exv10w2






Exhibit 10.2




PLEDGE AND SECURITY AGREEMENT




dated as of May 26, 2010



between



EACH OF THE GRANTORS PARTY HERETO



and



GOLDMAN SACHS BANK USA,



as Collateral Agent

















 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 1.
	 	DEFINITIONS; GRANT OF SECURITY	 	 	1	 
	1.1
	 	General Definitions	 	 	1	 
	1.2
	 	Definitions; Interpretation	 	 	5	 
	 
	 	 	 	 	 	 
	SECTION 2.
	 	GRANT OF SECURITY	 	 	6	 
	2.1
	 	Grant of Security	 	 	6	 
	2.2
	 	Certain Limited Exclusions	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 3.
	 	SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE	 	 	7	 
	3.1
	 	Security for Obligations	 	 	7	 
	3.2
	 	Continuing Liability Under Collateral	 	 	7	 
	3.3
	 	Release of Collateral and Guarantees, Termination of Credit Documents	 	 	7	 
	 
	 	 	 	 	 	 
	SECTION 4.
	 	[RESERVED]	 	 	8	 
	 
	 	 	 	 	 	 
	SECTION 5.
	 	REPRESENTATIONS AND WARRANTIES	 	 	8	 
	5.1
	 	Grantor Information and Status	 	 	8	 
	5.2
	 	Collateral Identification, Special Collateral	 	 	9	 
	5.3
	 	Ownership of Collateral and Absence of Other Liens	 	 	9	 
	5.4
	 	Status of Security Interest	 	 	9	 
	5.5
	 	Goods & Receivables	 	 	10	 
	5.6
	 	Pledged Equity Interests, Investment Related Property	 	 	10	 
	5.7
	 	Intellectual Property	 	 	11	 
	5.8
	 	Miscellaneous	 	 	12	 
	 
	 	 	 	 	 	 
	SECTION 6.
	 	COVENANTS AND AGREEMENTS	 	 	12	 
	6.1
	 	Grantor Information & Status	 	 	12	 
	6.2
	 	Collateral Identification; Special Collateral	 	 	12	 
	6.3
	 	Ownership of Collateral and Absence of Other Liens	 	 	13	 
	6.4
	 	Status of Security Interest	 	 	13	 
	6.5
	 	Goods & Receivables	 	 	13	 
	6.6
	 	Pledged Equity Interests, Investment Related Property	 	 	14	 
	6.7
	 	Intellectual Property	 	 	16	 
	 
	 	 	 	 	 	 
	SECTION 7.
	 	ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS	 	 	17	 
	7.1
	 	Access; Right of Inspection	 	 	17	 
	7.2
	 	Further Assurances	 	 	17	 
	7.3
	 	Additional Grantors	 	 	18	 






-i-









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 8.
	 	COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT	 	 	18	 
	8.1
	 	Power of Attorney	 	 	18	 
	8.2
	 	No Duty on the Part of Collateral Agent or Secured Parties	 	 	19	 
	 
	 	 	 	 	 	 
	SECTION 9.
	 	REMEDIES	 	 	19	 
	9.1
	 	Generally	 	 	19	 
	9.2
	 	Application of Proceeds	 	 	21	 
	9.3
	 	Sales on Credit	 	 	21	 
	9.4
	 	Investment Related Property	 	 	21	 
	9.5
	 	Grant of Intellectual Property License	 	 	22	 
	9.6
	 	Intellectual Property	 	 	22	 
	9.7
	 	Cash Proceeds; Deposit Accounts	 	 	24	 
	 
	 	 	 	 	 	 
	SECTION 10. COLLATERAL AGENT	 	 	24	 
	 
	 	 	 	 	 	 
	SECTION 11. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS	 	 	24	 
	 
	 	 	 	 	 	 
	SECTION 12. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM	 	 	25	 
	 
	 	 	 	 	 	 
	SECTION 13. MISCELLANEOUS	 	 	25	 
	 
	 	 	 	 	 	 
	SCHEDULE 5.1 — GENERAL INFORMATION	 	 	 	 
	 
	 	 	 	 	 	 
	SCHEDULE 5.2 — COLLATERAL IDENTIFICATION	 	 	 	 
	 
	 	 	 	 	 	 
	SCHEDULE 5.4 — FINANCING STATEMENTS	 	 	 	 
	 
	 	 	 	 	 	 
	SCHEDULE 5.5 — LOCATION OF EQUIPMENT AND INVENTORY	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT A — PLEDGE SUPPLEMENT	 	 	 	 






-ii-









 





     This PLEDGE AND SECURITY AGREEMENT, dated as of May 26, 2010 (this “Agreement”), between
Valeant Pharmaceuticals International (the “Borrower”) and each of the subsidiaries of the Borrower
party hereto from time to time, whether as an original signatory hereto or as an Additional Grantor
(as herein defined) (other than the Collateral Agent, each, a “Grantor”), and Goldman Sachs Bank
USA, as collateral agent for the Secured Parties (as herein defined) (in such capacity as
collateral agent, together with its successors and permitted assigns, the “Collateral Agent”).



RECITALS:




     WHEREAS, reference is made to that certain Credit and Guaranty Agreement, dated as of the date
hereof (as it may be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), by and among Borrower, certain subsidiaries of Borrower party thereto, as
Guarantors, the lenders party thereto from time to time (the “Lenders”) and Goldman Sachs Bank USA,
as Administrative Agent and as Collateral Agent;



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



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



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




			
	SECTION 1.	 	DEFINITIONS; GRANT OF SECURITY.





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



     “Additional Grantors” shall have the meaning assigned in Section 7.3.



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



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



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



     “Cash Proceeds” shall have the meaning assigned in Section 9.7.



     “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, supplier lists, blueprints, technical specifications, manuals, computer software and related



 









 




documentation, computer printouts, tapes, disks and other electronic storage media and related
data processing software and similar items that at any time evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon.




