (z) upon the instruction of the Agent (an “Activation Instruction”), the
Controlled Account Bank will forward by daily sweep all amounts in the applicable Controlled
Account to the Agent’s Account. Agent agrees not to issue an Activation Instruction with respect
to the Controlled Accounts unless an Event of Default has occurred and is continuing at the time
such Activation Instruction is issued. Agent agrees to use commercially reasonable efforts to
rescind an Activation Instruction (the “Rescission”) if: (A) the Event of Default upon
which such Activation Instruction was issued has been cured or waived in writing in accordance with
the terms of this Agreement, and (B) no additional Event of Default has occurred and is continuing
prior to the date of the Rescission or is reasonably expected to occur on or immediately after the
date of the Rescission; and



               (iii) So long as no Default or Event of Default has occurred and is continuing, any Grantor
may amend Schedule 6(l) to add or replace a Controlled Account Bank or Controlled Account;
provided, however, that (y) such prospective Controlled Account Bank shall be
reasonably satisfactory to Agent, and (z) concurrently with the opening of such Controlled Account,
the applicable Loan Party and such prospective Controlled Account Bank shall have executed and
delivered to Agent a Controlled Account Agreement. Each Grantor shall close any of its Controlled
Accounts (and establish replacement Controlled



-15-









 




Account accounts in accordance with the foregoing
sentence) as promptly as practicable, and in any event within forty-five (45) days, after notice
from Agent that the operating performance, funds transfer, or availability procedures or
performance of the Controlled Account Bank with respect to Controlled Accounts or Agent’s liability
under any Controlled Account Agreement with such Controlled Account Bank is no longer acceptable in
Agent’s reasonable judgment.




     7. Relation to Other Security Documents. The provisions of this Agreement shall be
read and construed with the other Loan Documents referred to below in the manner so indicated.



          (a) Credit Agreement. In the event of any conflict between any provision in this
Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall
control.




          (b) Patent, Trademark, Copyright Security Agreements. The provisions of the Copyright
Security Agreements, Trademark Security Agreements, and Patent Security Agreements are supplemental
to the provisions of this Agreement, and nothing contained in the Copyright Security Agreements,
Trademark Security Agreements, or the Patent Security Agreements shall limit any of the rights or
remedies of Agent hereunder. In the event of any conflict between any provision in this Agreement
and a provision in a Copyright Security Agreement, Trademark Security Agreement or Patent Security
Agreement, such provision of this Agreement shall control.




     8. Further Assurances.



          (a) Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or that Agent may reasonably request, in order to perfect and protect the Security
Interest granted or purported to be granted hereby or to enable Agent to exercise and enforce its
rights and remedies hereunder with respect to any of the Collateral.




          (b) Each Grantor authorizes the filing by Agent of financing or continuation statements, or
amendments thereto, and such Grantor will execute and deliver to Agent such other instruments or
notices, as may be necessary or as Agent may reasonably request, in order to perfect and preserve
the Security Interest granted or purported to be granted hereby.




          (c) Each Grantor authorizes Agent at any time and from time to time to file, transmit, or
communicate, as applicable, financing statements and amendments (i) describing the Collateral as
“all personal property of debtor” or “all assets of debtor” or words of similar effect,
(ii) describing the Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code for the sufficiency
or filing office acceptance. Each Grantor also hereby ratifies any and all financing statements or
amendments previously filed by Agent in any jurisdiction.




          (d) Each Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement filed in connection with
this Agreement without the prior written consent of Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the Code.




     9. Agent’s Right to Perform Contracts, Exercise Rights, etc. Upon the occurrence and
during the continuance of an Event of Default, Agent (or its designee) (a) may proceed to perform
any and all of the obligations of any Grantor contained in any contract, lease, or other agreement
and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right to use any Grantor’s rights under Intellectual Property Licenses in
connection with the enforcement of the Agent’s rights hereunder, including the right to prepare for
sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses, and (c) shall have the right to request that any Stock that is
pledged hereunder be registered in the name of Agent or any of its nominees.



