**Exhibit 10.2****PLEDGE AND SECURITY AGREEMENT****dated as of March 16, 2006****between****EACH OF THE GRANTORS PARTY HERETO****and****WACHOVIA BANK, NATIONAL ASSOCIATION,****as the Collateral Agent**
 

 
**TABLE OF CONTENTS**               **PAGE** SECTION 1 DEFINITIONS; GRANT OF SECURITY  1   1.1 General Definitions  1   1.2 Definitions; Interpretation  8   1.3 Schedules  8          SECTION 2 GRANT OF SECURITY  9   2.1 Grant of Security  9   2.2 Certain Limited Exclusions  10          SECTION 3 SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE  10   3.1 Security for Obligations  10   3.2 Continuing Liability Under Collateral  11          SECTION 4 REPRESENTATIONS AND WARRANTIES AND COVENANTS  11   4.1 Generally  11   4.2 Equipment and Inventory  14   4.3 Receivables  16   4.4 Investment Related Property.  Investment Related Property Generally  18   4.5 Pledged Equity Interests  21   4.6 Pledged Debt  23   4.7 Investment Accounts  23   4.8 Material Contracts  25   4.9 Letter of Credit Rights  25   4.10 Intellectual Property  26   4.11 Commercial Tort Claims  30          SECTION 5 FURTHER ASSURANCES; ADDITIONAL GRANTORS  30   5.1 Further Assurances  30   5.2 Additional Grantors  31          SECTION 6 COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT  32   6.1 Power of Attorney  32   6.2 No Duty on the Part of Collateral Agent or Secured Parties  33          SECTION 7 REMEDIES  33   7.1 Generally  33   7.2 Application of Proceeds  35   7.3 Sales on Credit  35   7.4 Deposit Accounts  35   7.5 Investment Related Property  35   7.6 Intellectual Property  36   7.7 Cash Proceeds  38          SECTION 8 COLLATERAL AGENT  38          SECTION 9 CONTINUING SECURITY INTEREST; TRANSFER OF LOANS  39          SECTION 10 STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM  39          SECTION 11 MISCELLANEOUS  40 
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   SCHEDULE 4.1 GENERAL INFORMATION   SCHEDULE 4.2 LOCATION OF EQUIPMENT AND INVENTORY   SCHEDULE 4.4 INVESTMENT RELATED PROPERTY   SCHEDULE 4.6 DESCRIPTION OF LETTERS OF CREDIT   SCHEDULE 4.7 INTELLECTUAL PROPERTY – EXCEPTIONS   SCHEDULE 4.8 COMMERCIAL TORT CLAIMS   EXHIBIT A PLEDGE SUPPLEMENT   EXHIBIT B UNCERTIFICATED SECURITIES CONTROL AGREEMENT   EXHIBIT C SECURITIES ACCOUNT CONTROL AGREEMENT   EXHIBIT D DEPOSIT ACCOUNT CONTROL AGREEMENT
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     This **PLEDGE AND SECURITY AGREEMENT**, dated as of March 16, 2006 (this “Agreement”),between **EACH OF THE UNDERSIGNED**, whether as an original signatory hereto or as an AdditionalGrantor (as herein defined) (each, a “Grantor”), and **WACHOVIA BANK, NATIONAL ASSOCIATION**,as collateral agent for the Secured Parties (as herein defined) (together with its permittedsuccessors in such capacity, the “Collateral Agent”).**RECITALS:**     **WHEREAS**, reference is made to that certain Credit and Guaranty Agreement, dated as of the datehereof (as it may be amended, restated, amended and restated, supplemented or otherwise modifiedfrom time to time, the “Credit Agreement”), by and among Easton-Bell Sports, Inc., aDelaware corporation (the “Company”), RBG Holdings Corp., a Delaware corporation, certainSubsidiaries of the Company, as Canadian Borrowers, certain Subsidiaries of the Company, as U.S.Guarantors, certain Subsidiaries of the Borrowers, as Canadian Guarantors, the Lenders partythereto from time to time, Wachovia Bank, National Association, as Administrative Agent andCollateral Agent and Wachovia Capital Finance Corporation (Canada), an Ontario corporation, asCanadian Agent;     **WHEREAS**, subject to the terms and conditions of the Credit Agreement, certain Grantors mayenter into one or more Secured Hedge Agreements with one or more Lender Counterparties     **WHEREAS**, in consideration of the extensions of credit and other accommodations of Lenders andLender Counterparties as set forth in the Credit Agreement and the Secured Hedge Agreements,respectively, each Grantor has agreed to secure such Grantor’s obligations under the CreditDocuments and the Secured Hedge Agreements as set forth herein; and     **NOW, THEREFORE**, in consideration of the premises and the agreements, provisions and covenantsherein contained, each Grantor and the Collateral Agent agree as follows:**SECTION 1****DEFINITIONS; GRANT OF SECURITY**     **1.1****General Definitions****.**     In this Agreement, the following terms shall have the following meanings:     “Account Debtor” shall mean each Person who is obligated on a Receivable or anySupporting Obligation related thereto.     “Accounts” shall mean all “accounts” as defined in Article 9 of the UCC, includingHealth-Care Insurance Receivables.
 

 
     “Additional Grantors” shall have the meaning assigned in Section 5.2.     “Agreement” shall have the meaning set forth in the preamble.     “Annual Reporting Date” shall mean the date on which annual financial statements aredelivered by the Company pursuant to Section 5.1(a) of the Credit Agreement.     “Assigned Agreements” shall mean all agreements and contracts to which such Grantor isa party as of the date hereof, or to which such Grantor becomes a party after the date hereof,including, without limitation, each Material Contract, as each such agreement may be amended,supplemented or otherwise modified from time to time.     “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”,as now and hereafter in effect, or any successor statute.     “Chattel Paper” shall mean all “chattel paper” as defined in Article 9 of the UCC,including, without limitation, “electronic chattel paper” or “tangible chattel paper”, as each termis defined in Article 9 of the UCC.     “Collateral” shall have the meaning assigned in Section 2.1.     “Collateral Account” shall mean any account established by the Collateral Agent.     “Collateral Agent” shall have the meaning set forth in the preamble.     “Collateral Records” shall mean books, records, ledger cards, files, correspondence,customer lists, blueprints, technical specifications, manuals, computer software, computerprintouts, tapes, disks and related data processing software and similar items that at any timeevidence or contain information relating to any of the Collateral or are otherwise necessary orhelpful in the collection thereof or realization thereupon.     “Collateral Support” shall mean all property (real or personal) assigned, hypothecatedor otherwise securing any Collateral and shall include any security agreement or other agreementgranting a lien or security interest in such real or personal property.     “Commercial Tort Claims” shall mean all “commercial tort claims” as defined in Article9 of the UCC asserted by any Grantor, including, without limitation, all commercial tort claimslisted on Schedule 4.8.     “Commodities Accounts” (i) shall mean all “commodity accounts” as defined in Article 9of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule4.4 under the heading “Commodities Accounts”.     “Company” shall have the meaning set forth in the preamble.
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     “Copyright Licenses” shall mean any and all agreements providing for the granting ofany right in or to Copyrights (whether such Grantor is licensee or licensor thereunder) including,without limitation, each agreement referred to in Schedule 4.7(B).     “Copyrights” shall mean all United States and foreign copyrights (including communitydesigns), including but not limited to copyrights in software and databases and all Mask Works (asdefined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and,with respect to any and all of the foregoing: (i) all registrations and applications thereforincluding, without limitation, the registrations and applications referred to in Schedule4.7(A), (ii) all extensions and renewals thereof, (iii) all rights corresponding theretothroughout the world, (iv) all rights to sue for past, present and future infringements thereof,and (v) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income,payments, claims, damages and proceeds of suit.     “Credit Agreement” shall have the meaning set forth in the recitals.     “Deposit Accounts” (i) shall mean all “deposit accounts” as defined in Article 9 ofthe UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule4.4 under the heading “Deposit Accounts”.     “Documents” shall mean all “documents” as defined in Article 9 of the UCC.     “Equipment” shall mean: (i) all “equipment” as defined in Article 9 of the UCC, (ii)all machinery, manufacturing equipment, data processing equipment, computers, office equipment,furnishings, furniture, appliances, fixtures and tools (in each case, regardless of whethercharacterized as equipment under the UCC) and (iii) all accessions or additions thereto, all partsthereof, whether or not at any time of determination incorporated or installed therein or attachedthereto, and all replacements therefor, wherever located, now or hereafter existing, including anyfixtures.     “General Intangibles” (i) shall mean all “general intangibles” as defined in Article 9of the UCC, including “payment intangibles” as defined in Article 9 of the UCC and (ii) shallinclude, without limitation, all Hedge Agreements, all tax refunds, all licenses, permits,concessions and authorizations, all Assigned Agreements and all Intellectual Property (in eachcase, regardless of whether characterized as general intangibles under the UCC).     “Goods” (i) shall mean all “goods” as defined in Article 9 of the UCC and (ii) shallinclude, without limitation, all Inventory and Equipment (in each case, regardless of whethercharacterized as goods under the UCC).     “Grantors” shall have the meaning set forth in the preamble.     “Health-Care Insurance Receivable” shall mean all “health-care-insurance receivable”as defined in Article 9 of the UCC.     “Instruments” shall mean all “instruments” as defined in Article 9 of the UCC.
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     “Insurance” shall mean (i) all insurance policies covering any or all of theCollateral (regardless of whether the Collateral Agent is the loss payee thereof) and (ii) any keyman life insurance policies.     “Intellectual Property” shall mean, collectively, the Copyrights, the CopyrightLicenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the TradeSecrets, and the Trade Secret Licenses.     “Inventory” shall mean (i) all “inventory” as defined in Article 9 of the UCC and (ii)all goods held for sale or lease or to be furnished under contracts of service or so leased orfurnished, all raw materials, work in process, finished goods, and materials used or consumed inthe manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of suchinventory or otherwise used or consumed in any Grantor’s business; all goods in which any Grantorhas an interest in mass or a joint or other interest or right of any kind; and all goods which arereturned to or repossessed by any Grantor, all computer programs embedded in any goods and allaccessions thereto and products thereof (in each case, regardless of whether characterized asinventory under the UCC).     “Investment Accounts” shall mean the Collateral Account, Securities Accounts,Commodities Accounts and Deposit Accounts.     “Investment Related Property” shall mean: (i) all “investment property” (as such termis defined in Article 9 of the UCC) and (ii) all of the following (regardless of whether classifiedas investment property under the UCC): all Pledged Equity Interests, Pledged Debt, the InvestmentAccounts and certificates of deposit.     “Lender” shall have the meaning set forth in the recitals.     “Letter of Credit Right” shall mean “letter-of-credit right” as defined in Article 9of the UCC.     “Lien” shall mean (i) any lien, mortgage, pledge, assignment, security interest,charge or encumbrance of any kind (including any agreement to give any of the foregoing, anyconditional sale or other title retention agreement, and any lease in the nature thereof) and anyoption, trust or other preferential arrangement having the practical effect of any of the foregoingand (ii) in the case of Pledged Equity Interests, any purchase option, call or similar right of athird party with respect to such Pledged Equity Interests.     “Material Receivables” is defined in Section 4.3(b)(iii) hereof.     “Money” shall mean “money” as defined in the UCC.     “Patent Licenses” shall mean all agreements providing for the granting of any right inor to Patents (whether such Grantor is licensee or licensor thereunder) including, withoutlimitation, each agreement referred to in Schedule 4.7(D).