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



     “Control” shall mean: (1) with respect to any Deposit Accounts, control within the meaning of
Section 9-104 of the UCC, (2) with respect to any Securities Accounts, Security Entitlements,
Commodity Contract or Commodity Account, control within the meaning of Section 9-106 of the UCC,
(3) with respect to any Uncertificated Securities, control within the meaning of Section 8-106(c)
of the UCC, (4) with respect to any Certificated Security, control within the meaning of Section
8-106(a) or (b) of the UCC, (5) with respect to any Electronic Chattel Paper, control within the
meaning of Section 9-105 of the UCC, (6) with respect to Letter of Credit Rights, control within
the meaning of Section 9-107 of the UCC and (7) with respect to any “transferable record” (as that
term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction), control within the meaning of Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in
effect in the jurisdiction relevant to such transferable record.



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



     “Copyright Licenses” shall mean any and all agreements, licenses and covenants providing for
the granting of any right in or to Copyrights or otherwise providing for a covenant not to sue
(whether such Grantor is licensee or licensor thereunder).



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



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



     “Credit Documents” shall mean this Agreement, the Credit Agreement and all other documents,
instruments or agreements executed and delivered by Borrower for the benefit of the Collateral
Agent for the benefit of the Secured Parties in connection herewith on or after the date hereof.



     “Excluded Asset” shall mean any asset of any Grantor excluded from the security interest
hereunder by virtue of Section 2.2 hereof but only to the extent, and for so long as, so excluded
thereunder.



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



-2-









 





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



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



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



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



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



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



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



     “Majority Holder” shall have the meaning set forth in Section 10.



     “Material Intellectual Property” shall mean any Intellectual Property included in the
Collateral which is material to the business of any Grantor or is otherwise of material value.



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



     “Patent Licenses” shall mean all agreements, licenses and covenants providing for the
granting of any right in or to Patents or otherwise providing for a covenant not to sue (whether
such Grantor is licensee or licensor thereunder).



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



     “Pledged Debt” shall mean all indebtedness for borrowed money owed to such Grantor, whether or
not evidenced by any Instrument, the instruments, if any, evidencing such any of the foregoing, and
all interest, cash, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing.



-3-









 





     “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests, Pledged
Partnership Interests and any other participation or interests in any equity or profits of any
business entity including, without limitation, any trust.



     “Pledged LLC Interests” shall mean all interests in any limited liability company and each
series thereof and the certificates, if any, representing such limited liability company interests
and any interest of such Grantor on the books and records of such limited liability company or on
the books and records of any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such limited liability company interests.



     “Pledged Partnership Interests” shall mean all interests in any general partnership, limited
partnership, limited liability partnership or other partnership and the certificates, if any,
representing such partnership interests and any interest of such Grantor on the books and records
of such partnership or on the books and records of any securities intermediary pertaining to such
interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities
and other property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests.



     “Pledged Stock” shall mean all shares of capital stock owned by such Grantor and the
certificates, if any, representing such shares and any interest of such Grantor in the entries on
the books of the issuer of such shares or on the books of any securities intermediary pertaining to
such shares, and all dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares.



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



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



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



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



-4-









 





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



     “Securities” shall mean any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly known as
“securities” or any certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.



     “Trade Secret Licenses” shall mean any and all agreements providing for the granting of any
right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder).



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



     “Trademark Licenses” shall mean any and all agreements, licenses and covenants providing for
the granting of any right in or to Trademarks or otherwise providing for a covenant not to sue or
permitting co-existence (whether such Grantor is licensee or licensor thereunder).



     “Trademarks” shall mean all United States, and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, Internet domain names, service
marks, certification marks, collective marks, logos, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for any of the
foregoing including, but not limited to: (i) all extensions or renewals of any of the foregoing,
(ii) all of the goodwill of the business connected with the use of and symbolized by the foregoing,
(iii) the right to sue for past, present and future infringement or dilution of any of the
foregoing or for any injury to goodwill, and (iv) all Proceeds of the foregoing, including, without
limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit.



     “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of
New York; provided, however, that in the event that, by reason of mandatory provisions of law, any
or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by
the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New
York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or
remedies.



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




1.2 Definitions; Interpretation.



          (a) In this Agreement, the following capitalized terms shall have the meaning given to them in
the UCC (and, if defined in more than one Article of the UCC, shall have the meaning given in
Article 9 thereof): Account, Account Debtor, As-Extracted Collateral, Bank, Certificated Security,
Chattel Paper, Consignee, Consignment, Consignor, Commercial Tort Claims, Commodity Account,



-5-









 




Commodity Contract, Deposit Account, Document, Entitlement Order, Equipment, Electronic
Chattel Paper, Farm Products, Fixtures, General Intangibles, Goods, Health-Care-Insurance
Receivable, Instrument, Inventory, Letter of Credit Right, Manufactured Home, Money, Payment
Intangible, Proceeds, Record, Securities Account, Securities Intermediary, Security Certificate,
Security Entitlement, Supporting Obligations, Tangible Chattel Paper and Uncertificated Security.




          (b) All other capitalized terms used herein (including the preamble and recitals hereto) and
not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement. The
incorporation by reference of terms defined in the Credit Agreement shall survive any termination
of the Credit Agreement until this agreement is terminated as provided in Section 11 hereof. Any
of the terms defined herein may, unless the context otherwise requires, be used in the singular or
the plural, depending on the reference. References herein to any Section, Appendix, Schedule or
Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof
unless otherwise specifically provided. The use herein of the word “include” or “including”, when
following any general statement, term or matter, shall not be construed to limit such statement,
term or matter to the specific items or matters set forth immediately following such word or to
similar items or matters, whether or not non-limiting language (such as “without limitation” or
“but not limited to” or words of similar import) is used with reference thereto, but rather shall
be deemed to refer to all other items or matters that fall within the broadest possible scope of
such general statement, term or matter. The terms lease and license shall include sub-lease and
sub-license, as applicable. If any conflict or inconsistency exists between this Agreement and the
Credit Agreement, the Credit Agreement shall govern. All references herein to provisions of the
UCC shall include all successor provisions under any subsequent version or amendment to any Article
of the UCC.