-16-









 





     10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints Agent
its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of
such Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under
the Credit Agreement, to take any action and to execute any instrument which Agent may reasonably
deem necessary or advisable to accomplish the purposes of this Agreement, including:



          (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and
receipts for moneys due and to become due under or in connection with the Accounts or any other
Collateral of such Grantor;




          (b) to receive and open all mail addressed to such Grantor and to notify postal authorities to
change the address for the delivery of mail to such Grantor to that of Agent;




          (c) to receive, indorse, and collect any drafts or other instruments, documents, Negotiable
Collateral or Chattel Paper;




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




          (e) to repair, alter, or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;




          (f) to use any Intellectual Property, including but not limited to any labels, Patents,
Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, and advertising
matter, in advertising for sale and selling Inventory and other Collateral and to collect any
amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and




          (g) Agent, on behalf of the Lender Group or the Bank Product Providers, shall have the right,
but shall not be obligated, to bring suit in its own name to enforce the Intellectual Property and
Intellectual Property Licenses and, if Agent shall commence any such suit, the appropriate Grantor
shall, at the request of Agent, do any and all lawful acts and execute any and all proper documents
reasonably required by Agent in aid of such enforcement.




     To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.



     11. Agent May Perform. If any Grantor fails to perform any agreement contained herein
within the time period allowed therefor, Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Agent incurred in connection therewith shall be payable,
jointly and severally, by Grantors.



     12. Agent’s Duties. The powers conferred on Agent hereunder are solely to protect
Agent’s interest in the Collateral, for the benefit of the Lender Group and the Bank Product
Providers, and shall not impose any duty upon Agent to exercise any such powers. Except for the
safe custody of any Collateral in its actual possession and the accounting for moneys actually
received by it hereunder, 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. Agent shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its actual possession if such Collateral is accorded treatment
substantially equal to that which Agent accords its own property.



     13. Collection of Accounts, General Intangibles and Negotiable Collateral. At any
time upon the occurrence and during the continuation of an Event of Default, Agent or Agent’s
designee may (a) notify



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Account Debtors of any Grantor that the Accounts, General Intangibles,
Chattel Paper or Negotiable Collateral have been assigned to Agent, for the benefit of the Lender
Group and the Bank Product Providers, or that Agent has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral directly, and any
collection costs and expenses shall constitute part of such Grantor’s Secured Obligations under the
Loan Documents.




     14. Disposition of Pledged Interests by Agent. None of the Pledged Interests existing
as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the
date of acquisition thereof will be, registered or qualified under the various federal or state
securities laws of the United States and disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack of such
registration. Each Grantor understands that in connection with such disposition, Agent may
approach only a restricted number of potential purchasers and further understands that a sale under
such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests
were registered and qualified pursuant to federal and state securities laws and sold on the open
market. Each Grantor, therefore, agrees that: (a) if Agent shall, pursuant to the terms of this
Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale,
Agent shall have the right to rely upon the advice and opinion of any nationally recognized
brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do
so shall not be considered in determining the commercial reasonableness of such action) as to the
best manner in which to offer the Pledged Interest or any portion thereof for sale and as to the
best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be
conclusive evidence that Agent has handled the disposition in a commercially reasonable manner.



     15. Voting Rights.



          (a) Upon the occurrence and during the continuation of an Event of Default, (i) Agent may, at
its option, and with two (2) Business Days prior notice to any Grantor, and in addition to all
rights and remedies available to Agent under any other agreement, at law, in equity, or otherwise,
exercise all voting rights, and all other ownership or consensual rights in respect of the Pledged
Interests owned by such Grantor, but under no circumstances is Agent obligated by the terms of this
Agreement to exercise such rights, and (ii) if Agent duly exercises its right to vote any of such
Pledged Interests, each Grantor hereby appoints Agent, such Grantor’s true and lawful
attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any manner Agent deems
advisable for or against all matters submitted or which may be submitted to a vote of shareholders,
partners or members, as the case may be. The power-of-attorney and proxy granted hereby is coupled
with an interest and shall be irrevocable.