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     “Patents” shall mean all United States and foreign patents and certificates ofinvention, or similar industrial property rights, and applications for any of the foregoing,including, but not limited to: (i) each patent and patent application referred to in Schedule4.7(C) hereto, (ii) all reissues, divisions, continuations, continuations-in-part, extensions,renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world,(iv) all inventions and improvements described therein, (v) all rights to sue for past, present andfuture infringements thereof, (vi) all licenses, claims, damages, and proceeds of suit arisingtherefrom, and (vii) all Proceeds of the foregoing, including, without limitation, licenses,royalties, income, payments, claims, damages, and proceeds of suit.     “Permitted Sale” shall mean those sales, transfers or assignments permitted by theCredit Agreement.     “Pledge Supplement” shall mean any supplement to this agreement in substantially theform of Exhibit A.     “Pledged Debt” shall mean all Indebtedness owed to such Grantor, including, withoutlimitation, all Indebtedness described on Schedule 4.4(A) under the heading “Pledged Debt”,issued by the obligors named therein, the instruments evidencing such Indebtedness, and allinterest, cash, instruments and other property or proceeds from time to time received, receivableor otherwise distributed in respect of or in exchange for any or all of such Indebtedness.     “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests,Pledged Partnership Interests and Pledged Trust Interests.     “Pledged LLC Interests” shall mean (as limited by Section 2.2(b) hereof) all interestsin any limited liability company owned by a Grantor, including, without limitation, all limitedliability company interests listed on Schedule 4.4(A) under the heading “Pledged LLCInterests” and the certificates, if any, representing such limited liability company interests andany interest of such Grantor on the books and records of such limited liability company or on thebooks and records of any securities intermediary pertaining to such interest and all dividends,distributions, cash, warrants, rights, options, instruments, securities and other property orproceeds from time to time received, receivable or otherwise distributed in respect of or inexchange for any or all of such limited liability company interests.     “Pledged Partnership Interests” shall mean (as limited by Section 2.2(b) hereof) allinterests in any general partnership, limited partnership, limited liability partnership or otherpartnership owned by a Grantor, including, without limitation, all partnership interests listed onSchedule 4.4(A) under the heading “Pledged Partnership Interests” and the certificates, ifany, representing such partnership interests and any interest of such Grantor on the books andrecords of such partnership or on the books and records of any securities intermediary pertainingto such interest and all dividends, distributions, cash, warrants, rights, options, instruments,securities and other property or proceeds from time to time received, receivable or otherwisedistributed in respect of or in exchange for any or all of such partnership interests.
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     “Pledged Stock” shall mean (as limited by Section 2.2(b) hereof) all shares of CapitalStock owned by such Grantor, including, without limitation, all shares of Capital Stock describedon Schedule 4.4(A) under the heading “Pledged Stock”, and the certificates, if any,representing such shares and any interest of such Grantor in the entries on the books of the issuerof such shares or on the books of any securities intermediary pertaining to such shares, and alldividends, distributions, cash, warrants, rights, options, instruments, securities and otherproperty or proceeds from time to time received, receivable or otherwise distributed in respect ofor in exchange for any or all of such shares.     “Pledged Trust Interests” shall mean (as limited by Section 2.2(b) hereof) allinterests in a Delaware business trust or other trust including, without limitation, all trustinterests listed on Schedule 4.4(A) under the heading “Pledged Trust Interests” and thecertificates, if any, representing such trust interests and any interest of such Grantor on thebooks and records of such trust or on the books and records of any securities intermediarypertaining to such interest and all dividends, distributions, cash, warrants, rights, options,instruments, securities and other property or proceeds from time to time received, receivable orotherwise distributed in respect of or in exchange for any or all of such trust interests.     “Proceeds” shall mean: (i) all “proceeds” as defined in Article 9 of the UCC, (ii)payments or distributions made with respect to any Investment Related Property and (iii) whateveris receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwisedisposed of, whether such disposition is voluntary or involuntary.     “Quarterly Reporting Date” shall mean the date on which quarterly financial statementsare delivered by the Company pursuant to Section 5.1(b) of the Credit Agreement.     “Receivables” shall mean all rights to payment, whether or not earned by performance,for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or servicesrendered or to be rendered, including, without limitation all such rights constituting or evidencedby any Account, Chattel Paper, Instrument, General Intangible or Investment Related Property,together with all of Grantor’s rights, if any, in any goods or other property giving rise to suchright to payment and all Collateral Support and Supporting Obligations related thereto and allReceivables Records.     “Receivables Records” shall mean (i) all original copies of all documents, instrumentsor other writings or electronic records or other Records evidencing the Receivables, (ii) allbooks, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and otherpapers relating to Receivables, including, without limitation, all tapes, cards, computer tapes,computer discs, computer runs, record keeping systems and other papers and documents relating tothe Receivables, whether in the possession or under the control of Grantor or any computer bureauor agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing offinancing statements and the registration of other instruments in connection therewith, andamendments, supplements or other modifications thereto, notices to other creditors or securedparties, and certificates, acknowledgments, or other writings, including, without limitation, liensearch reports, from filing or other registration officers, (iv) all credit information, reportsand
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memoranda relating thereto and (v) all other written or nonwritten forms of informationrelated in any way to the foregoing or any Receivable.     “Record” shall have the meaning specified in Article 9 of the UCC.     “Secured Obligations” shall have the meaning assigned in Section 3.1.     “Secured Parties” shall mean the Lenders (including Canadian Lenders), the Agents andthe Lender Counterparties and shall include, without limitation, all former Lenders, Agents andLender Counterparties to the extent that any Obligations owing to such Persons were incurred whilesuch Persons were Lenders, Agents or Lender Counterparties and such Obligations have not been paidor satisfied in full.     “Securities” shall mean any stock, shares, partnership interests, membership orlimited liability company interests, voting trust certificates, certificates of interest orparticipation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures,notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated orotherwise, or in general any instruments commonly known as “securities” or any certificates ofinterest, shares or participations in temporary or interim certificates for the purchase oracquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.     “Securities Accounts” (i) shall mean all “securities accounts” as defined in Article 8of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule4.4(A) under the heading “Securities Accounts”.     “Supporting Obligation” shall mean all “supporting obligations” as defined in Article9 of the UCC.     “Tax Code” shall mean the United States Internal Revenue Code of 1986, as amended fromtime to time.     “Trademark Licenses” shall mean any and all agreements providing for the granting ofany right in or to Trademarks (whether such Grantor is licensee or licensor thereunder) including,without limitation, each agreement referred to in Schedule 4.7(F).     “Trademarks” shall mean all United States and foreign trademarks, trade names,corporate names, company names, business names, fictitious business names, Internet domain names,service marks, certification marks, collective marks, logos, elements of package or trade dress ofgoods or services, other source or business identifiers, designs and general intangibles of a likenature, all registrations and applications for any of the foregoing, including, but not limited to:(i) the registrations and applications referred to in Schedule 4.7(E), (ii) all extensionsor renewals of any of the foregoing, (iii) all of the goodwill of the business connected with theuse of and symbolized by the foregoing, (iv) the right to sue for past, present and futureinfringement or dilution of any of the foregoing or for any injury to goodwill, and (v) allProceeds of the foregoing, including, without limitation, licenses, royalties, income, payments,claims, damages, and proceeds of suit.
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     “Trade Secret Licenses” shall mean any and all agreements providing for the grantingof any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder)including, without limitation, each agreement referred to in Schedule 4.7(G).     “Trade Secrets” shall mean all trade secrets and all other confidential or proprietaryinformation and know-how whether or not such Trade Secret has been reduced to a writing or othertangible form, including all documents and things embodying, incorporating, or referring in any wayto such Trade Secret, including but not limited to: (i) the right to sue for past, present andfuture misappropriation or other violation of any Trade Secret, and (ii) all Proceeds of theforegoing, including, without limitation, licenses, royalties, income, payments, claims, damages,and proceeds of suit.     “UCC” shall mean the Uniform Commercial Code as in effect from time to time in theState of New York or, when the context implies, the Uniform Commercial Code as in effect from timeto time in any other applicable jurisdiction.     “United States” shall mean the United States of America.     **1.2****Definitions; Interpretation**     All capitalized terms used herein (including the preamble and recitals hereto) and nototherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement or, ifnot defined therein, in the UCC. References to “Sections,” “Exhibits” and “Schedules” shall be toSections, Exhibits and Schedules, as the case may be, of this Agreement unless otherwisespecifically provided. Section headings in this Agreement are included herein for convenience ofreference only and shall not constitute a part of this Agreement for any other purpose or be givenany substantive effect. Any of the terms defined herein may, unless the context otherwiserequires, be used in the singular or the plural, depending on the reference. The use herein of theword “include” or “including”, when following any general statement, term or matter, shall not beconstrued to limit such statement, term or matter to the specific items or matters set forthimmediately following such word or to similar items or matters, whether or not nonlimiting language(such as “without limitation” or “but not limited to” or words of similar import) is used withreference thereto, but rather shall be deemed to refer to all other items or matters that fallwithin the broadest possible scope of such general statement, term or matter. If any conflict orinconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement shallgovern. To the extent any Grantor is permitted to dispose of the Collateral under the CreditAgreement, no notice or consent shall be required hereunder. All references herein to provisionsof the UCC shall include all successor provisions under any subsequent version or amendment to anyArticle of the UCC.     **1.3****Schedules**     References to any Schedules hereunder shall refer to the Schedules as attached to thisAgreement on the Closing Date as well as to any amendment, supplements or modifications to theinformation contained in such Schedules, including but not limited to, delivery of written
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notice pursuant to Section 5.01(n) of the Credit Agreement and delivery of the annualcollateral verification pursuant to Section 5.1(o) of the Credit Agreement.**SECTION 2****GRANT OF SECURITY****2.1****Grant of Security****.**     Each Grantor hereby grants to the Collateral Agent a security interest in and continuing lienon all of such Grantor’s right, title and interest in, to and under all personal property of suchGrantor, including, but not limited to the following, in each case whether now owned or existing orhereafter acquired or arising and wherever located (all of which being hereinafter collectivelyreferred to as the “Collateral”): (a) Accounts;  (b) Chattel Paper (including Electronic Chattel Paper);  (c) Commercial Tort Claims;  (d) Documents;  (e) Fixtures;  (f) General Intangibles (including Payment Intangibles);  (g) Goods (including Inventory and Equipment);  (h) Instruments;  (i) Insurance;  (j) Intellectual Property;  (k) Investment Related Property;  (l) Letter of Credit Rights;  (m) Money;  (n) Receivables and Receivable Records;  (o) Software;
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     (p) to the extent not otherwise included above, all Collateral Records, CollateralSupport and Supporting Obligations relating to any of the foregoing; and     (q) to the extent not otherwise included above, all Proceeds, products, Accessions,rents and profits of or in respect of any of the foregoing.     **2.2****Certain Limited Exclusions****.**     Notwithstanding anything herein to the contrary, in no event shall the security interestgranted under Section 2.1 hereof attach to (a) any Equipment that is subject to a purchase moneylien or capital lease permitted under the Credit Agreement to the extent the documents relating tosuch purchase money lien or capital lease would not permit such Equipment to be subject to thesecurity interests created hereby or (b) any property for so long as the grant of such securityinterest (i) is prohibited by any applicable law of any Governmental Authority, or (ii) willconstitute or result in the abandonment, invalidation, unenforceability, breach or terminationpursuant to the terms of, or a default under, any lease, license, contract or other agreementevidencing or giving rise to such property or, in the case of any Investment Related Property,applicable shareholder or similar agreement; provided, however, that such securityinterest shall attach immediately at such time as the condition or term causing such abandonment,invalidation, unenforceability, breach, termination or default shall be rendered ineffective (byoperation of the UCC or otherwise) or remedied, and to the extent severable, shall attachimmediately to any portion of such lease, license, contract or other agreement or shareholder orsimilar agreement that does not result in any of the consequences specified in (i) or (ii) above;or (b) with respect to Obligations of the U.S. Credit Parties, in any of the outstanding CapitalStock of a Foreign Subsidiary in excess of 65% of all classes of Capital Stock of such ForeignSubsidiary entitled to vote.     Notwithstanding anything contained herein to the contrary, the Grantors shall not be requiredto take any actions with respect to the property excluded pursuant to this Section 2.2 and none ofthe representations, warranties and covenants contained herein shall be deemed to apply to any suchproperty.**SECTION 3****SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE**     **3.1****Security for Obligations****.**     This Agreement secures, and the Collateral is collateral security for, the prompt and completepayment or performance in full when due, whether at stated maturity, by required prepayment,declaration, acceleration, demand or otherwise (including the payment of amounts that would becomedue but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11U.S.C. §362(a) (and any successor provision thereof)), of all Obligations with respect to everyGrantor (the “Secured Obligations”).