			
	SECTION 2.	 	GRANT OF SECURITY.





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




     (a) Accounts;




     (b) Chattel Paper;




     (c) Documents;




     (d) General Intangibles;




     (e) Goods (including, without limitation, Inventory and Equipment);




     (f) Instruments;




     (g) Insurance;




     (h) Intellectual Property;




     (i) Investment Related Property (including, without limitation, Deposit Accounts);




     (j) Letter of Credit Rights;



-6-









 






     (k) Money;




     (l) Receivables and Receivable Records;




     (m) Commercial Tort Claims now or hereafter described on Schedule 5.2




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




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



     2.2 Certain Limited Exclusions. Notwithstanding anything herein to the contrary, in no event
shall the Collateral include or the security interest granted under Section 2.1 hereof attach to
(a) any lease, license, contract or agreement to which any Grantor is a party, and any of its
rights or interest thereunder, if and to the extent that a security interest is prohibited by or in
violation of (i) any law, rule or regulation applicable to such Grantor, or (ii) a term, provision
or condition of any such lease, license, contract, property right or agreement (unless such law,
rule, regulation, term, provision or condition would be rendered ineffective with respect to the
creation of the security interest hereunder pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of
the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other
applicable law (including the Bankruptcy Code) or principles of equity); provided however that the
Collateral shall include (and such security interest shall attach) immediately at such time as the
contractual or legal prohibition shall no longer be applicable and to the extent severable, shall
attach immediately to any portion of such lease, license, contract or agreement not subject to the
prohibitions specified in (i) or (ii) above; provided further that the exclusions referred to in
clause (a) of this Section 2.2 shall not include any Proceeds of any such lease, license, contract
or agreement; (b) in any of the outstanding capital stock of a Controlled Foreign Corporation in
excess of 66% of the voting power of all classes of capital stock of such Controlled Foreign
Corporation entitled to vote; provided that immediately upon the amendment of the Internal Revenue
Code to allow the pledge of a greater percentage of the voting power of capital stock in a
Controlled Foreign Corporation without adverse tax consequences, the Collateral shall include, and
the security interest granted by each Grantor shall attach to, such greater percentage of capital
stock of each Controlled Foreign Corporation or (c) any intent-to-use application trademark
application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect
thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of
a security interest therein would impair the validity or enforceability of such intent-to-use
trademark application under applicable federal law.




			
	SECTION 3.	 	SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.





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



     3.2 Continuing Liability Under Collateral. Notwithstanding anything herein to the contrary,
(i) each Grantor shall remain liable for all obligations under the Collateral and nothing contained
herein is intended or shall be a delegation of duties to the Collateral Agent or any Secured Party,
(ii) each Grantor shall remain liable under each of the agreements included in the Collateral,



-7-









 




including, without limitation, any agreements relating to Pledged Partnership Interests or
Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder all in
accordance with and pursuant to the terms and provisions thereof and neither the Collateral Agent
nor any Secured Party shall have any obligation or liability under any of such agreements by reason
of or arising out of this Agreement or any other document related thereto nor shall the Collateral
Agent nor any Secured Party have any obligation to make any inquiry as to the nature or sufficiency
of any payment received by it or have any obligation to take any action to collect or enforce any
rights under any agreement included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and (iii) the
exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from
any of its duties or obligations under the contracts and agreements included in the Collateral.




     3.3 Release of Collateral and Guarantees, Termination of Credit Documents. In accordance with
Section 9.8(d) of the Credit Agreement, when all Obligations (other than obligations in respect of
any Hedge Agreement) have been paid in full, the Collateral Agent shall (without notice to, or vote
or consent of, any Lender, or any affiliate of any Lender that is a party to any Hedge Agreement)
take such actions as shall be required to release its security interest in all Collateral, and to
release all guarantee obligations provided for in any Credit Document, whether or not on the date
of such release there may be outstanding Obligations in respect of Hedge Agreements.




			
	SECTION 4.	 	[RESERVED].






			
	SECTION 5.	 	REPRESENTATIONS AND WARRANTIES.





Each Grantor hereby represents and warrants, on the Closing Date and on each Credit Date, that:




     5.1 Grantor Information and Status.



          (a) Schedules 5.1(A) and (B) (as such schedules may be amended or supplemented from time to
time) sets forth under the appropriate headings: (1) the full legal name of such Grantor, (2) all
trade names or other names under which such Grantor currently conducts business, (3) the type of
organization of such Grantor, (4) the jurisdiction of organization of such Grantor, (5) its
organizational identification number, if any, and (6) the jurisdiction where the chief executive
office or its sole place of business (or the principal residence if such Grantor is a natural
person) is located;




          (b) except as provided on Schedule 5.1(C), it has not changed its name, jurisdiction of
organization, chief executive office or sole place of business (or principal residence if such
Grantor is a natural person) or its corporate structure in any way (e.g., by merger, consolidation,
change in corporate form or otherwise) and has not done business under any other name, in each
case, within the past five (5) years;




          (c) it has not within the last five (5) years become bound (whether as a result of merger or
otherwise) as debtor under a security agreement entered into by another Person, which has not
heretofore been terminated other than agreements entered into in connection with Permitted Liens
and other than the agreements identified on Schedule 5.1(D) hereof (as such schedule may be amended
or supplemented from time to time);




          (d) such Grantor has been duly organized and is validly existing as an entity of the type as
set forth opposite such Grantor’s name on Schedule 5.1(A) solely under the laws of the jurisdiction
as set forth opposite such Grantor’s name on Schedule 5.1(A) and remains duly existing as such.
Such Grantor has not filed any certificates of dissolution or liquidation, any certificates of
domestication, transfer or continuance in any other jurisdiction; and







-8-









 








          (e) no Grantor is a “transmitting utility” (as defined in Section 9-102(a)(80) of the UCC).