          (b) For so long as any Grantor shall have the right to vote the Pledged Interests owned by it,
such Grantor covenants and agrees that it will not, without the prior written consent of Agent,
vote or take any consensual action with respect to such Pledged Interests which would materially
adversely affect the rights of Agent, the other members of the Lender Group, the Bank Product
Providers, or the value of the Pledged Interests.




     16. Remedies. Upon the occurrence and during the continuance of an Event of Default:



          (a) Agent may, and, at the instruction of the Required Lenders, shall exercise in respect of
the Collateral, in addition to other rights and remedies provided for herein, in the other Loan
Documents, or otherwise available to it, all the rights and remedies of a secured party on default
under the Code or any other applicable law. Without limiting the generality of the foregoing, each
Grantor expressly agrees that, in any such event, Agent without demand of performance or other
demand, advertisement or notice of any kind (except a notice specified below of time and place of
public or private sale) to or upon any Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent permitted by the Code
or any other applicable law), may take immediate possession of all or any portion of the Collateral
and (i) require Grantors to, and each Grantor hereby agrees that it will at its own expense and
upon request of Agent forthwith, assemble all or part of the Collateral as directed by Agent and
make it available to Agent at one or more locations where such Grantor regularly maintains
Inventory, and



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(ii) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Agent’s offices or elsewhere,
for cash, on credit, and upon such other terms as Agent may deem commercially reasonable. Each
Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days notice
to the applicable 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 and specifically such notice
shall constitute a reasonable “authenticated notification of disposition” within the meaning of
Section 9-611 of the Code. Agent shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. 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 the
internet shall constitute a “place” for purposes of Section 9-610(b) of the Code.




          (b) Agent is hereby granted a license or other right to use, without liability for royalties
or any other charge, each Grantor’s Intellectual Property, including but not limited to, any
labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, and
advertising matter, whether owned by any Grantor or with respect to which any Grantor has rights
under license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for
sale, advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses
and all franchise agreements shall inure to the benefit of Agent.




          (c) Agent may, in addition to other rights and remedies provided for herein, in the other Loan
Documents, or otherwise available to it under applicable law and without the requirement of notice
to or upon any Grantor or any other Person (which notice is hereby expressly waived to the maximum
extent permitted by the Code or any other applicable law), (i) with respect to any Grantor’s
Deposit Accounts in which Agent’s Liens are perfected by control under Section 9-104 of the Code,
instruct the bank maintaining such Deposit Account for the applicable Grantor to pay the balance of
such Deposit Account to or for the benefit of Agent, and (ii) with respect to any Grantor’s
Securities Accounts in which the Agent’s Liens are perfected by control under Section 9-106 of the
Code, instruct the securities intermediary maintaining such Securities Account for the applicable
Grantor to (A) transfer any cash in such Securities Account to or for the benefit of Agent, or
(B) liquidate any financial assets in such Securities Account that are customarily sold on a
recognized market and transfer the cash proceeds thereof to or for the benefit of Agent.




          (d) Any cash held by Agent as Collateral and all cash proceeds received by Agent in respect of
any sale of, collection from, or other realization upon all or any part of the Collateral shall be
applied against the Secured Obligations in the order set forth in the Credit Agreement. In the
event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in
full, each Grantor shall remain jointly and severally liable for any such deficiency.




          (e) Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial
transaction, and agrees that if an Event of Default shall occur and be continuing Agent shall have
the right to an immediate writ of possession without notice of a hearing. Agent shall have the
right to the appointment of a receiver for the properties and assets of each of Grantors, and each
Grantor hereby consents to such rights and such appointment and hereby waives any objection such
Grantors may have thereto or the right to have a bond or other security posted by Agent.