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**3.2****Continuing Liability Under Collateral****.**     Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for allobligations under the Collateral and nothing contained herein is intended or shall be a delegationof duties to the Collateral Agent or any Secured Party, (ii) each Grantor shall remain liable undereach of the agreements included in the Collateral, including, without limitation, any agreementsrelating to Pledged Partnership Interests or Pledged LLC Interests, to perform all of theobligations undertaken by it thereunder all in accordance with and pursuant to the terms andprovisions thereof and neither the Collateral Agent nor any Secured Party shall have any obligationor liability under any of such agreements by reason of or arising out of this Agreement or anyother document related thereto nor shall the Collateral Agent nor any Secured Party have anyobligation to make any inquiry as to the nature or sufficiency of any payment received by it orhave any obligation to take any action to collect or enforce any rights under any agreementincluded in the Collateral, including, without limitation, any agreements relating to PledgedPartnership Interests or Pledged LLC Interests, and (iii) the exercise by the Collateral Agent ofany of its rights hereunder shall not release any Grantor from any of its duties or obligationsunder the contracts and agreements included in the Collateral.**SECTION 4****REPRESENTATIONS AND WARRANTIES AND COVENANTS**     **4.1****Generally****.**     (a) Representations and Warranties. Each Grantor hereby represents andwarrants, on the Closing Date and (x) with respect to clauses (i) and (x) below, on eachCredit Date, and (y) with respect to all other clauses below, on each Annual Reporting Datethat:     (i) it owns the Collateral purported to be owned by it or otherwise has therights it purports to have in each item of Collateral free and clear of any and allLiens, rights or claims of all other Persons, including, without limitation, liensarising as a result of such Grantor becoming bound (as a result of merger orotherwise) as debtor under a security agreement entered into by another Person,other than Permitted Liens;     (ii) it has indicated on Schedule 4.1(A): (w) the type of organizationof such Grantor, (x) the jurisdiction of organization of such Grantor, (y) itsorganizational identification number, if any and (z) the jurisdiction where thechief executive office or its sole place of business is (or the principal residenceif such Grantor is a natural person), and for the one-year period preceding the datehereof has been, located;     (iii) the full legal name of such Grantor is as set forth on Schedule4.1(A) and it has not done in the five (5) years prior to the Closing Date,
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business under any other name except for those names set forth on Schedule4.1(B);     (iv) except as provided on Schedule 4.1(C), it has not changed itsname, jurisdiction of organization, chief executive office or sole place of business(or principal residence if such Grantor is a natural person) or its corporatestructure in any way (e.g., by merger, consolidation, change in corporate form orotherwise) within the five (5) years prior to the Closing Date;     (v) it has not within the five (5) years prior to the Closing Date become bound(whether as a result of merger or otherwise) as debtor under a security agreemententered into by another Person, which has not heretofore been terminated other thanthe agreements identified on Schedule 4.1(D) hereof;     (vi) (u) upon the filing of all UCC financing statements naming each Grantor as“debtor” and the Collateral Agent as “secured party” and describing the Collateralin the filing offices set forth opposite such Grantor’s name on Schedule 4.01(E)hereof and other filings delivered by each Grantor, (v) upon delivery of allInstruments, Chattel Paper and certificated Pledged Equity Interests and PledgedDebt, (w) upon sufficient identification of Commercial Tort Claims, (x) uponexecution of a control agreement establishing the Collateral Agent’s “control”(within the meaning of Section 9-806, 9-106 or 9-104 of the UCC, as applicable) withrespect to any Investment Account and, to the extent required by the UCC, anyuncertificated Pledged Equity Interest, (y) upon consent of the issuer with respectto Letter of Credit Rights, and (z) upon recordation of the security interestsgranted hereunder in Patents, Trademarks and Copyrights in the applicableintellectual property registries, including but not limited to the United StatesPatent and Trademark Office and the United States Copyright Office, the securityinterests granted to the Collateral Agent hereunder constitute valid and perfectedfirst priority Liens (subject in the case of priority only to Permitted Liens andthe rights of the United States government (including any agency or departmentthereof) with respect to United States government Receivables) on all of theCollateral subject to such grant;     (vii) [reserved]     (viii) other than the financing statements filed in favor of the CollateralAgent, no effective UCC financing statement, fixture filing or other instrumentsimilar in effect under any applicable law covering all or any part of theCollateral is on file in any filing or recording office except for (x) financingstatements for which proper termination statements have been delivered to theCollateral Agent for filing and (y) financing statements filed in connection withPermitted Liens;     (ix) other than the financing statements to be filed in favor of the CollateralAgent or any other actions, filing or notices to be consummated after the ClosingDate pursuant to Section 5.14 of the Credit Agreement with respect to
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the Collateral, no authorization, approval or other action by, and no notice toor filing with, any Governmental Authority or regulatory body is required for either(i) the pledge or grant by any Grantor of the Liens purported to be created in favorof the Collateral Agent hereunder or (ii) the exercise by Collateral Agent of anyrights or remedies in respect of any Collateral (whether specifically granted orcreated hereunder or created or provided for by applicable law), except as may berequired, in connection with the disposition of any Investment Related Property, bylaws generally affecting the offering and sale of Securities;(x) all information supplied by any Grantor with respect to any of theCollateral (in each case taken as a whole with respect to any particular Collateral)is accurate and complete in all material respects;(xi) none of the Collateral constitutes, or is the Proceeds of, “farm products”(as defined in the UCC);(xii) it does not own any “as extracted collateral” (as defined in the UCC) orany timber to be cut; and(xiii) such Grantor has been duly organized as an entity of the type as setforth opposite such Grantor’s name on Schedule 4.1(A) solely under the lawsof the jurisdiction as set forth opposite such Grantor’s name on Schedule4.1(A) and remains duly existing as such. Such Grantor has not filed anycertificates of domestication, transfer or continuance in any other jurisdiction.     Notwithstanding anything herein to the contrary, all representations and warranties containedin this Agreement to be made by a Grantor on any Annual Reporting Date shall be deemed for purposesof Section 3.2(a)(iii) of the Credit Agreement as if made on the most recent Annual Reporting Date(or if no Annual Reporting Date has occurred, then as of the Closing Date) and shall not be broughtdown and made as of any Credit Date to the extent such Credit Date is not the Closing Date or anAnnual Reporting Date.     (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that:     (i) except for the security interest created by this Agreement, it shall notcreate or suffer to exist any Lien upon or with respect to any of the Collateral,except Permitted Liens, and such Grantor shall defend the Collateral against allPersons at any time claiming any interest therein;     (ii) it shall not produce, use or permit to its knowledge any Collateral to beused in violation of any provision of this Agreement or in any material respectunlawfully or in violation of any applicable statute, regulation or ordinance or anypolicy of insurance covering the Collateral;
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     (iii) it shall not change such Grantor’s name, identity, corporate structure(e.g., by merger, consolidation, change in corporate form or otherwise), type oforganization or jurisdiction of organization or unless it shall have (a) notifiedthe Collateral Agent in writing, by executing and delivering to the Collateral Agenta completed Pledge Supplement, substantially in the form of Exhibit Aattached hereto, together with all Supplements to Schedules thereto, at leastfifteen (15) days prior to any such change or establishment (unless the CollateralAgent consents to a shorter period or notice after the fact), identifying such newproposed name, identity, corporate structure, jurisdiction of organization andproviding such other information in connection therewith as the Collateral Agent mayreasonably request and (b) taken all actions reasonably requested by the CollateralAgent to maintain the continuous validity, perfection and the same or betterpriority of the Collateral Agent’s security interest in the Collateral intended tobe granted and agreed to hereby;     (iv) if the Collateral Agent or any Secured Party gives value to enable Grantorto acquire rights in or the use of any Collateral, it shall use such value for suchpurposes and such Grantor further agrees that repayment of any Obligation shallapply on a “first-in, first-out” basis so that the portion of the value used toacquire rights in any Collateral shall be paid in the chronological order suchGrantor acquired rights therein;     (v) it shall not take or permit any action which could reasonably be expectedto materially impair the Collateral Agent’s rights in the Collateral other thanPermitted Sales and the granting of Permitted Liens; and     (vi) it shall not sell, transfer or assign (by operation of law or otherwise)any Collateral except as Permitted Sales and the granting of Permitted Liens.     **4.2****Equipment and Inventory****.**     (a) Representations and Warranties. Each Grantor represents and warrants, onthe Closing Date and on each Annual Reporting Date, that:     (i) substantially all material Equipment and Inventory included in theCollateral was kept for five (5) years prior to the Closing Date only at one or moreof the locations specified in Schedule 4.2 or in the possession of salesmen,processors or repairmen in transit or in the ordinary course of business; providedthat with respect to consignee arrangements with the Grantors’ customers, theGrantors shall specify locations by client (not by location).     (b) Covenants and Agreements. Each Grantor covenants and agrees that:     (i) it shall (A) notify the Collateral Agent in writing, contemporaneously withthe delivery of the annual financial statements under
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Section 5.1(c) of the Credit Agreement and at such other times as theCollateral Agent may reasonably request by executing and delivering to theCollateral Agent the annual collateral verification required by Section 5.1(o) ofthe Credit Agreement or an amendment or supplement to Schedule 4.2, asapplicable, of any Document evidencing any Equipment and Inventory and (B) take allactions necessary to maintain the continuous validity, perfection and the same orbetter priority of the Collateral Agent’s security interest in the Collateralintended to be granted and agreed to hereby, or to enable the Collateral Agent toexercise and enforce its rights and remedies hereunder, with respect to suchDocument, Equipment and Inventory;     (ii) it shall keep correct and accurate records of the Inventory, as iscustomarily maintained under similar circumstances by Persons of establishedreputation engaged in similar business, and in any event in conformity with GAAP;     (iii) it shall not deliver any Document evidencing any Equipment and Inventoryto any Person other than the issuer of such Document to claim the Goods evidencedtherefor or the Collateral Agent;     (iv) if any Equipment or Inventory (other than Inventory covered by clause(viii)) with a value in excess of $600,000 individually or $5,000,000 in theaggregate is in possession or control of any third party for a period of more than30 days, each Grantor shall notify the Collateral Agent thereof no later than thenext Quarterly Reporting Date and thereafter, upon reasonable request by theCollateral Agent, each Grantor shall join with the Collateral Agent in notifying thethird party of the Collateral Agent’s security interest and use commerciallyreasonable efforts to obtain an acknowledgment from the third party that it isholding the Equipment and Inventory for the benefit of the Collateral Agent;provided that such notification and acknowledgment shall not be required to theextent prohibited by a bona fide Contractual Obligation of such Grantor and suchContractual Obligation was not entered into in contemplation of these requirements;     (v) with respect to any item of Equipment in excess of $600,000 individually or$5,000,000 in the aggregate which is covered by a certificate of title under astatute of any jurisdiction under the law of which indication of a security intereston such certificate is required as a condition of perfection thereof, upon thereasonable request of the Collateral Agent, (A) provide information with respect toany such Equipment, (B) execute and file with the registrar of motor vehicles orother appropriate authority in such jurisdiction an application or other documentrequesting the notation or other indication of the security interest createdhereunder on such certificate of title, and (C) deliver to the Collateral Agentcopies of all such applications or other documents filed during such calendarquarter and copies of all such certificates of title issued during such