     5.2 Collateral Identification, Special Collateral.



          (a) Schedule 5.2 (as such schedule may be amended or supplemented from time to time) sets
forth under the appropriate headings all of such Grantor’s Commercial Tort Claims other than any
Commercial Tort Claims having a value of less than $1.0 million. Each Grantor shall supplement
such schedule as necessary to ensure that such schedules are accurate on each Credit Date;




          (b) none of the Collateral constitutes, or is the Proceeds of, (1) Farm Products,
(2) As-Extracted Collateral, (3) Manufactured Homes, (4) Health-Care-Insurance Receivables, (5)
timber to be cut, or (6) aircraft, aircraft engines, satellites, ships or railroad rolling stock.
No material portion of the collateral consists of motor vehicles or other goods subject to a
certificate of title statute of any jurisdiction;




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




          (d) not more than 10% of the value of all personal property included in the Collateral is
located in any country other than the United States.




     5.3 Ownership of Collateral and Absence of Other Liens.



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




          (b) other than any financing statements filed in favor of the Collateral Agent, no effective
financing statement, fixture filing or other instrument similar in effect under any applicable law
covering all or any part of the Collateral is on file in any filing or recording office except for
(x) financing statements for which duly authorized proper termination statements have been
delivered to the Collateral Agent for filing and (y) financing statements filed in connection with
Permitted Liens. Other than the Collateral Agent and any automatic control in favor of a Bank,
Securities Intermediary or Commodity Intermediary maintaining a Deposit Account, Securities Account
or Commodity Contract, no Person is in Control of any Collateral.




     5.4 Status of Security Interest.



          (a) upon the filing of financing statements naming each Grantor as “debtor” and the Collateral
Agent as “secured party” and describing the Collateral in the filing offices set forth opposite
such Grantor’s name on Schedule 5.4 hereof (as such schedule may be amended or supplemented from
time to time), the security interest of the Collateral Agent in all Collateral that can be
perfected by the filing of a financing statement under the Uniform Commercial Code as in effect in
any jurisdiction will constitute a valid, perfected, first priority Liens subject in the case of
priority only, to any Permitted Liens






-9-









 







with respect to Collateral. Each agreement purporting to give the Collateral Agent Control
over any Collateral is effective to establish the Collateral Agent’s Control of the Collateral
subject thereto; and




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




     5.5 Goods & Receivables.



          (a) each Receivable (a) is and will be the legal, valid and binding obligation of the Account
Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (b) is
and will be enforceable in accordance with its terms, (c) is not and will not be subject to any
credits, rights of recoupment, setoffs, defenses, taxes, counterclaims (except with respect to
refunds, returns and allowances in the ordinary course of business with respect to damaged
merchandise) and (d) is and will be in compliance with all applicable laws, whether federal, state,
local or foreign;




          (b) none of the Account Debtors in respect of any Receivable (other than any Receivable in the
ordinary course related to Medicaid, Medicare and similar reimbursements) is the government of the
United States, any agency or instrumentality thereof, any state or municipality or any foreign
sovereign. No Receivable requires the consent of the Account Debtor in respect thereof in
connection with the security interest hereunder, except any consent which has been obtained;




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




          (d) other than any Inventory or Equipment in transit, all of the Equipment and Inventory
included in the Collateral is located only at the locations specified in Schedule 5.5 (as such
schedule may be amended or supplemented from time to time).




     5.6 Pledged Equity Interests, Investment Related Property.



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




          (b) no consent of any Person including any other general or limited partner, any other member
of a limited liability company, any other shareholder or any other trust beneficiary is necessary
or desirable in connection with the creation, perfection or first priority status of the security
interest of the Collateral Agent in any Pledged Equity Interests or the exercise by the Collateral
Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in
respect thereof except such as have been obtained; and







-10-









 








          (c) all of the Pledged LLC Interests and Pledged Partnership Interests are or represent
interests that by their terms provide that they are securities governed by the uniform commercial
code of an applicable jurisdiction.




     5.7 Intellectual Property.



          (a) it owns or has the valid right to use and, where Grantor does so, sublicense others to
use, all Intellectual Property used in or necessary to conduct its business, free and clear of all
Liens, claims, encumbrances and licenses, except for Permitted Liens and Intellectual Property
Licenses entered into by such grantor in the ordinary course of business;




          (b) all Material Intellectual Property is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part, nor, in the case of Patents, is any of the Intellectual
Property the subject of a reexamination proceeding, and each Grantor has performed all acts and has
paid all renewal, maintenance, and other fees and taxes required to maintain each and every
registration and application of Copyrights, Patents and Trademarks constituting Material
Intellectual Property in full force and effect;




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




          (d) all registrations and applications for Copyright registrations, Patents and Trademark
registrations are standing in the name of each Grantor, and none of the Trademarks, Patents,
Copyrights or Trade Secrets has been licensed by any Grantor to any Affiliate or third party, other
than Intellectual Property Licenses entered into by such Grantor in the ordinary course of
business, and all exclusive Copyright Licenses constituting Material Intellectual Property have
been properly recorded in the U.S. Copyright Office;




          (e) each Grantor has not made a previous assignment, sale, transfer, exclusive license or
agreement constituting a present or future assignment, sale, transfer, exclusive license or
agreement of any Material Intellectual Property that has not been terminated or released




          (f) each Grantor has been using appropriate statutory notice of registration in connection
with its use of registered Trademarks, proper marking practices in connection with the use of
Patents, and appropriate notice of copyright in connection with the publication of Copyrights
constituting Material Intellectual Property;




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




          (h) the conduct of such Grantor’s business does not, to the best of each such Grantor’s
knowledge, infringe upon or misappropriate or otherwise violate any trademark, patent, copyright,
trade secret or other intellectual property right of any other Person; no claim has been made that
the use of any Material Intellectual Property owned or used by Grantor (or any of its respective
licensees) infringes upon, misappropriates or otherwise violates the asserted rights of any other
Person,






-11-









 







and no demand that Grantor enter into a license or co-existence agreement has been made but
not resolved;




          (i) to the best of each Grantor’s knowledge, no other Person is infringing upon,
misappropriating or otherwise violating any rights in any Material Intellectual Property owned,
licensed or used by such Grantor, or any of its respective licensees; and




          (j) no settlement or consents, covenants not to sue, co-existence agreements, non-assertion
assurances, or releases have been entered into by Grantor or binds Grantor in a manner that could
adversely affect Grantor’s rights to own, license or use any Material Intellectual Property.