     17. Remedies Cumulative. Each right, power, and remedy of Agent as provided for in
this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or
by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other
right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Agent, of any one or more of such rights, powers, or remedies shall not preclude
the simultaneous or later exercise by Agent of any or all such other rights, powers, or remedies.



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     18. Marshaling. Agent shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To the extent that it
lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling
of collateral which might cause delay in or impede the enforcement of Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.



     19. Indemnity and Expenses.



          (a) Each Grantor agrees to indemnify Agent and the other members of the Lender Group from and
against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of
or resulting from this Agreement (including enforcement of this Agreement) or any other Loan
Document to which such Grantor is a party, except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the party seeking indemnification or its officers,
directors, employees, attorneys, or agents as determined by a final non-appealable order of a court
of competent jurisdiction. This provision shall survive the termination of this Agreement and the
Credit Agreement and the repayment of the Secured Obligations.




          (b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to
the Loan Account) all the Lender Group Expenses which Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an
Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in
accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of
any of the rights of Agent hereunder or (iv) the failure by any Grantor to perform or observe any
of the provisions hereof.




     20. Merger, Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to
any departure by any Grantor herefrom, shall in any event be effective unless the same shall be in
writing and signed by Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment of any provision of
this Agreement shall be effective unless the same shall be in writing and signed by Agent and each
of Grantors to which such amendment applies.



     21. Addresses for Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Agent at its address specified in
the Credit Agreement, and to any of the Grantors at their respective addresses specified in the
Credit Agreement or Guaranty, as applicable, or, as to any party, at such other address as shall be
designated by such party in a written notice to the other party.



     22. Continuing Security Interest: Assignments under Credit Agreement. This Agreement
shall create a continuing security interest in the Collateral and shall (a) remain in full force
and effect until the Obligations have been paid in full in cash in accordance with the provisions
of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding
upon each of Grantors, and their respective successors and assigns, and (c) inure to the benefit
of, and be enforceable by, Agent, and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c), any Lender may, in accordance with the provisions of
the Credit Agreement, assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Lender herein or otherwise.



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Upon payment
in full in cash of the Obligations in accordance with the provisions of the Credit Agreement and
the expiration or termination of the Commitments, the Security Interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantors or any other Person entitled
thereto. At such time, Agent will authorize the filing of appropriate termination statements to
terminate such Security Interests. No transfer or renewal, extension, assignment, or termination
of this Agreement or of the Credit Agreement, any other Loan Document, or any other instrument or
document executed and delivered by any Grantor to Agent nor any additional Advances or other loans
made by any Lender to Borrower, nor the taking of further security, nor the retaking or re-delivery
of the Collateral to Grantors, or any of them, by Agent, nor any other act of the Lender Group or
the Bank Product Providers, or any of them, shall release any Grantor from any obligation, except a
release or discharge executed in writing by Agent in accordance with the provisions of the Credit
Agreement. Agent shall not by any act, delay, omission or otherwise, be deemed to have waived any
of its rights or remedies hereunder, unless such waiver is in writing and signed by Agent and then
only to the extent therein set forth. A waiver by Agent of any right or remedy on any occasion
shall not be construed as a bar to the exercise of any such right or remedy which Agent would
otherwise have had on any other occasion.




     23. Governing Law; Jury Trial Waiver.



          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO
THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.




          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
AGENT AND EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE
TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).




          (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AGENT AND EACH GRANTOR HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH
GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.




          (d) REFERENCE PROVISION.




          In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect to
proceed under this Judicial Reference Provision.




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          23.1 Mechanics.