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calendar quarter indicating the security interest created hereunder in theitems of Equipment covered thereby;     (vi) it shall notify the Collateral Agent no later than the next QuarterlyReporting Date of any Inventory or Equipment in excess of $600,000 individually or$5,000,000 in the aggregate coming in the possession of an issuer of a negotiabledocument (as defined in Section 7-104 of the UCC) therefor;     (vii) any Goods produced by any Grantor included in the Collateral shall beproduced in compliance with the requirements of the Fair Labor Standards Act of1938, as amended; and     (viii) if any Inventory in excess of $10,000,000 in the aggregate with respectto any one customer of a Grantor or $25,000,000 in the aggregate with respect to allcustomers of the Grantors is held by such customer or customers pursuant to aconsignment or sale or return arrangement, promptly notify the Collateral Agent ofsuch arrangement and to the extent requested by the Collateral Agent, take suchactions as are necessary to perfect the Grantor’s Lien on such Inventory.     **4.3****Receivables****.**     (a) Representations and Warranties. Each Grantor represents and warrants, onthe Closing Date and on each Credit Date, that:     (i) each Material Receivable arose from bona fide transactions in the ordinarycourse of business;     (ii) none of the Account Debtors in respect of any Material Receivable is thegovernment of the United States, any agency or instrumentality thereof, any state ormunicipality or any foreign sovereign; and     (iii) no Material Receivable is evidenced by, or constitutes, an Instrument orChattel Paper which has not been delivered to, or otherwise subjected to the controlof, the Collateral Agent to the extent required by, and in accordance with Section4.3(c).     (b) Covenants and Agreements: Each Grantor hereby covenants and agrees that:     (i) it shall keep and maintain at its own cost and expense accurate andcomplete records of the Receivables, as is customarily maintained under similarcircumstances by Persons of established reputation engaged in similar businesses,and in any event in conformity with GAAP;     (ii) [reserved]
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     (iii) other than in the ordinary course of business and except as otherwiseprovided in subsection (iv) below, upon the occurrence and during the continuationof an Event of Default, such Grantor shall not (v) amend, modify, terminate or waiveany provision of any Receivable in excess of $600,000 individually for any invoiceor $5,000,000 in the aggregate for any account (“Material Receivables”) inany manner which could reasonably be expected to have a material adverse effect onthe value of such Material Receivable as Collateral, (w) grant any extension orrenewal of the time of payment of any Material Receivable, (x) compromise or settleany dispute, claim or legal proceeding with respect to any Material Receivable forless than the total unpaid balance thereof, (y) release, wholly or partially, anyPerson liable for the payment thereof, or (z) allow any credit or discount thereon;     (iv) except as otherwise provided in this subsection, each Grantor may continueto collect all amounts due or to become due to such Grantor under the Receivablesand any Supporting Obligation and may exercise each right it may have under anyReceivable any Supporting Obligation or Collateral Support, in each case, at its ownexpense; provided, however, at any time following the occurrence andduring the continuation of an Event of Default, the Collateral Agent may: (1)direct the Account Debtors under any Receivables to make payment of all amounts dueor to become due to such Grantor thereunder directly to the Collateral Agent; (2)notify, or require any Grantor to notify, each Person maintaining a lockbox orsimilar arrangement to which Account Debtors under any Receivables have beendirected to make payment to remit all amounts representing collections on checks andother payment items from time to time sent to or deposited in such lockbox or otherarrangement directly to the Collateral Agent; and (3) enforce, at the expense ofsuch Grantor, collection of any such Receivables and to adjust, settle or compromisethe amount or payment thereof, in the same manner and to the same extent as suchGrantor might have done. If the Collateral Agent notifies any Grantor that it haselected to collect the Receivables in accordance with the preceding sentence, anypayments of Receivables received by such Grantor shall be forthwith promptlydeposited by such Grantor in the exact form received, duly indorsed by such Grantorto the Collateral Agent if required, in the Collateral Account maintained under thesole dominion and control of the Collateral Agent, and until so turned over, allamounts and proceeds (including checks and other instruments) received by suchGrantor in respect of the Receivables, any Supporting Obligation or CollateralSupport shall be received for the benefit of the Collateral Agent hereunder andshall be segregated from other funds of such Grantor and such Grantor shall notadjust, settle or compromise the amount or payment of any Receivable, or releasewholly or partly any Account Debtor or obligor thereof, or allow any credit ordiscount thereon;     (v) except as it shall determine otherwise in the ordinary course of business,it shall use its commercially reasonable efforts to keep in full force and
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effect any Supporting Obligation or Collateral Support relating to any MaterialReceivable; and     (vi) it shall notify the Collateral Agent in writing the next QuarterlyReporting Date following receipt of any Material Receivable in respect of which theAccount Debtor is the government of the United States, any agency or instrumentalitythereof, any state or municipality or any foreign sovereign.     (c) Delivery and Control of Receivables. With respect to any MaterialReceivables that is evidenced by, or constitutes, Chattel Paper or Instruments, each Grantorshall cause each originally executed copy thereof to be delivered to the Collateral Agent(or its agent or designee) appropriately indorsed to the Collateral Agent or indorsed inblank: (i) with respect to any such Receivables in existence on the date hereof, on orprior to the date hereof and (ii) with respect to any such Receivables hereafter arising,such Grantor acquiring rights therein. With respect to any Material Receivables which wouldconstitute “electronic chattel paper” under Article 9 of the UCC, each Grantor shall takeall steps necessary to give the Collateral Agent control over such Material Receivables(within the meaning of Section 9-105 of the UCC): (i) with respect to any such MaterialReceivables in existence on the date hereof, on or prior to the date hereof and (ii) withrespect to any such Receivables hereafter arising, the next Quarterly Reporting Datefollowing such Grantor acquiring rights therein. Any Material Receivable not otherwiserequired to be delivered or subjected to the control of the Collateral Agent in accordancewith this subsection (c) shall be delivered or subjected to such control upon request of theCollateral Agent.     **4.4****Investment Related Property. Investment Related Property Generally****.**     (a) Covenants and Agreements. Each Grantor hereby covenants and agrees that:     (i) in the event it acquires rights in any Investment Related Property afterthe date hereof, it shall deliver to the Collateral Agent, no less frequently thanon an annual basis or as otherwise expressly required by the Credit Agreement, acompleted Pledge Supplement, substantially in the form of Exhibit A attachedhereto, together with all Supplements to Schedules thereto, reflecting such newInvestment Related Property and all other Investment Related Property.Notwithstanding the foregoing, it is understood and agreed that the securityinterest of the Collateral Agent shall attach to all Investment Related Propertyimmediately upon any Grantor’s acquisition of rights therein and shall not beaffected by the failure of any Grantor to deliver a supplement to Schedule4.4 as required hereby;     (ii) except as provided in the next sentence, in the event such Grantorreceives any dividends, interest or distributions on any Investment RelatedProperty, or any securities or other property upon the merger, consolidation,liquidation or dissolution of any issuer of any Investment Related Property, then
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(a) such dividends, interest or distributions and securities or other propertyshall be included in the definition of Collateral without further action and (b)such Grantor shall promptly take all steps reasonably requested by the CollateralAgent to ensure the validity, perfection, priority and, if applicable, control ofthe Collateral Agent over such Investment Related Property (including, withoutlimitation, delivery thereof to the Collateral Agent) and pending any such actionsuch Grantor shall be deemed to hold such dividends, interest, distributions,securities or other property for the benefit of the Collateral Agent and shallsegregate such dividends, distributions, Securities or other property from all otherproperty of such Grantor. Notwithstanding the foregoing, so long as no Event ofDefault shall have occurred and be continuing, the Collateral Agent authorizes eachGrantor to retain all cash dividends and distributions and all payments of interest;     (iii) each Grantor consents to the grant by each other Grantor of a SecurityInterest in all Investment Related Property to the Collateral Agent.     (b) Delivery and Control.     (i) Each Grantor agrees that with respect to any Investment Related Property inwhich it currently has rights it shall comply with the provisions of this Section4.4(b) on or before the Closing Date (or such other time period as specified in theCredit Agreement) and with respect to any Investment Related Property hereafteracquired by such Grantor it shall comply with the provisions of this Section 4.4(b)no later than the next Quarterly Reporting Date after acquiring rights therein, ineach case in form and substance reasonably satisfactory to the Collateral Agent.With respect to any Investment Related Property that is represented by a certificateor that is an “instrument” (other than any Investment Related Property credited to aSecurities Account) it shall cause such certificate or instrument to be delivered tothe Collateral Agent, indorsed in blank by an “effective indorsement” (as defined inSection 8-107 of the UCC), regardless of whether such certificate constitutes a“certificated security” for purposes of the UCC. With respect to any InvestmentRelated Property that is an “uncertificated security” for purposes of the UCC(other than any “uncertificated securities” credited to a Securities Account), itshall cause any issuer of such uncertificated security which is a Subsidiary (otherthan an Immaterial Subsidiary), and shall use commercially reasonable efforts tocause any issuer of such uncertificated security which is not a Subsidiary, uponrequest by the Collateral Agent, execute an agreement substantially in the form ofExhibit B hereto or such other form reasonably acceptable to the CollateralAgent, pursuant to which such issuer agrees to comply with the Collateral Agent’sinstructions with respect to such uncertificated security without further consent bysuch Grantor.