     5.8 Miscellaneous.



          (a) No Material Contract prohibits assignment or requires consent of or notice to any Person
in connection with the assignment to the Collateral Agent hereunder, except such as has been given
or made or is currently sought and except for assignments which are ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of
equity.





			
	SECTION 6.	 	COVENANTS AND AGREEMENTS.




Each Grantor hereby covenants and agrees that:




     6.1 Grantor Information & Status.



          (a) Without limiting any prohibitions or restrictions on mergers or other transactions set
forth in the Credit Agreement, it shall not change such Grantor’s name, identity, corporate
structure (e.g. by merger, consolidation, change in corporate form or otherwise), sole place of
business (or principal residence if such Grantor is a natural person), chief executive office, type
of organization or jurisdiction of organization or establish any trade names unless it shall have
(a) notified the Collateral Agent in writing at least thirty (30) days prior to any such change or
establishment, identifying such new proposed name, identity, corporate structure, sole place of
business (or principal residence if such Grantor is a natural person), chief executive office,
jurisdiction of organization or trade name and providing such other information in connection
therewith as the Collateral Agent may reasonably request and (b) taken all actions necessary or
advisable to maintain the continuous validity, perfection and the same or better priority of the
Collateral Agent’s security interest in the Collateral granted or intended to be granted and agreed
to hereby, which in the case of any merger or other change in corporate structure shall include,
without limitation, executing and delivering to the Collateral Agent a completed Pledge Supplement,
substantially in the form of Annex A attached hereto, upon completion of such merger or other
change in corporate structure confirming the grant of the security interest hereunder.




     6.2 Collateral Identification; Special Collateral.



          (a) in the event that it hereafter acquires or has any Commercial Tort Claim in excess of $1.0
million it shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in
the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto,
identifying such new Commercial Tort Claims.







-12-









 








     6.3 Ownership of Collateral and Absence of Other Liens.



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




          (b) upon such Grantor or any officer of such Grantor obtaining knowledge thereof, it shall
promptly notify the Collateral Agent in writing of any event that may have a Material Adverse
Effect on the value of the Collateral or any portion thereof, the ability of any Grantor or the
Collateral Agent to dispose of the Collateral or any portion thereof, or the rights and remedies of
the Collateral Agent in relation thereto, including, without limitation, the levy of any legal
process against the Collateral or any portion thereof; and




          (c) it shall not sell, transfer or assign (by operation of law or otherwise) or exclusively
license to another Person any Collateral except as otherwise permitted by the Credit Agreement.




     6.4 Status of Security Interest.



          (a) Subject to the limitations set forth in subsection (b) of this Section 6.4, each Grantor
shall maintain the security interest of the Collateral Agent hereunder in all Collateral as valid,
perfected, first priority Liens (subject, in the case of priority only, to Permitted Liens).




          (b) Notwithstanding the foregoing, no Grantor shall be required to take any action to perfect
any Collateral that can only be perfected by (i) Control, (ii) federal or foreign filings with
respect to Intellectual Property or (iii) filings with registrars of motor vehicles or similar
governmental authorities with respect to goods covered by a certificate of title.




     6.5 Goods & Receivables.



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




          (b) it shall keep the Equipment, Inventory and any Documents evidencing any Equipment and
Inventory in the locations specified on Schedule 5.5 (as such schedule may be amended or
supplemented from time to time) unless it shall have (a) notified the Collateral Agent in writing,
by executing and delivering to the Collateral Agent a completed Pledge Supplement, substantially in
the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, at least
thirty (30) days prior to any change in locations, identifying such new locations and providing
such other information in connection therewith as the Collateral Agent may reasonably request;




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




          (d) other than in the ordinary course of business (i) it shall not amend, modify, terminate or
waive any provision of any Receivable in any manner which could reasonably be expected to have a
material adverse effect on the value of such Receivable; (ii) following and during the continuation
of an Event of Default, such Grantor shall not (w) grant any extension or renewal of the time of
payment






-13-









 







of any Receivable, (x) compromise or settle any dispute, claim or legal proceeding with
respect to any Receivable for less than the total unpaid balance thereof, (y) release, wholly or
partially, any Person liable for the payment thereof, or (z) allow any credit or discount thereon;
and




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




     6.6 Pledged Equity Interests, Investment Related Property.



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




          (b) Voting.





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




-14-









 






	 	 	 	with the terms of this Agreement or the Credit Agreement; provided, no
Grantor shall exercise or refrain from exercising any such right if the
Collateral Agent shall have notified such Grantor that, in the Collateral
Agent’s reasonable judgment, such action would have a Material Adverse
Effect on the value of the Investment Related Property or any part thereof;
and provided further, such Grantor shall give the Collateral Agent at least
five (5) Business Days prior written notice of the manner in which it
intends to exercise, or the reasons for refraining from exercising, any such
right; it being understood, however, that neither the voting by such Grantor
of any Pledged Stock for, or such Grantor’s consent to, the election of
directors (or similar governing body) at a regularly scheduled annual or
other meeting of stockholders or with respect to incidental matters at any
such meeting, nor such Grantor’s consent to or approval of any action
otherwise permitted under this Agreement and the Credit Agreement, shall be
deemed inconsistent with the terms of this Agreement or the Credit Agreement
within the meaning of this Section 6.6(b)(i)(1) and no notice of any such
voting or consent need be given to the Collateral Agent; and
	 