          (A) With the exception of the items specified in clause (B), below, any controversy, dispute
or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement
or any other document, instrument or agreement between the undersigned parties (collectively in
this Section, the “Lender Documents”), will be resolved by a reference proceeding in
California in accordance with the provisions of Sections 638 et seq. of the California Code of
Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive
remedy for the resolution of any Claim, including whether the Claim is subject to the reference
proceeding. Except as otherwise provided in the Lender Documents, venue for the reference
proceeding will be in the state or federal court in the county or district where the real property
involved in the action, if any, is located or in the state or federal court in the county or
district where venue is otherwise appropriate under applicable law (the “Court”).




          (B) The matters that shall not be subject to a reference are the following: (i) foreclosure of
any security interests in real or personal property, (ii) exercise of self-help remedies
(including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary,
provisional or ancillary remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This reference provision does
not limit the right of any party to exercise or oppose any of the rights and remedies described in
clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the items
described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not
waive the right of any party to a reference pursuant to this reference provision as provided
herein.




          (C) The referee shall be a retired judge or justice selected by mutual written agreement of
the parties. If the parties do not agree within ten (10) days of a written request to do so by any
party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the
Court (or his or her representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would result if ex parte
relief is not granted. Pursuant to CCP § 170.6, each party shall have one peremptory challenge to
the referee selected by the Presiding Judge of the Court (or his or her representative).




          (D) The parties agree that time is of the essence in conducting the reference proceedings.
Accordingly, the referee shall be requested, subject to change in the time periods specified herein
for good cause shown, to (i) set the matter for a status and trial-setting conference within
fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues
of law or fact within one hundred twenty (120) days after the date of the conference and (iii)
report a statement of decision within twenty (20) days after the matter has been submitted for
decision.




          (E) The referee will have power to expand or limit the amount and duration of discovery. The
referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s
failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based
upon good cause shown, no party shall be entitled to “priority” in conducting discovery,
depositions may be taken by either party upon seven (7) days written notice, and all other
discovery shall be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the referee whose decision
shall be final and binding.




          23.2 Procedures. Except as expressly set forth herein, the referee shall determine
the manner in which the reference proceeding is conducted including the time and place of hearings,
the order of presentation of evidence, and all other questions that arise with respect to the
course of the reference proceeding. All proceedings and hearings conducted before the referee,
except for trial, shall be conducted without a court reporter, except that when any party so
requests, a court reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making such a request shall
have the obligation to arrange for and pay the court reporter. Subject to the





-22-









 







referee’s power to
award costs to the prevailing party, the parties will equally share the cost of the referee and the
court reporter at trial.




          23.3 Application of Law. The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of California. The rules of
evidence applicable to proceedings at law in the State of California will be applicable to the
reference proceeding. The referee shall be empowered to enter equitable as well as legal relief,
enter equitable orders that will be binding on the parties and rule on any motion which would be
authorized in a court proceeding, including without limitation motions for summary judgment or
summary adjudication. The referee shall issue a decision at the close of the reference proceeding
which disposes of all claims of the parties that are the subject of the reference. Pursuant to CCP
§ 644, such decision shall be entered by the Court as a judgment or an order in the same manner as
if the action had been tried by the Court and any such decision will be final, binding and
conclusive. The parties reserve the right to appeal from the final judgment or order or from any
appealable decision or order entered by the referee. The parties reserve the right to findings of
fact, conclusions of laws, a written statement of decision, and the right to move for a new trial
or a different judgment, which new trial, if granted, is also to be a reference proceeding under
this provision.




          23.4 Repeal. If the enabling legislation which provides for appointment of a referee
is repealed (and no successor statute is enacted), any dispute between the parties that would
otherwise be determined by reference procedure will be resolved and determined by arbitration. The
arbitration will be conducted by a retired judge or justice, in accordance with the California
Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with
respect to discovery set forth above shall apply to any such arbitration proceeding.




          23.5 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED
UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY
KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE
PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR
IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LENDER DOCUMENTS.