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     (c) Voting and Distributions.     (i) So long as no Event of Default shall have occurred and be continuing and nonotice shall have been given pursuant to clause (ii) below: (1) except as otherwise providedunder the covenants and agreements relating to investmentrelated property in this Agreement or elsewhere herein or in theCredit Agreement, each Grantor shall be entitled to exercise orrefrain from exercising any and all voting and other consensualrights pertaining to the Investment Related Property or any partthereof for any purpose not inconsistent in any material respectwith the terms of this Agreement or the Credit Agreement; itbeing understood, however, that neither the voting by suchGrantor of any Pledged Stock for, or such Grantor’s consent to,the election of directors (or similar governing body) at aregularly scheduled annual or other meeting of stockholders orwith respect to incidental matters at any such meeting, nor suchGrantor’s consent to or approval of any action otherwisepermitted under this Agreement and the Credit Agreement, shallbe deemed inconsistent with the terms of this Agreement or theCredit Agreement within the meaning of this Section4.4(c)(i)(1), and no notice of any such voting or consent needbe given to the Collateral Agent; and  (2) the Collateral Agent shallpromptly execute and deliver (or cause to be executed anddelivered) to each Grantor all proxies, and other instruments assuch Grantor may from time to time reasonably request for thepurpose of enabling such Grantor to exercise the voting andother consensual rights when and to the extent which it isentitled to exercise pursuant to clause (1) above;     (ii) Upon either delivery by any Grantor to the Collateral Agent of writtennotice that an Event of Default has occurred and is continuing, or delivery by theCollateral Agent or the Administrative Agent to Grantor of written notice that theEvent of Default exists: (A) all rights of each Grantor toexercise or refrain from exercising the voting and otherconsensual rights which it would otherwise be entitled toexercise pursuant hereto shall, upon notice to such Grantor bythe Collateral Agent, cease and all such rights shall thereuponbecome vested in the Collateral Agent who shall thereupon havethe sole
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   right to exercise such voting and other consensual rights;and  (B) in order to permit the CollateralAgent to exercise the voting and other consensual rights whichit may be entitled to exercise pursuant hereto and to receiveall dividends and other distributions which it may be entitledto receive hereunder: (1) each Grantor shall promptly executeand deliver (or cause to be executed and delivered) to theCollateral Agent all proxies, dividend payment orders and otherinstruments as the Collateral Agent may from time to timereasonably request and (2) each Grantor acknowledges that theCollateral Agent may utilize the power of attorney set forth inSection 6.1.     (d) Limitation on Foreign Pledges. Notwithstanding anything in this Section 4or any other Section of this Agreement to the contrary, the Obligations of the U.S. CreditParties shall not be secured by, and the Grantors shall not be required to deliver to theCollateral Agent as security for such Obligations, more than 65% of all classes ofoutstanding Capital Stock of a Foreign Subsidiary entitled to vote.     **4.5****Pledged Equity Interests****.**     (a) Representations and Warranties. Each Grantor hereby represents andwarrants, on the Closing Date and (x) with respect to clauses (iii) and (iv) below, on eachCredit Date and (y) with respect to all other clauses below, on each Annual Reporting Date,that:     (i) Schedule 4.4(A) sets forth under the headings “Pledged Stock,“Pledged LLC Interests,” “Pledged Partnership Interests” and “Pledged TrustInterests,” respectively, all of the Pledged Stock, Pledged LLC Interests, PledgedPartnership Interests and Pledged Trust Interests owned by any Grantor and suchPledged Equity Interests constitute the percentage of issued and outstanding sharesof stock, percentage of membership interests, percentage of partnership interests orpercentage of beneficial interest of the respective issuers thereof indicated onsuch Schedule, all of which is true, accurate and complete as of the Closing Date orthereafter, as of the Annual Reporting Date;     (ii) except as set forth on Schedule 4.4(B), it has not acquired anymajority equity interests of another entity or substantially all the assets ofanother entity within the five (5) years prior to the Closing Date;     (iii) it is the record and beneficial owner of the Pledged Equity Interestsfree of all Liens, rights or claims of other Persons other than Permitted Liens andthere are no outstanding warrants, options or other rights to purchase, orshareholder, voting trust or similar agreements outstanding with respect to, or
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property that is convertible into, or that requires the issuance or sale of,any Pledged Equity Interests;     (iv) no material consent of any Person including any other general or limitedpartner, any other member of a limited liability company, any other shareholder orany other trust beneficiary is necessary in connection with the creation, perfectionor first priority status (subject to Permitted Liens) of the security interest ofthe Collateral Agent in any Pledged Equity Interests or the exercise by theCollateral Agent of the voting or other rights provided for in this Agreement or theexercise of remedies in respect thereof; and     (v) except as otherwise set forth in Schedule 4.4 hereto, none of thePledged LLC Interests nor Pledged Partnership Interests issued by any Grantor or anySubsidiary thereof are or represent interests in issuers that: (a) are registered asinvestment companies or (b) are dealt in or traded on securities exchanges ormarkets.     (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that:     (i) other than as permitted under the Credit Agreement, without the priorwritten consent of the Collateral Agent (which shall not be unreasonably withheld),it shall not vote to enable or take any other action to: (a) amend or terminate anypartnership agreement, limited liability company agreement, certificate ofincorporation, by-laws or other organizational documents in any way that adverselyaffects the validity, perfection or priority of the Collateral Agent’s securityinterest except for Permitted Liens and Permitted Sales, (b) permit any issuer ofany Pledged Equity Interest that is a Grantor or a Subsidiary thereof to issue anyadditional stock, partnership interests, limited liability company interests orother equity interests of any nature or to issue securities convertible into orgranting the right of purchase or exchange for any stock or other equity interest ofany nature of such issuer unless such stock or interests is pledged hereunder, (c)permit any issuer of any Pledged Equity Interest that is a Subsidiary to dispose ofall or a material portion of their assets, (d) waive any default under or breach ofany terms of organizational document relating to the issuer of any Pledged EquityInterest or the terms of any Pledged Debt that would individually or in theaggregate cause a Material Adverse Effect, or (e) cause any Subsidiary of Holdingsthat is an issuer of any Pledged Partnership Interests or Pledged LLC Interestswhich are not securities (for purposes of the UCC) on the date hereof to elect orotherwise take any action to cause such Pledged Partnership Interests or Pledged LLCInterests to be treated as securities for purposes of the UCC unless such Grantornotifies the Collateral Agent in writing prior to any such election or action and,in such event, takes all steps reasonably requested by the Collateral Agent toestablish the Collateral Agent’s “control” thereof;
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     (ii) each Grantor consents to the grant by each other Grantor of a securityinterest in all Investment Related Property to the Collateral Agent and, withoutlimiting the foregoing, consents to the transfer of any Pledged Partnership Interestand any Pledged LLC Interest to the Collateral Agent or its nominee following theoccurrence and during the continuance of an Event of Default and to the substitutionof the Collateral Agent or its nominee as a partner in any partnership or as amember in any limited liability company with all the rights and powers relatedthereto; and     (iii) it shall notify the Collateral Agent in writing, by executing anddelivering to the Collateral Agent a completed Pledge Supplement, substantially inthe form of Exhibit A attached hereto, together with all Supplements toSchedules thereto, promptly if any issuer of Pledged LLC Interests or PledgedPartnership Interests that is a Grantor or a Subsidiary thereof has not opted forsuch Pledged LLC Interests or Pledged Partnership Interests to be treated assecurities under the uniform commercial code of any jurisdiction.     **4.6****Pledged Debt****.**     (a) Representations and Warranties. Each Grantor hereby represents andwarrants, on the Closing Date and each Annual Reporting Date, that:     (i) Schedule 4.4 sets forth under the heading “Pledged Debt” all of thePledged Debt owned by any Grantor as of the Closing Date or thereafter, as of theAnnual Reporting Date and all of such Pledged Debt has been duly authorized,authenticated or issued, and delivered and is the legal, valid and bindingobligation of the issuers thereof and is not in default and constitutes all of theissued and outstanding inter-company Indebtedness.     **4.7****Investment Accounts****.**     (a) Representations and Warranties. Each Grantor hereby represents andwarrants, on the Closing Date and (x) with respect to clauses (ii), (iv) and (v) below, oneach Credit Date and (y) with respect to all other clauses below, on each Annual ReportingDate, that:     (i) Schedule 4.4 hereto sets forth under the headings “SecuritiesAccounts” and “Commodities Accounts,” respectively, all of the Securities Accountsand Commodities Accounts in which each Grantor has an interest as of the ClosingDate or thereafter, as of the Annual Reporting Date;     (ii) each Grantor is the sole entitlement holder of each such SecuritiesAccount and Commodity Account, and such Grantor has not consented to, and is nototherwise aware of, any Person (other than the Collateral Agent pursuant thereto)having “control” (within the meanings of Sections 8-106 and 9-106 of the
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UCC) over, or any other interest in, any such Securities Account or CommodityAccount or securities or other property credited thereto;     (iii) Schedule 4.4 hereto sets forth under the headings “DepositAccounts” all of the Deposit Accounts in which each Grantor has an interest as ofthe Closing Date or thereafter, as of the Annual Reporting Date;     (iv) each Grantor is the sole account holder of each such Deposit Account andsuch Grantor has not consented to, and is not otherwise aware of, any Person (otherthan the Collateral Agent pursuant thereto) having either sole dominion and control(within the meaning of common law) or “control” (within the meanings of Section9-104 of the UCC) over, or any other interest in, any such Deposit Account or anymoney or other property deposited therein; and     (v) unless otherwise in accordance with the Credit Agreement, each Grantor hastaken all actions reasonably requested by the Collateral Agent, including thosespecified in Section 4.4.4(c), to: (a) establish the Collateral Agent’s “control”(within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion of theInvestment Related Property constituting Certificated Securities, UncertificatedSecurities, Securities Accounts, Securities Entitlements or Commodities Accounts(each as defined in the UCC); (b) establish the Collateral Agent’s “control” (withinthe meaning of Section 9-104 of the UCC) over all Deposit Accounts; and (c) deliverall Instruments to the Collateral Agent.     (b) Delivery and Control.     (i) With respect to any Investment Related Property consisting of SecuritiesAccounts or Securities Entitlements, it shall, to the extent required under theCredit Agreement, within sixty (60) days of the request by the Collateral Agent (orsuch extended period of time as agreed to by the Collateral Agent), cause thesecurities intermediary maintaining such Securities Account or SecuritiesEntitlement to enter into an agreement substantially in the form of ExhibitC hereto or such other form reasonably acceptable to the Collateral Agent,pursuant to which it shall agree to comply with the Collateral Agent’s “entitlementorders” without further consent by such Grantor. With respect to any InvestmentRelated Property that is a “Deposit Account,” it shall, to the extent required underthe Credit Agreement, within sixty (60) days of the request by the Collateral Agent(or such extended period of time as agreed to by the Collateral Agent), cause thedepositary institution maintaining such account to enter into an agreementsubstantially in the form of Exhibit D hereto or such other form reasonablyacceptable to the Collateral Agent, pursuant to which the Collateral Agent shallhave both sole dominion and control over such Deposit Account (within the meaning ofthe common law) and “control” (within the meaning of Section 9-104 of the UCC) oversuch Deposit Account. Unless otherwise in accordance with the Credit Agreement,each Grantor shall have entered into such control agreement or agreements, to theextent required under the Credit
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Agreement and upon request by the Collateral Agent, with respect to: (i) anySecurities Accounts, Securities Entitlements or Deposit Accounts that exist on theClosing Date, as of or prior to the Closing Date and (ii) any Securities Accounts,Securities Entitlements or Deposit Accounts that are created or acquired after theClosing Date, no later than the Quarterly Reporting Date following the deposit ortransfer of any such Securities Entitlements or funds, whether constituting moneysor investments, into such Securities Accounts or Deposit Accounts.     In addition to the foregoing, if any issuer of any Investment Related Property is located in ajurisdiction outside of the United States, if requested by the Collateral Agent, each Grantor shalltake such additional actions, including, without limitation, causing the issuer to register thepledge on its books and records or making such filings or recordings, in each case as may bereasonably requested by the Collateral Agent, under the laws of such issuer’s jurisdiction toinsure the validity, perfection and priority of the security interest of the Collateral Agent.Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shallhave the right, without notice to any Grantor, to transfer all or any portion of the InvestmentRelated Property to its name or the name of its nominee or agent. In addition, the CollateralAgent shall have the right at any time, without notice to any Grantor, to exchange any certificatesor instruments representing any Investment Related Property for certificates or instruments ofsmaller or larger denominations.     **4.8****Material Contracts****.**     Each Grantor hereby covenants and agrees that, in addition to any rights under the Section ofthis Agreement relating to Receivables, upon the occurrence and during the continuation of an Eventof Default, the Collateral Agent may at any time notify, or require any Grantor to so notify, thecounterparty on any Material Contract of the security interest of the Collateral Agent therein. Inaddition, after the occurrence and during the continuance of an Event of Default, the CollateralAgent may upon written notice to the applicable Grantor, notify, or require any Grantor to notify,the counterparty to make all payments under the Material Contracts directly to the CollateralAgent; and     **4.9****Letter of Credit Rights****.**     (a) Representations and Warranties. Each Grantor hereby represents andwarrants:     (i) all material letters of credit to which such Grantor has rights, as of theClosing Date and as of each Annual Reporting Date, is listed on Schedule4.6; and     (ii) as of each Credit Date, it has obtained the consent of each issuer of anymaterial letter of credit to the assignment of the proceeds of the letter of creditto the Collateral Agent.
