Exhibit 4.5


 


EXECUTION VERSION


 




 





 


INTELLECTUAL PROPERTY SECURITY AGREEMENT


 


dated as of


 


November 3, 2006


 


among


 


ENCORE MEDICAL FINANCE LLC,

as Borrower


 


ENCORE MEDICAL HOLDINGS LLC,

as Holdings


 


CERTAIN SUBSIDIARIES OF HOLDINGS

IDENTIFIED HEREIN,


 


and


 


BANK OF AMERICA, N.A.,

as Collateral Agent


 




 





 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
   

  	
   

  	
  1

  
	
  Section 1.01   Credit
  Agreement

  	
   

  	
  1

  
	
  Section 1.02   Other
  Defined Terms

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II SECURITY INTERESTS

  	
   

  	
   

  	
   

  	
  4

  
	
  Section 2.01   Security
  Interest

  	
   

  	
  4

  
	
  Section 2.02   Representations
  and Warranties

  	
   

  	
  5

  
	
  Section 2.03   Covenants

  	
   

  	
  7

  
	
  Section 2.04   As to
  Intellectual Property Collateral

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REMEDIES

  	
   

  	
   

  	
   

  	
  10

  
	
  Section 3.01   Remedies
  Upon Default

  	
   

  	
  10

  
	
  Section 3.02   Application
  of Proceeds

  	
   

  	
  11

  
	
  Section 3.03   Grant
  of License to Use Intellectual Property

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV INDEMNITY,
  SUBROGATION AND SUBORDINATION

  	
   

  	
  12

  
	
  Section 4.01   Indemnity

  	
   

  	
  12

  
	
  Section 4.02   Contribution
  and Subrogation

  	
   

  	
  12

  
	
  Section 4.03   Subordination

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V MISCELLANEOUS

  	
   

  	
   

  	
   

  	
  12

  
	
  Section 5.01   Notices

  	
   

  	
  12

  
	
  Section 5.02   Waivers;
  Amendment

  	
   

  	
  13

  
	
  Section 5.03   Collateral
  Agent’s Fees and Expenses; Indemnification

  	
   

  	
  13

  
	
  Section 5.04   Successors
  and Assigns

  	
   

  	
  14

  
	
  Section 5.05   Survival
  of Agreement

  	
   

  	
  14

  
	
  Section 5.06   Counterparts;
  Effectiveness; Several Agreement

  	
   

  	
  14

  
	
  Section 5.07   Severability

  	
   

  	
  15

  
	
  Section 5.08   Right
  of Set-Off

  	
   

  	
  15

  
	
  Section 5.09   Governing
  Law; Jurisdiction; Consent to Service of Process

  	
   

  	
  15

  
	
  Section 5.10   WAIVER
  OF JURY TRIAL

  	
   

  	
  16

  
	
  Section 5.11   Headings

  	
   

  	
  16

  
	
  Section 5.12   Security
  Interest Absolute

  	
   

  	
  16

  
	
  Section 5.13   Termination
  or Release

  	
   

  	
  17

  
	
  Section 5.14   Additional
  Restricted Subsidiaries

  	
   

  	
  18

  
	
  Section 5.15   General
  Authority of the Collateral Agent

  	
   

  	
  18

  
	
  Section 5.16   Collateral
  Agent Appointed Attorney-in-Fact

  	
   

  	
  18

  



 

















 


Schedules


 


	
  Schedule I

  	
  Subsidiary Parties

  
	
  Schedule II

  	
  Intellectual Property

  
	
  Schedule III

  	
  Post-Closing Items

  



 


Exhibits


 


Exhibit I  Form of Supplement


 


2

















 


INTELLECTUAL
PROPERTY SECURITY AGREEMENT dated as of November 3, 2006 among ENCORE
MEDICAL HOLDINGS LLC (“Holdings”),
ENCORE MEDICAL FINANCE LLC (the “Borrower”),
the Subsidiaries of Holdings from time to time party hereto, and BANK OF
AMERICA N.A., as Collateral Agent (the “Collateral
Agent”).


 


Reference
is made to the Credit Agreement dated as of November 3, 2006 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower,
Holdings, BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and
an L/C Issuer, each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), BANC OF AMERICA SECURITIES LLC,
as Arranger and Book Runner, CREDIT SUISSE SECURITIES (USA) LLC, as Arranger,
Book Runner and Syndication Agent, and GENERAL ELECTRIC CAPITAL CORPORATION, as
Documentation Agent. The Lenders have agreed to extend credit to the Borrower
subject to the terms and conditions set forth in the Credit Agreement. The Grantors
may receive, directly or indirectly, a portion of the proceeds of the Loans
under the Credit Agreement and will derive substantial direct and indirect
benefits from the transactions contemplated by the Credit Agreement. It is a
condition precedent to the making of Loans and the issuance of Letters of
Credit by the Lenders under the Credit Agreement and the entry by any Lender or
Affiliate of a Lender in its capacity as a provider of cash management services
into Cash Management Obligations and Hedge Banks into Secured Hedge Agreements
from time to time that the Grantors shall have executed and delivered this
Agreement. Holdings and the Subsidiary Parties are affiliates of the Borrower,
will derive substantial benefits from the extension of credit to the Borrower
pursuant to the Credit Agreement and are willing to execute and deliver this
Agreement in order to induce the Lenders to extend such credit. Accordingly,
the parties hereto agree as follows:


 


ARTICLE I



DEFINITIONS


 


Section 1.01           Credit Agreement.