     24. New Subsidiaries. Pursuant to Section 5.11 of the Credit Agreement,
certain new direct or indirect Subsidiaries (whether by acquisition or creation) of any Grantor are
required to enter into this Agreement by executing and delivering in favor of Agent a supplement to
this Agreement in substantially the form of Annex 1. Upon the execution and delivery of
Annex 1 by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the
same force and effect as if originally named as a Grantor herein. The execution and delivery of
any instrument adding an additional Grantor as a party to this Agreement shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new Grantor hereunder.



     25. Agent. Each reference herein to any right granted to, benefit conferred upon or
power exercisable by the “Agent” shall be a reference to Agent, for the benefit of the Lender Group
and each of the Bank Product Providers.



     26. Miscellaneous.



          (a) This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method
of transmission shall be equally as effective as delivery of an original executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall





-23-









 







deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each
other Loan Document mutatis mutandis.




          (b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such provision in any
other jurisdiction. Each provision of this Agreement shall be severable from every other provision
of this Agreement for the purpose of determining the legal enforceability of any specific
provision.




          (c) Headings and numbers have been set forth herein for convenience only. Unless the contrary
is compelled by the context, everything contained in each Section applies equally to this entire
Agreement.




          (d) Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against
any member of the Lender Group or any Grantor, whether under any rule of construction or otherwise.
On the contrary, this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to accomplish fairly the
purposes and intentions of all parties hereto.




          (e) The pronouns used herein shall include, when appropriate, either gender and both singular
and plural, and the grammatical construction of sentences shall conform thereto.




          (f) Unless the context of this Agreement clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the terms “includes” and
“including” are not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement
or such other Loan Document, as the case may be, as a whole and not to any particular provision of
this Agreement or such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any
reference in this Agreement to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). The words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts, and contract rights. Any reference herein to the
satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or,
in the case of Letters of Credit or Bank Products, providing Letter of Credit Collateralization or
Bank Product Collateralization, as applicable) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and that are not required by
the provisions of this Agreement to be repaid or cash collateralized. Any reference herein to any
Person shall be construed to include such Person’s successors and assigns. Any requirement of a
writing contained herein shall be satisfied by the transmission of a Record.




          (g) All of the annexes, schedules and exhibits attached to this Agreement shall be deemed
incorporated herein by reference.




[signature pages follow]




-24-









 








     IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and
through their duly authorized officers, as of the day and year first above written.



	 	 	 	 	 
	GRANTORS: 	
REALPAGE, INC.

 	 
	 	By:  	/s/ Timothy J. Barker
 	 
	 	 	Name:  	Timothy J. Barker 	 
	 	 	Title:  	Executive Vice President and Chief Financial Officer 	 
	 
	 	OPSTECHNOLOGY, INC.

 	 
	 	By:  	/s/ Timothy J. Barker
 	 
	 	 	Name:  	Timothy J. Barker 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	MULTIFAMILY INTERNET VENTURES, LLC

 	 
	 	By:  	/s/ Timothy J. Barker
 	 
	 	 	Name:  	Timothy J. Barker 	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	STARFIRE MEDIA, INC.

 	 
	 	By:  	/s/ Timothy J. Barker
 	 
	 	 	Name:  	Timothy J. Barker 	 
	 	 	Title:  	Treasurer 	 
	 
	 	REALPAGE INDIA HOLDINGS, INC.

 	 
	 	By:  	/s/ Timothy J. Barker
 	 
	 	 	Name:  	Timothy J. Barker 	 
	 	 	Title:  	Treasurer 	 
	 



Signature Page to Security Agreement




 









 








	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 



	 	 	 	 	 
	AGENT:       	WELLS FARGO FOOTHILL, LLC, 

a Delaware limited liability company, as

Agent

 	 
	 	By:  	/s/ Terri Wesolik
 	 
	 	 	Name:  	Terri Wesolik 	 
	 	 	Title:  	Vice President 	 
	 



Signature Page to Security Agreement