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     (b) Covenants and Agreements. Each Grantor hereby covenants and agrees thatwith respect to any material letter of credit hereafter arising it shall promptly and in anyevent within sixty (60) days (or such extended period of time as agreed to by the CollateralAgent) of its obtaining rights in such material letter of credit rights obtain the consentof the issuer thereof to the assignment of the proceeds of the letter of credit to theCollateral Agent and shall deliver to the Collateral Agent a completed Pledge Supplement,substantially in the form of Exhibit A attached hereto, together with allSupplements to Schedules thereto.     **4.10****Intellectual Property****.**     (a) Representations and Warranties. Except as disclosed in Schedule4.7(H), each Grantor hereby represents and warrants, on the Closing Date and (x) withrespect to clauses (ii) – (ix) below, on each Credit Date and (y) with respect to clauses(i) and (x) below, on each Annual Reporting Date, that:     (i) Schedule 4.7 sets forth a true and complete list of (i) all UnitedStates, state and foreign registrations of and applications for Patents, Trademarks,and Copyrights owned by each Grantor and (ii) all Patent Licenses, TrademarkLicenses, Trade Secret Licenses and Copyright Licenses material to the business ofsuch Grantor as of the Closing Date or thereafter, as of the Annual Reporting Date;     (ii) it is the owner of the right, title, and interest in and to all materialIntellectual Property that it purports to own, and owns or has the valid right touse all other material Intellectual Property, in each case as used in or necessaryto conduct its business, free and clear of all Liens, claims, encumbrances andlicenses, except for Permitted Liens, the licenses set forth on Schedule4.7(B), (D), (F) and (G) and other licenses or sub-licenses entered intoin the ordinary course of business;     (iii) each Grantor has performed all acts and has paid all renewal,maintenance, and other fees and taxes required to maintain each and everyregistration and application of material Intellectual Property in full force andeffect;     (iv) (A) to such Grantor’s knowledge, all material Intellectual Property isvalid and enforceable and (B) no holding, decision, or judgment has been rendered inany action or proceeding before any court or administrative authority challengingthe validity of such Grantor’s right to register, or such Grantor’s rights to own oruse, any material Intellectual Property and no such action or proceeding is pendingor, to such Grantor’s knowledge, threatened;     (v) all registrations and applications for material Copyrights, Patents andTrademarks purported to be owned by any Grantor are standing in the name of eachGrantor, and none of the material Trademarks, Patents, Copyrights or
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Trade Secret Collateral has been licensed by any Grantor to any affiliate orthird party, except as disclosed on Schedule 4.7(B), (D), (F) and (G) as ofthe Closing Date or, with respect to licenses entered into after the Closing Date tothe Collateral Agent on the next Quarterly Reporting Date;     (vi) except as would not have a Material Adverse Effect, each Grantor usesadequate standards of quality in the manufacture, distribution, and sale of allproducts sold and in the provision of all services rendered under or in connectionwith all Trademark Collateral and has taken all action reasonably necessary toinsure that all licensees of the Trademark Collateral owned by such Grantor usesuch adequate standards of quality;     (vii) to such Grantor’s knowledge, the conduct of such Grantor’s business doesnot infringe upon or otherwise violate any trademark, patent, copyright, tradesecret or similar intellectual property right owned or controlled by a third partyin a manner reasonably likely to result in a Material Adverse Effect; no writtenclaim has been received by such Grantor that the use of any Intellectual Propertyowned or used by Grantor (or any of its respective licensees) violates the assertedrights of any third party that could reasonably be expected to result in a MaterialAdverse Effect;     (viii) to each Grantor’s knowledge, no third party is infringing upon orotherwise violating any rights in any Intellectual Property owned or used by suchGrantor, or any of its respective licensees in a manner reasonably likely to resultin a Material Adverse Effect;     (ix) no settlement or consents, covenants not to sue, nonassertion assurances,or releases have been entered into by Grantor or to which Grantor is bound thatadversely effect Grantor’s rights to own or use any Intellectual Property in amanner reasonably likely to result in a Material Adverse Effect; and     (x) except as permitted under the Credit Agreement, each Grantor has not made aprevious assignment, sale, transfer or agreement constituting a present or futureassignment, sale, transfer or agreement of any Intellectual Property disclosed onSchedule 4.7(A), (B), (C), (D), (E), (F) or (G) that has not been terminatedor released. There is no effective financing statement or other document orinstrument now executed, or on file or recorded in any public office, granting asecurity interest in or otherwise encumbering any material part of the IntellectualProperty, other than the financing statements filed in favor of the Collateral Agentor as otherwise disclosed on Schedule 4.7.     (b) Covenants and Agreements. Each Grantor hereby covenants and agrees asfollows:     (i) it shall not do any act or omit to do any commercially unreasonable actwhereby any of the Intellectual Property which in its reasonable judgment is
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material to the business of Grantor may lapse, or become abandoned, dedicatedto the public, or unenforceable, or which would adversely affect the validity,grant, or enforceability of the security interest granted therein;     (ii) it shall not, with respect to any Trademarks which are material to thebusiness of any Grantor, as determined in its reasonable judgment, cease the use ofany of such Trademarks or fail to maintain the level of the quality of products soldand services rendered under any of such Trademark at a level at least substantiallyconsistent with the quality of such products and services as of the date hereof, andeach Grantor shall take all steps reasonably necessary to insure that licensees ofsuch Trademarks use such consistent standards of quality;     (iii) it shall, within sixty (60) days following the creation or acquisition ofany Copyrightable work which is material to the business of Grantor, apply toregister the Copyright in the United States Copyright Office except for works withrespect to which the Grantor has determined with the exercise of its commerciallyreasonable judgment that it shall not so apply;     (iv) it shall promptly notify the Collateral Agent if it knows that any item ofthe Intellectual Property that in its reasonable judgment is material to thebusiness of any Grantor may become (a) abandoned or dedicated to the public orplaced in the public domain, (b) invalid or unenforceable, or (c) subject to anyadverse determination or development (including the institution of proceedings) inany action or proceeding in the United States Patent and Trademark Office, theUnited States Copyright Office, and state registry, any foreign counterpart of theforegoing, or any court, except as would not have a Material Adverse Effect;     (v) it shall take all reasonable steps in the United States Patent andTrademark Office, the United States Copyright Office, any state registry or anyforeign counterpart of the foregoing, to pursue any application and maintain anyregistration of each Trademark, Patent, and Copyright owned by any Grantor andmaterial to its business which is now or shall become included in the IntellectualProperty including, but not limited to, those items on Schedule 4.7(A), (C) and(E) (as each may be amended or supplemented from time to time), except as wouldnot have a Material Adverse Effect;     (vi) in the event that any Intellectual Property owned by or exclusivelylicensed to any Grantor that in its reasonable judgment is material to the businessof such Grantor is, to such Grantor’s knowledge, infringed, misappropriated, ordiluted by a third party, such Grantor shall promptly take all reasonable actions tostop such infringement, misappropriation, or dilution and protect its rights in suchIntellectual Property (except for such works in respect to which such Grantor hasdetermined in the exercise of its commercially reasonable judgment that it shall nottake any action);
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     (vii) On the Quarterly Reporting Date after a filing or registration describedin clause (i) or (ii) takes place, it shall promptly (but in no event more thanthirty (30) days after any Grantor obtains knowledge thereof) report to theCollateral Agent (i) the filing of any application to register any materialIntellectual Property with the United States Patent and Trademark Office, the UnitedStates Copyright Office, or any state registry or foreign counterpart of theforegoing (whether such application is filed by such Grantor or through any agent,employee, licensee, or designee thereof) and (ii) the registration of anyIntellectual Property by any such office, in each case by executing and deliveringto the Collateral Agent a completed Pledge Supplement, substantially in the form ofExhibit A attached hereto, together with all Supplements to Schedulesthereto;     (viii) it shall, promptly upon the reasonable request of the Collateral Agent,execute and deliver to the Collateral Agent any document required to acknowledge,confirm, register, record, or perfect the Collateral Agent’s interest in any part ofthe Intellectual Property, whether now owned or hereafter acquired;     (ix) except with the prior consent of the Collateral Agent (not to beunreasonably withheld) or with respect to Permitted Liens, each Grantor shall notexecute, and there will not be on file in any public office, any financing statementor other document or instruments, except financing statements or other documents orinstruments filed or to be filed in favor of the Collateral Agent and each Grantorshall not license, grant any option, or create or suffer to exist any Lien upon orwith respect to the material Intellectual Property, except for (a) the Liens createdby and under this Agreement and the other Credit Documents and (b) licenses enteredinto in the ordinary course of business of such Grantor; and     (x) it shall hereafter use commercially reasonable efforts so as not to permitthe inclusion in any Material Contract to which it hereafter becomes a party of anyprovision that could or might in any way materially impair or prevent the creationof a security interest in, or the assignment of, such Grantor’s rights and interestsin any property included within the definitions of any Intellectual Propertyacquired under such contracts, provided that this shall not apply to standard formcontracts entered into in the ordinary course of business.     (xi) it shall use proper statutory notice in connection with its use of anyPatent, except where the failure to do so would not have a Material Adverse Effect;and     (xii) unless otherwise determined in the exercise of business judgment, itshall continue to collect, at its own expense, all amounts due or to become due tosuch Grantor in respect of the material Intellectual Property or any portionthereof. Following the occurrence and during the continuance of an Event ofDefault, in connection with such collections, each Grantor may take (and, at theCollateral Agent’s reasonable direction, shall take) such action as such Grantor orthe Collateral Agent may deem reasonably necessary to enforce collection of such
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amounts. Notwithstanding the foregoing, the Collateral Agent shall have theright at any time following the occurrence and during the continuance of an Event ofDefault, to notify, or require any Grantor to notify, any obligors with respect toany such amounts of the existence of the security interest created hereby.     **4.11****Commercial Tort Claims****.**     (a) Representations and Warranties. Each Grantor hereby represents andwarrants, on the Closing Date and on each Credit Date, that Schedule 4.8 sets forthall Commercial Tort Claims of each Grantor in excess of $1,000,000 individually or$5,000,000 in the aggregate as of the Closing Date or thereafter, as of the date on whichfinancial statements were required to be provided under the Credit Agreement for the lastFiscal Quarter then ended or the last date such Schedule 4.8 was otherwise requiredto be amended or supplemented in accordance with the Credit Agreement; and     (b) Covenants and Agreements. Each Grantor hereby covenants and agrees thatwith respect to any Commercial Tort Claim in excess of $1,000,000 individually or $5,000,000in the aggregate hereafter arising it shall on the next Quarterly Reporting Date after itacquires rights in such Commercial Tort Claims deliver to the Collateral Agent a completedPledge Supplement, substantially in the form of Exhibit A attached hereto, togetherwith all Supplements to Schedules thereto, identifying such new Commercial Tort Claims.**SECTION 5****FURTHER ASSURANCES; ADDITIONAL GRANTORS**     **5.1****Further Assurances****.**     (a) Each Grantor agrees that from time to time, at the expense of such Grantor, that itshall promptly execute and deliver all further instruments and documents, and take allfurther action, that the Collateral Agent may reasonably request, in order to create and/ormaintain the validity, perfection or priority of and protect any security interest grantedhereby or to enable the Collateral Agent to exercise and enforce its rights and remedieshereunder with respect to any Collateral. Without limiting the generality of the foregoing,each Grantor shall:     (i) file such financing or continuation statements, or amendments thereto, andexecute and deliver such other agreements, instruments, endorsements, powers ofattorney or notices, as the Collateral Agent may reasonably request, in order toperfect and preserve the security interests granted or purported to be grantedhereby; and     (ii) take all actions necessary to ensure the recordation of appropriateevidence of the liens and security interest granted hereunder in the Intellectual
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Property with any intellectual property registry in which said IntellectualProperty is registered or in which an application for registration is pendingincluding, without limitation, the United States Patent and Trademark Office, theUnited States Copyright Office, the various Secretaries of State, and the foreigncounterparts on any of the foregoing.     (b) Each Grantor hereby authorizes the Collateral Agent to file a Record or Records,including, without limitation, financing or continuation statements, and amendments thereto,in any jurisdictions and with any filing offices as the Collateral Agent may determine, inits sole discretion, are necessary to perfect the security interest granted to theCollateral Agent herein. Such financing statements may describe the Collateral in the samemanner as described herein or may contain an indication or description of collateral thatdescribes such property in any other manner as the Collateral Agent may determine, in itssole discretion, is necessary, to ensure the perfection of the security interest in theCollateral granted to the Collateral Agent herein, including, without limitation, describingsuch property as “all assets” or “all personal property, whether now owned or hereafteracquired.     (c) Each Grantor hereby authorizes the Collateral Agent to modify this Agreement afterobtaining such Grantor’s approval of or signature to such modification by amendingSchedule 4.7 to include reference to any right, title or interest in any existingIntellectual Property or any Intellectual Property acquired or developed by any Grantorafter the execution hereof or to delete any reference to any right, title or interest in anyIntellectual Property in which any Grantor no longer has or claims any right, title orinterest.     **5.2****Additional Grantors****.**     From time to time subsequent to the date hereof, additional Persons may become parties heretoas additional Grantors (each, an “Additional Grantor”), by executing a Counterpart Agreement. Upondelivery of any such counterpart agreement to the Collateral Agent, notice of which is herebywaived by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a party heretoas if Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that itsobligations arising hereunder shall not be affected or diminished by the addition or release of anyother Grantor hereunder, nor by any election of the Collateral Agent not to cause any Subsidiary ofCompany to become an Additional Grantor hereunder. This Agreement shall be fully effective as toany Grantor that is or becomes a party hereto regardless of whether any other Person becomes orfails to become or ceases to be a Grantor hereunder.