	 	(ii)	 	Upon the occurrence and during the continuation of an Event of Default:
	 
	 	(1)	 	all rights of each Grantor to exercise or refrain from
exercising the voting and other consensual rights which it would otherwise be
entitled to exercise pursuant hereto shall cease and all such rights shall
thereupon become vested in the Collateral Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights; and
	 
	 	(2)	 	in order to permit the Collateral Agent to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant
hereto and to receive all dividends and other distributions which it may be
entitled to receive hereunder: (1) each Grantor shall promptly execute and
deliver (or cause to be executed and delivered) to the Collateral Agent all
proxies, dividend payment orders and other instruments as the Collateral Agent
may from time to time reasonably request and (2) each Grantor acknowledges that
the Collateral Agent may utilize the power of attorney set forth in Section
8.1.





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






-15-









 







action in violation of the foregoing in this clause (e), such Grantor shall promptly notify
the Collateral Agent in writing of any such election or action and, in such event, shall take all
steps necessary or advisable to establish the Collateral Agent’s “control” thereof; and




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




          (e) notwithstanding anything in this Agreement or the Credit Agreement to the contrary, (i)
all Certificated Securities included in the Collateral shall remain in the possession and control
of a Grantor at all times and (ii) no Grantor shall transfer or deliver any Certificated Securities
included in the Collateral to any Person other than the Collateral Agent.




     6.7 Intellectual Property.



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




          (b) it shall not, with respect to any Trademarks constituting Material Intellectual Property,
cease the use of any of such Trademarks or fail to maintain the level of the quality of products
sold and services rendered under any of such Trademark at a level at least substantially consistent
with the quality of such products and services as of the date hereof, and each Grantor shall take
all steps necessary to insure that licensees of such Trademarks use such consistent standards of
quality;




          (c) it shall take all reasonable steps in the United States Patent and Trademark Office, the
United States Copyright Office, any state registry or any foreign counterpart of the foregoing, to
pursue any application and maintain any registration of each Trademark, Patent, and Copyright owned
by or exclusively licensed to any Grantor and constituting Material Intellectual Property which is
now or shall become included in the Intellectual Property including Intellectual Property Licenses;




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




          (e) in the event that any Material Intellectual Property owned by or exclusively licensed to
any Grantor is infringed, misappropriated, or diluted by a third party, such Grantor shall promptly
take all reasonable actions that it determines are reasonably appropriate to stop such
infringement, misappropriation, or dilution and protect its rights in such Material Intellectual
Property






-16-









 







including, but not limited to, if it so determines, the initiation of a suit for injunctive
relief and to recover damages;




          (f) it shall take all steps reasonably necessary to protect the secrecy of all Trade Secrets,
including, without limitation, entering into confidentiality agreements with employees and
consultants and labeling and restricting access to secret information and documents;




          (g) it shall use proper statutory notice in connection with its use of any of the Material
Intellectual Property; and




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





			
	SECTION 7.	 	ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS.





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



     7.2 Further Assurances.



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





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




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



-17-









 







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




     (iv) furnish the Collateral Agent with such information regarding the Collateral,
including, without limitation, the location thereof, as the Collateral Agent may reasonably
request from time to time.



          (b) Each Grantor hereby authorizes the Collateral Agent to file a Record or Records,
including, without limitation, financing or continuation statements, and amendments to any of the
foregoing, in any jurisdictions and with any filing offices as the Collateral Agent may determine,
in its sole discretion, are necessary or advisable to perfect or otherwise protect the security
interest granted to the Collateral Agent herein. Such financing statements may describe the
Collateral in the same manner as described herein or may contain an indication or description of
collateral that describes such property in any other manner as the Collateral Agent may determine,
in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security
interest in the Collateral granted to the Collateral Agent herein, including, without limitation,
describing such property as “all assets, whether now owned or hereafter acquired” or words of
similar effect. Each Grantor shall furnish to the Collateral Agent from time to time statements
and schedules further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.




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




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




			
	SECTION 8.	 	COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.





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



-18-









 






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




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




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




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




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




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




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



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




			
	SECTION 9.	 	REMEDIES.





     9.1 Generally.



          (a) If any Event of Default shall have occurred and be continuing, the Collateral Agent may
exercise in respect of the Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it at law or in equity, all the rights and remedies of the
Collateral Agent on default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce






-19-









 







or satisfy any Secured Obligations then owing, whether by acceleration or otherwise, and also
may pursue any of the following separately, successively or simultaneously:





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




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




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




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



          (b) The Collateral Agent or any Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent to the portion of the Collateral being privately
sold is of a kind that is customarily sold on a recognized market or the subject of widely
distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as
collateral agent for and representative of the Secured Parties, shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any Collateral payable by the
Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days notice to such Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each Grantor agrees that it would not be
commercially unreasonable for the Collateral Agent to dispose of the Collateral or any portion
thereof by using Internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of
assets. Each Grantor hereby waives any claims against the Collateral Agent arising by reason of
the fact that the price at which any Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if the Collateral Agent
accepts the first offer received and does not offer such Collateral to more than one offeree. If
the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the
Secured Obligations, Grantors shall be liable for the deficiency and the fees of any attorneys
employed by the Collateral Agent to collect such deficiency. Each Grantor further agrees that a
breach of any of the covenants contained in this Section will cause irreparable injury to the
Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach
and, as a consequence, that each






-20-









 







and every covenant contained in this Section shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no default has occurred giving
rise to the Secured Obligations becoming due and payable prior to their stated maturities. Nothing
in this Section shall in any way limit the rights of the Collateral Agent hereunder.