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**SECTION 6****COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT**     **6.1****Power of Attorney****.**     To the extent permitted by applicable law, each Grantor hereby irrevocably appoints theCollateral Agent (such appointment being coupled with an interest) as such Grantor’sattorney-in-fact, with full authority in the place and stead of such Grantor and in the name ofsuch Grantor, the Collateral Agent or otherwise, from time to time, to take any of the followingactions:     (a) upon the occurrence and during the continuance of any Event of Default, to obtainand adjust insurance required to be maintained by such Grantor or paid to the CollateralAgent pursuant to the Credit Agreement;     (b) upon the occurrence and during the continuance of any Event of Default, to ask for,demand, collect, sue for, recover, compound, receive and give acquittance and receipts formoneys due and to become due under or in respect of any of the Collateral;     (c) upon the occurrence and during the continuance of any Event of Default, to receive,endorse and collect any drafts or other instruments, documents and chattel paper inconnection with clause (b) above;     (d) upon the occurrence and during the continuance of any Event of Default, to file anyclaims or take any action or institute any proceedings that the Collateral Agent mayreasonably request for the collection of any of the Collateral or otherwise to enforce therights of the Collateral Agent with respect to any of the Collateral;     (e) to prepare and file any UCC financing statements against such Grantor as debtor;     (f) to prepare, sign, and file for recordation in any intellectual property registry,appropriate evidence of the lien and security interest granted herein in the IntellectualProperty in the name of such Grantor as debtor;     (g) upon the occurrence and during the continuance of an Event of Default, to take orcause to be taken all actions necessary to perform or comply or cause performance orcompliance with the terms of this Agreement, including, without limitation, access to pay ordischarge taxes or Liens (other than Permitted Liens) levied or placed upon or threatenedagainst the Collateral, the legality or validity thereof and the amounts necessary todischarge the same to be determined by the Collateral Agent in its sole discretion, any suchpayments made by the Collateral Agent to become obligations of such Grantor to theCollateral Agent, due and payable immediately without demand; and
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     (h) upon the occurrence and during the continuance of an Event of Default, generally tosell, transfer, pledge, make any agreement with respect to or otherwise deal with any of theCollateral as fully and completely as though the Collateral Agent were the absolute ownerthereof for all purposes, and to do, at the Collateral Agent’s option and such Grantor’sexpense, at any time or from time to time, all acts and things that the Collateral Agentdeems reasonably necessary to protect, preserve or realize upon the Collateral and theCollateral Agent’s security interest therein in order to effect the intent of thisAgreement, all as fully and effectively as such Grantor might do.     **6.2****No Duty on the Part of Collateral Agent or Secured Parties****.**     The powers conferred on the Collateral Agent hereunder are solely to protect the interests ofthe Secured Parties in the Collateral and shall not impose any duty upon the Collateral Agent orany Secured Party to exercise any such powers. The Collateral Agent and the Secured Parties shallbe accountable only for amounts that they actually receive as a result of the exercise of suchpowers, and neither they nor any of their officers, directors, employees or agents shall beresponsible to any Grantor for any act or failure to act hereunder, except for their own grossnegligence or willful misconduct.**SECTION 7****REMEDIES**     **7.1****Generally****.**     (a) If any Event of Default shall have occurred and be continuing, the Collateral Agentmay exercise in respect of the Collateral, in addition to all other rights and remediesprovided for herein or otherwise available to it at law or in equity, all the rights andremedies of the Collateral Agent on default under the UCC (whether or not the UCC applies tothe affected Collateral) to collect, enforce or satisfy any Secured Obligations then owing,whether by acceleration or otherwise, and also may to the fullest extent permitted byapplicable law pursue any of the following separately, successively or simultaneously:     (i) require any Grantor to, and each Grantor hereby agrees that it shall at itsexpense and promptly upon request of the Collateral Agent forthwith, assemble all orpart of the Collateral as directed by the Collateral Agent and make it available tothe Collateral Agent at a place to be designated by the Collateral Agent that isreasonably convenient to both parties;     (ii) enter onto the property owned or leased by any Grantor where anyCollateral is located and take possession thereof with or without judicial process;
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     (iii) prior to the disposition of the Collateral, store the Collateral orotherwise prepare the Collateral for disposition in any manner to the extent theCollateral Agent deems appropriate; and     (iv) without notice except as specified below or under the UCC, sell, assign,lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of theCollateral or any part thereof in one or more parcels at public or private sale, atany of the Collateral Agent’s offices or elsewhere, for cash, on credit or forfuture delivery, at such time or times and at such price or prices and upon suchother terms as the Collateral Agent may deem commercially reasonable.     (b) The Collateral Agent or any Secured Party may be the purchaser of any or all of theCollateral at any public or private (to the extent to the portion of the Collateral beingprivately sold is of a kind that is customarily sold on a recognized market or the subjectof widely distributed standard price quotations) sale in accordance with the UCC and theCollateral Agent, as collateral agent for and representative of the Secured Parties, shallbe entitled, for the purpose of bidding and making settlement or payment of the purchaseprice for all or any portion of the Collateral sold at any such sale made in accordance withthe UCC, to use and apply any of the Secured Obligations as a credit on account of thepurchase price for any Collateral payable by the Collateral Agent at such sale. Eachpurchaser at any such sale shall hold the property sold absolutely free from any claim orright on the part of any Grantor, and each Grantor hereby waives (to the extent permitted byapplicable law) all rights of redemption, stay and/or appraisal which it now has or may atany time in the future have under any rule of law or statute now existing or hereafterenacted. Each Grantor agrees that, to the extent notice of sale shall be required by law,at least ten (10) days notice to such Grantor of the time and place of any public sale orthe time after which any private sale is to be made shall constitute reasonablenotification. The Collateral Agent shall not be obligated to make any sale of Collateralregardless of notice of sale having been given. The Collateral Agent may adjourn any publicor private sale from time to time by announcement at the time and place fixed therefor, andsuch sale may, without further notice, be made at the time and place to which it was soadjourned. Each Grantor agrees that it would not be commercially unreasonable for theCollateral Agent to dispose of the Collateral or any portion thereof by using Internet sitesthat provide for the auction of assets of the types included in the Collateral or that havethe reasonable capability of doing so, or that match buyers and sellers of assets. EachGrantor hereby waives (to the fullest extent permitted by applicable law) any claims againstthe Collateral Agent arising by reason of the fact that the price at which any Collateralmay have been sold at such a private sale was less than the price which might have beenobtained at a public sale, even if the Collateral Agent accepts the first offer received anddoes not offer such Collateral to more than one offeree. If the proceeds of any sale orother disposition of the Collateral are insufficient to pay all the Secured Obligations,Grantors shall be liable for the deficiency and the reasonable fees of any attorneysemployed by the Collateral Agent to collect such deficiency. Each Grantor further agreesthat a breach of any of the covenants contained in this Section will cause irreparableinjury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law inrespect of such breach and, as a consequence,
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that each and every covenant contained in this Section shall be specificallyenforceable against such Grantor, and such Grantor hereby waives (to the fullest extentpermitted by applicable law) and agrees not to assert any defenses against an action forspecific performance of such covenants except for a defense that no default has occurredgiving rise to the Secured Obligations becoming due and payable prior to their statedmaturities. Nothing in this Section shall in any way alter the rights of the CollateralAgent hereunder.     (c) The Collateral Agent may sell the Collateral without giving any warranties as tothe Collateral. The Collateral Agent may specifically disclaim or modify any warranties oftitle or the like. This procedure will not be considered to adversely affect the commercialreasonableness of any sale of the Collateral.     (d) The Collateral Agent shall have no obligation to marshal any of the Collateral.     **7.2****Application of Proceeds****.**     All proceeds received by the Collateral Agent in respect of any sale, any collection from, orother realization upon all or any part of the Collateral shall be applied in full or in part by theCollateral Agent against, the Secured Obligations in accordance with the terms of Section 8.3 ofthe Credit Agreement.     **7.3****Sales on Credit****.**     If the Collateral Agent sells any of the Collateral upon credit, Grantor will be credited onlywith payments actually made by purchaser and received by the Collateral Agent and applied toindebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, theCollateral Agent may resell the Collateral and Grantor shall be credited with proceeds of the sale.     **7.4****Deposit Accounts****.**     If any Event of Default shall have occurred and be continuing, the Collateral Agent may applythe balance from any Deposit Account that is subject to a control agreement pursuant to the CreditAgreement or instruct the bank at which any such Deposit Account is maintained to pay the balanceof any such Deposit Account to or for the benefit of the Collateral Agent. Unless an Event ofDefault shall have occurred and be continuing, the Collateral Agent agrees not to instruct any bankin which any Deposit Account that is subject to a control agreement pursuant to the CreditAgreement is maintained as provided in the immediately preceding sentence.     **7.5****Investment Related Property****.**     Each Grantor recognizes that, by reason of certain prohibitions contained in the SecuritiesAct and applicable state securities laws, the Collateral Agent may be compelled, with respect toany sale of all or any part of the Investment Related Property conducted without prior registrationor qualification of such Investment Related Property under the Securities Act and/or
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such state securities laws, to limit purchasers to those who will agree, among other things,to acquire the Investment Related Property for their own account, for investment and not with aview to the distribution or resale thereof. Each Grantor acknowledges that any such private salemay be at prices and on terms less favorable than those obtainable through a public sale withoutsuch restrictions (including a public offering made pursuant to a registration statement under theSecurities Act) and, notwithstanding such circumstances, each Grantor agrees that any such privatesale shall be deemed to have been made in a commercially reasonable manner and that the CollateralAgent shall have no obligation to engage in public sales and no obligation to delay the sale of anyInvestment Related Property for the period of time necessary to permit the issuer thereof toregister it for a form of public sale requiring registration under the Securities Act or underapplicable state securities laws, even if such issuer would, or should, agree to so register it.If the Collateral Agent determines to exercise its right to sell any or all of the InvestmentRelated Property, upon written request, each Grantor shall and shall cause each issuer of anyPledged Stock to be sold hereunder, each partnership and each limited liability company from timeto time to furnish to the Collateral Agent all such information as the Collateral Agent may requestin order to determine the number and nature of interest, shares or other instruments included inthe Investment Related Property which may be sold by the Collateral Agent in exempt transactionsunder the Securities Act and the rules and regulations of the Securities and Exchange Commissionthereunder, as the same are from time to time in effect.     **7.6****Intellectual Property****.**     (a) Anything contained herein to the contrary notwithstanding, upon the occurrence andduring the continuation of an Event of Default:     (i) the Collateral Agent shall have the right (but not the obligation) to bringsuit or otherwise commence any action or proceeding in the name of any Grantor, theCollateral Agent or otherwise, in the Collateral Agent’s sole discretion, to enforceany Intellectual Property, in which event such Grantor shall, at the request of theCollateral Agent, do any and all lawful acts and execute any and all documentsrequired by the Collateral Agent in aid of such enforcement and such Grantor shallpromptly, upon demand, reimburse and indemnify the Collateral Agent as provided inthe Credit Agreement hereof in connection with the exercise of its rights under thisSection, and, to the extent that the Collateral Agent shall elect not to bring suitto enforce any Intellectual Property as provided in this Section, each Grantoragrees to use all reasonable measures, whether by action, suit, proceeding orotherwise, to prevent the infringement or other violation of any of such Grantor’srights in the Intellectual Property that is material to the business by others andfor that purpose agrees to diligently maintain any action, suit or proceedingagainst any Person so infringing as shall be necessary to prevent such infringementor violation; and     (ii) [reserved]     (iii) the Collateral Agent shall have the right to notify, or require eachGrantor to notify, any obligors with respect to amounts due or to become due to
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such Grantor in respect of the Intellectual Property, of the existence of thesecurity interest created herein, to direct such obligors to make payment of allsuch amounts directly to the Collateral Agent, and, upon such notification and atthe expense of such Grantor, to enforce collection of any such amounts and toadjust, settle or compromise the amount or payment thereof, in the same manner andto the same extent as such Grantor might have done; (1) all amounts and proceeds(including checks and other instruments) received by Grantor inrespect of amounts due to such Grantor in respect of theCollateral or any portion thereof shall be received for thebenefit of the Collateral Agent hereunder, shall be segregatedfrom other funds of such Grantor and shall be forthwith paidover or delivered to the Collateral Agent in the same form as soreceived (with any necessary endorsement) to be held as cashCollateral and applied as provided by Section 7.7 hereof; and  (2) Grantor shall not adjust, settleor compromise the amount or payment of any such amount orrelease wholly or partly any obligor with respect thereto orallow any credit or discount thereon.     (b) If (i) an Event of Default shall have occurred and, by reason of cure, waiver,modification, amendment or otherwise, no longer be continuing, (ii) no other Event ofDefault shall have occurred and be continuing, (iii) an assignment or other transfer to theCollateral Agent of any rights, title and interests in and to the Intellectual Propertyshall have been previously made and shall have become absolute and effective, and (iv) theSecured Obligations shall not have become immediately due and payable, upon the writtenrequest of any Grantor, the Collateral Agent shall promptly execute and deliver to suchGrantor, at such Grantor’s sole cost and expense, such assignments or other transfer as maybe necessary to reassign to such Grantor any such rights, title and interests as may havebeen assigned to the Collateral Agent as aforesaid, subject to any disposition thereof thatmay have been made by the Collateral Agent; provided, after giving effect to suchreassignment, the Collateral Agent’s security interest granted pursuant hereto, as well asall other rights and remedies of the Collateral Agent granted hereunder, shall continue tobe in full force and effect; and provided further, the rights, title and interests soreassigned shall be free and clear of any other Liens granted by or on behalf of theCollateral Agent and the Secured Parties.     (c) Solely for the purpose of enabling the Collateral Agent to exercise rights andremedies under this Section 7 and at such time as the Collateral Agent shall be lawfullyentitled to exercise such rights and remedies, each Grantor hereby grants to the CollateralAgent, to the extent it has the right to do so, an irrevocable, nonexclusive license(exercisable without payment of royalty or other compensation to such Grantor), subject, inthe case of Trademarks, to sufficient rights to quality control and inspection in
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favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use,operate under, license, or sublicense any Intellectual Property now owned or hereafteracquired by such Grantor, and wherever the same may be located.     **7.7****Cash Proceeds****.**     Any proceeds of any Collateral received by any Grantor consisting of cash, checks and othernon-cash items received by the Collateral Agent (i) if no Event of Default shall have occurred andbe continuing, shall be turned over to the Grantor and (ii) if an Event of Default shall haveoccurred and be continuing, may, in the sole discretion of the Collateral Agent, (A) be held by theCollateral Agent for the ratable benefit of the Secured Parties, as collateral security for theSecured Obligations (whether matured or unmatured) and/or (B) then or at any time thereafter may beapplied by the Collateral Agent against the Secured Obligations then due and owing.**SECTION 8****COLLATERAL AGENT**     The Collateral Agent has been appointed to act as the Collateral Agent hereunder by Lendersand, by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agentshall be obligated, and shall have the right hereunder, to make demands, to give notices, toexercise or refrain from exercising any rights, and to take or refrain from taking any action(including, without limitation, the release or substitution of Collateral), solely in accordancewith this Agreement and the Credit Agreement; provided, the Collateral Agent shall, afterpayment in full of all Obligations under the Credit Agreement and the other Credit Documents,exercise, or refrain from exercising, any remedies provided for herein in accordance with theinstructions of the holders of a majority of the aggregate notional amount (or, with respect to anySecured Hedge Agreement that has been terminated in accordance with its terms, the amount then dueand payable (exclusive of expenses and similar payments but including any early terminationpayments then due) under such Secured Hedge Agreement) under all Secured Hedge Agreements. Infurtherance of the foregoing provisions of this Section, each Secured Party, by its acceptance ofthe benefits hereof, agrees that it shall have no right individually to realize upon any of theCollateral hereunder, it being understood and agreed by such Secured Party that all rights andremedies hereunder may be exercised solely by the Collateral Agent for the benefit of SecuredParties in accordance with the terms of this Section. The Collateral Agent may resign at any timeby giving thirty (30) days’ prior written notice thereof to Lenders and the Grantors, and theCollateral Agent may be removed at any time with or without cause by an instrument or concurrentinstruments in writing delivered to the Grantors and the Collateral Agent signed by the RequisiteLenders holding more than 50% of the outstanding Commitments under the Credit Agreement. Upon anysuch notice of resignation or any such removal, Requisite Lenders shall have the right, upon five(5) Business Days’ notice to the Collateral Agent, following receipt of the Grantors’ consent(which shall not be unreasonably withheld or delayed and which shall not be required while an Eventof Default exists), to appoint a successor Collateral Agent. Upon the acceptance of anyappointment as Collateral Agent hereunder by a successor Collateral Agent,
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that successor Collateral Agent shall thereupon succeed to and become vested with all therights, powers, privileges and duties of the retiring or removed Collateral Agent under thisAgreement, and the retiring or removed Collateral Agent under this Agreement shall promptly (i)transfer to such successor Collateral Agent all sums, Securities and other items of Collateral heldhereunder, together with all records and other documents necessary or appropriate in connectionwith the performance of the duties of the successor Collateral Agent under this Agreement, and (ii)execute and deliver to such successor Collateral Agent or otherwise authorize the filing of suchamendments to financing statements, and take such other actions, as may be necessary or appropriatein connection with the assignment to such successor Collateral Agent of the security interestscreated hereunder, whereupon such retiring or removed Collateral Agent shall be discharged from itsduties and obligations under this Agreement. After any retiring or removed Collateral Agent’sresignation or removal hereunder as the Collateral Agent, the provisions of this Agreement shallinure to its benefit as to any actions taken or omitted to be taken by it under this Agreementwhile it was the Collateral Agent hereunder.**SECTION 9****CONTINUING SECURITY INTEREST; TRANSFER OF LOANS**     This Agreement shall create a continuing security interest in the Collateral and shall remainin full force and effect until the payment in full of all Secured Obligations, the cancellation ortermination of the Commitments and the cancellation or expiration of all outstanding Letters ofCredit, be binding upon each Grantor, its successors and assigns, and inure, together with therights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent andits successors, transferees and assigns. Without limiting the generality of the foregoing, butsubject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loansheld by it to any other Person, and such other Person shall thereupon become vested with all thebenefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full ofall Secured Obligations (other than unmatured indemnification obligations), the cancellation ortermination of the Commitments and the cancellation or expiration of all outstanding Letters ofCredit, the security interest granted hereby shall terminate hereunder and of record and all rightsto the Collateral shall revert to Grantors. Upon any such termination the Collateral Agent shall,at Grantors’ expense, execute and deliver to Grantors such documents as Grantors shall reasonablyrequest to evidence such termination.**SECTION 10****STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM**     The powers conferred on the Collateral Agent hereunder are solely to protect its interest inthe Collateral and shall not impose any duty upon it to exercise any such powers. Except for theexercise of reasonable care in the custody of any Collateral in its possession and the accountingfor moneys actually received by it hereunder, the Collateral Agent shall have no duty as to anyCollateral or as to the taking of any necessary steps to preserve rights against prior
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parties or any other rights pertaining to any Collateral. The Collateral Agent shall bedeemed to have exercised reasonable care in the custody and preservation of Collateral in itspossession if such Collateral is accorded treatment substantially equal to that which theCollateral Agent accords its own property. Neither the Collateral Agent nor any of its directors,officers, employees or agents shall be liable for failure to demand, collect or realize upon all orany part of the Collateral or for any delay in doing so or shall be under any obligation to sell orotherwise dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantorfails to perform any agreement contained herein, the Collateral Agent may itself perform, or causeperformance of, such agreement, and the expenses of the Collateral Agent incurred in connectiontherewith shall be payable by each Grantor under Section 10.2 of the Credit Agreement.**SECTION 11****MISCELLANEOUS**     Any notice required or permitted to be given under this Agreement shall be given in accordancewith Section 10.1 of the Credit Agreement. No failure or delay on the part of the Collateral Agentin the exercise of any power, right or privilege hereunder or under any other Credit Document shallimpair such power, right or privilege or be construed to be a waiver of any default or acquiescencetherein, nor shall any single or partial exercise of any such power, right or privilege precludeother or further exercise thereof or of any other power, right or privilege. All rights andremedies existing under this Agreement and the other Credit Documents are cumulative to, and notexclusive of, any rights or remedies otherwise available. In case any provision in or obligationunder this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity,legality and enforceability of the remaining provisions or obligations, or of such provision orobligation in any other jurisdiction, shall not in any way be affected or impaired thereby. Allcovenants hereunder shall be given independent effect so that if a particular action or conditionis not permitted by any of such covenants, the fact that it would be permitted by an exception to,or would otherwise be within the limitations of, another covenant shall not avoid the occurrence ofa Default or an Event of Default if such action is taken or condition exists. This Agreement shallbe binding upon and inure to the benefit of the Collateral Agent and Grantors and their respectivesuccessors and assigns. No Grantor shall, without the prior written consent of the CollateralAgent given in accordance with the Credit Agreement, assign any right, duty or obligationhereunder. This Agreement and the other Credit Documents embody the entire agreement andunderstanding between Grantors and the Collateral Agent and supersede all prior agreements andunderstandings between such parties relating to the subject matter hereof and thereof.Accordingly, the Credit Documents may not be contradicted by evidence of prior, contemporaneous orsubsequent oral agreements of the parties. There are no unwritten oral agreements between theparties. This Agreement may be executed in one or more counterparts and by different partieshereto in separate counterparts, each of which when so executed and delivered shall be deemed anoriginal, but all such counterparts together shall constitute but one and the same instrument;signature pages may be detached from multiple separate counterparts and attached to a singlecounterpart so that all signature pages are physically attached to the same document.
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     **THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.**
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     IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this Agreement to beduly executed and delivered by their respective officers thereunto duly authorized as of the datefirst written above.      **EASTON-BELL SPORTS, INC.**