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




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




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



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



     9.4 Investment Related Property. Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities laws, the Collateral
Agent may be compelled, with respect to any sale of all or any part of the Investment Related
Property conducted without prior registration or qualification of such Investment Related Property
under the Securities Act and/or such state securities laws, to limit purchasers to those who will
agree, among other things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges
that any such private sale may be at prices and on terms less favorable than those obtainable
through a public sale without such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such circumstances, each
Grantor agrees that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales
and no obligation to delay the sale of any Investment Related Property for the period of time
necessary to permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it. If the Collateral Agent determines to exercise
its right to sell any or all of the Investment Related Property, upon written request, each Grantor
shall and shall cause each issuer of any Pledged



-21-









 




Stock to be sold hereunder, each partnership and each limited liability company from time to
time to furnish to the Collateral Agent all such information as the Collateral Agent may request in
order to determine the number and nature of interest, shares or other instruments included in the
Investment Related Property which may be sold by the Collateral Agent in exempt transactions under
the Securities Act and the rules and regulations of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.




     9.5 Grant of Intellectual Property License. For the purpose of enabling the Collateral Agent,
during the continuance of an Event of Default, to exercise rights and remedies under Section 9
hereof at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent, to the
extent assignable, an irrevocable, non-exclusive license to use, assign, license or sublicense any
of the Intellectual Property now owned or hereafter acquired by such Grantor, wherever the same may
be located. Such license shall include access to all media in which any of the licensed items may
be recorded or stored and to all computer programs used for the compilation or printout hereof.



     9.6 Intellectual Property.



          (a) Anything contained herein to the contrary notwithstanding, in addition to the other rights
and remedies provided herein, upon the occurrence and during the continuation of an Event of
Default:





     (i) the Collateral Agent shall have the right (but not the obligation) to bring suit or
otherwise commence any action or proceeding in the name of any Grantor, the Collateral Agent
or otherwise, in the Collateral Agent’s sole discretion, to enforce any Intellectual
Property, in which event such Grantor shall, at the request of the Collateral Agent, do any
and all lawful acts and execute any and all documents required by the Collateral Agent in
aid of such enforcement and such Grantor shall promptly, upon demand, reimburse and
indemnify the Collateral Agent as provided in Section 10 hereof in connection with the
exercise of its rights under this Section, and, to the extent that the Collateral Agent
shall elect not to bring suit to enforce any Intellectual Property as provided in this
Section, each Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement or other violation of any of such
Grantor’s rights in the Intellectual Property by others and for that purpose agrees to
diligently maintain any action, suit or proceeding against any Person so infringing as shall
be necessary to prevent such infringement or violation;




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




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




     (iv) within five (5) Business Days after written notice from the Collateral Agent, each
Grantor shall make available to the Collateral Agent, to the extent within such Grantor’s
power and authority, such personnel in such Grantor’s employ on the date of such Event of
Default as the Collateral Agent may reasonably designate, by name, title or job
responsibility, to permit such



-22-









 







Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection with the
Trademarks, Trademark Licenses, such persons to be available to perform their prior
functions on the Collateral Agent’s behalf and to be compensated by the Collateral Agent at
such Grantor’s expense on a per diem, pro-rata basis consistent with the salary and benefit
structure applicable to each as of the date of such Event of Default; and




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




	 	(1)	 	all amounts and proceeds (including checks and other
instruments) received by Grantor in respect of amounts due to such Grantor in
respect of the Collateral or any portion thereof shall be received in trust for
the benefit of the Collateral Agent hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over or delivered to the
Collateral Agent in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section
9.7 hereof; and
	 
	 	(2)	 	Grantor shall not adjust, settle or compromise the amount or
payment of any such amount or release wholly or partly any obligor with respect
thereto or allow any credit or discount thereon.





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




          (c) Solely for the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Section 9 and at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent, to the
extent it has the right to do so, an irrevocable, nonexclusive license (exercisable without payment
of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of
invalidation of said Trademarks, to use, operate under, license, or sublicense any Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same may be located.







-23-









 








     9.7 Cash Proceeds; Deposit Accounts.



          (a) If any Event of Default shall have occurred and be continuing, in addition to the rights
of the Collateral Agent specified in Section 6.5 with respect to payments of Receivables, all
proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash
items (collectively, “Cash Proceeds”) shall be held by such Grantor in trust for the Collateral
Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such
Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Collateral Agent, if required) and held by the Collateral Agent in
the Collateral Account. Any Cash Proceeds received by the Collateral Agent (whether from a Grantor
or otherwise) may, in the sole discretion of the Collateral Agent, (A) be held by the Collateral
Agent for the ratable benefit of the Secured Parties, as collateral security for the Secured
Obligations (whether matured or unmatured) and/or (B) then or at any time thereafter may be applied
by the Collateral Agent against the Secured Obligations then due and owing.




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





			
	SECTION 10.	 	COLLATERAL AGENT.





     The Collateral Agent has been appointed to act as Collateral Agent hereunder by Lenders and,
by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agent shall
be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement; provided, the Collateral Agent shall, after payment in full of
all Obligations under the Credit Agreement and the other Credit Documents, exercise, or refrain
from exercising, any remedies provided for herein in accordance with the instructions of the
holders (the “Majority Holders”) of a majority of the aggregate “settlement amount” as defined in
the Hedge Agreements (or, with respect to any Hedge Agreement that has been terminated in
accordance with its terms, the amount then due and payable (exclusive of expenses and similar
payments but including any early termination payments then due) under such Hedge Agreement) under
all Hedge Agreements. For purposes of the foregoing sentence, settlement amount for any Hedge that
has not been terminated shall be the settlement amount as of the last Business Day of the month
preceding any date of determination and shall be calculated by the appropriate swap counterparties
and reported to the Collateral Agent upon request; provided any Hedge Agreement with a settlement
amount that is a negative number shall be disregarded for purposes of determining the Majority
Holders. In furtherance of the foregoing provisions of this Section, each Secured Party, by its
acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon
any of the Collateral hereunder, it being understood and agreed by such Secured Party that all
rights and remedies hereunder may be exercised solely by the Collateral Agent for the benefit of
Secured Parties in accordance with the terms of this Section. The provisions of the Credit
Agreement relating to the Collateral Agent including, without limitation, the provisions relating
to resignation or removal of the Collateral Agent and the powers and duties and immunities of the
Collateral Agent are incorporated herein by this reference and shall survive any termination of the
Credit Agreement.




			
	SECTION 11.	 	CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.





     This Agreement shall create a continuing security interest in the Collateral and shall remain
in full force and effect until the payment in full of all Secured Obligations and be binding upon
each



-24-









 




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





			
	SECTION 12.	 	STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.





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




			
	SECTION 13.	 	MISCELLANEOUS.





     Any notice required or permitted to be given under this Agreement shall be given in accordance
with Section 10.1 of the Credit Agreement. No failure or delay on the part of the Collateral Agent
in the exercise of any power, right or privilege hereunder or under any other Credit Document shall
impair such power, right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Credit Documents are cumulative to, and not
exclusive of, any rights or remedies otherwise available. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. All
covenants hereunder shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted by an exception to,
or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of
a Default or an Event of Default if such action is taken or condition exists. This Agreement shall
be



-25-









 




binding upon and inure to the benefit of the Collateral Agent and Grantors and their
respective successors and assigns. No Grantor shall, without the prior written consent of the
Collateral Agent given in accordance with the Credit Agreement, assign any right, duty or
obligation hereunder. This Agreement and the other Credit Documents embody the entire agreement
and understanding between Grantors and the Collateral Agent and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and thereof.
Accordingly, the Credit Documents may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties. There are no unwritten oral agreements between the
parties. This Agreement may be executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same document.




     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ALL CLAIMS AND
CONTROVERSIES ARISING OUT OF THE SUBJECT MATTER HEREOF WHETHER SOUNDING IN CONTRACT LAW, TORT LAW
OR OTHERWISE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE
APPLICATION OF ANY OTHER LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW
GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OF THE SECURITY INTEREST).



     THE PROVISIONS OF THE CREDIT AGREEMENT UNDER THE HEADINGS “CONSENT TO JURISDICTION” AND
“WAIVER OF JURY TRIAL” ARE INCORPORATED HEREIN BY THIS REFERENCE AND SUCH INCORPORATION SHALL
SURVIVE ANY TERMINATION OF THE CREDIT AGREEMENT.



-26-









 





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



	 	 	 	 	 
	 	VALEANT PHARMACEUTICALS INTERNATIONAL, as Grantor

 	 
	 	By:  	/s/
J. Michael Pearson 	 
	 	 	Name:  	J. Michael Pearson 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	AMARIN PHARMACEUTICALS INC., as Grantor

 	 
	 	By:  	/s/
Steve T. Min 	 
	 	 	Name:  	Steve T. Min 	 
	 	 	Title:  	President 	 
	 
	 	HARBOR PHARMACEUTICALS, INC., as Grantor

 	 
	 	By:  	/s/
Steve T. Min 	 
	 	 	Name:  	Steve T. Min 	 
	 	 	Title:  	President 	 
	 
	 	HEALTHCHOICE ONLINE, LLC, as Grantor

 	 
	 	By:  	/s/
Steve T. Min 	 
	 	 	Name:  	Steve T. Min 	 
	 	 	Title:  	Managing Officer 	 
	 
	 	HYLAND CAPITAL, INC., as Grantor

 	 
	 	By:  	/s/
Steve T. Min 	 
	 	 	Name:  	Steve T. Min 	 
	 	 	Title:  	President 	 



-27-









 







	 	 	 	 	 
	 	ICN MEDICAL ALLIANCE, INC., as Grantor

 	 
	 	By:  	/s/ Peter J. Blott 	 
	 	 	Name:  	Peter J. Blott 	 
	 	 	Title:  	President and Treasurer 	 
	 
	 	ICN SOUTHEAST, INC., as Grantor

 	 
	 	By:  	/s/ Steve T. Min 	 
	 	 	Name:  	Steve T. Min 	 
	 	 	Title:  	President 	 
	 
	 	OCEANSIDE PHARMACEUTICALS, INC., as Grantor

 	 
	 	By:  	/s/ Steve T. Min  	 
	 	 	Name:  	Steve T. Min  	 
	 	 	Title:  	President 	 
	 
	 	VALEANT BIOMEDICALS, INC., as Grantor

 	 
	 	By:  	/s/ Peter J. Blott 	 
	 	 	Name:  	 Peter J. Blott 	 
	 	 	Title:  	President and Treasurer 	 
	 
	 	VALEANT CHINA, INC., as Grantor

 	 
	 	By:  	/s/ Steve T. Min 	 
	 	 	Name:  	Steve T. Min 	 
	 	 	Title:  	President 	 
	 
	 	VALEANT PHARMACEUTICALS NORTH AMERICA, as
Grantor

 	 
	 	By:  	/s/ J. Michael Pearson 	 
	 	 	Name:  	J. Michael Pearson 	 
	 	 	Title:  	Chief Executive Officer 	 



-28-









 






	 	 	 	 	 



	 	 	 	 	 
	 	CORIA LABORATORIES, LTD., as Grantor

 	 
	 	By:  	/s/ J. Michael Pearson	 
	 	 	Name:  	J. Michael Pearson	 
	 	 	Title:  	Chief Executive Officer	 
	 
	 	DOW PHARMACEUTICAL SCIENCES, INC., as Grantor

 	 
	 	By:  	/s/ J. Michael Pearson	 
	 	 	Name:  	J. Michael Pearson	 
	 	 	Title:  	Chief Executive Officer	 
	 
	 	GOLDMAN SACHS BANK USA,

as Collateral Agent

 	 
	 	By:  	/s/ Mark Walton	 
	 	 	Name:  	 Mark Walton	 
	 	 	Title:  	Authorized Signatory 	 
	 




-29-