 


(a)           Capitalized terms used in this Agreement and not otherwise
defined herein have the meanings specified in the Credit Agreement. All terms
defined in the New York UCC (as defined herein) and not defined in this
Agreement have the meanings specified therein; the term “instrument” shall have
the meaning specified in Article 9 of the New York UCC.


 


(b)           The rules of construction specified in Article I of the
Credit Agreement also apply to this Agreement.


 


Section 1.02           Other Defined Terms. As used in this
Agreement, the following terms have the meanings specified below:


 


“Agreement” means this Intellectual Property
Security Agreement.


 


“Borrower” has the meaning assigned to such term in the
preliminary statement of this Agreement.


 

















 


“Claiming Party” has the meaning assigned to such term in
Section 4.02.


 


“Collateral” has the meaning assigned to such term in Section
2.01.


 


“Collateral Agent” has the meaning assigned to such term in
the preliminary statement of this Agreement.


 


“Contributing Party” has the meaning assigned to such term in
Section 4.02.


 


“Copyright License” means any written agreement, now or
hereafter in effect, granting any right to any third party under any copyright
now or hereafter owned by any Grantor or that such Grantor otherwise has the
right to license, or granting any right to any Grantor under any copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.


 


“Copyrights” means all of the following now owned or
hereafter acquired by any Grantor:  (a)
all copyright rights in any work, whether registered or unregistered, subject
to the copyright laws of the United States or any other country, whether as
author, assignee, transferee or otherwise, and (b) all registrations and
applications for registration of any such copyright in the United States or any
other country, including registrations, recordings, supplemental registrations
and pending applications for registration in the United States Copyright
Office, including those listed on Schedule II.


 


“Credit Agreement” has the meaning assigned to such term in
the preliminary statement of this Agreement.


 


“Grantor” means each of Holdings, the Borrower and each
Subsidiary Party that is a Domestic Subsidiary and not an Unrestricted
Subsidiary or an Excluded Subsidiary.


 


“Holdings” has the meaning assigned to such term in the
preliminary statement of this Agreement.


 


“Intellectual Property” means all intellectual and similar
property of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know how, show how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions
to, and books and records describing or used in connection with, any of the
foregoing.


 


“Intellectual Property Collateral” means Collateral
consisting of Intellectual Property.


 


“Intellectual Property Security Agreement Supplement” means
an instrument in the form of Exhibit I hereto.


 


“Lender” has the meaning assigned to such term in the
preliminary statement of this Agreement.


 


2

















 


“License” means any Patent License, Trademark License,
Copyright License or other license or sublicense agreement relating to
Intellectual Property to which any Grantor is a party, including those listed
on Schedule II.


 


“New York UCC” means the Uniform Commercial Code as from time
to time in effect in the State of New York.


 


“Patent License” means any written agreement, now or
hereafter in effect, granting to any third party any right to make, use or sell
any invention on which a patent, now or hereafter owned by any Grantor or that
any Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a patent, now
or hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.


 


“Patents” means all of the following now owned or hereafter
acquired by any Grantor:  (a) all letters
patent of the United States or the equivalent thereof in any other country, all
registrations and recordings thereof, and all applications for letters patent
of the United States or the equivalent thereof in any other country, including
registrations, recordings and pending applications in the United States Patent and
Trademark Office or any similar offices in any other country, including those
listed on Schedule II, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.


 


“Perfection Certificate” has the meaning specified in the
Security Agreement dated the date hereof among the parties hereto (as amended,
supplemented or otherwise modified from time to time, the “Security
Agreement”).


 


“Proceeds” has the meaning specified in Section 9-102 of the
New York UCC.


 


“Security Interest” has the meaning assigned to such term in
Section 2.01(a).


 


“Subsidiary Parties” means (a) the Subsidiaries identified on
Schedule I and (b) each other Subsidiary that becomes a party to this
Agreement as a Subsidiary Party after the Closing Date.


 


“Trademark License” means any written agreement, now or
hereafter in effect, granting to any third party any right to use any trademark
now or hereafter owned by any Grantor or that any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.


 


“Trademarks” means all of the following now owned or
hereafter acquired by any Grantor:  (a)
all trademarks, service marks, trade names, domain names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office or
any similar offices in any State


 


3

















 


of the United States or any other country or any
political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule II, (b) all goodwill associated
therewith or symbolized thereby and (c) all other assets, rights and interests
that uniquely reflect or embody such goodwill.


 


ARTICLE II



SECURITY INTERESTS


 


Section 2.01           Security Interest.


 


(a)  As security
for the payment or performance, as the case may be, in full of the Obligations,
including the Guaranties, each Grantor hereby assigns and pledges to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, and hereby grants to the Collateral Agent, its successors and assigns,
for the benefit of the Secured Parties, a security interest (the “Security Interest”) in, all right, title or interest in or
to any and all of the following assets and properties now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the “Collateral”):


 


(i)            all
Copyrights;


 


(ii)           all
Patents;


 


(iii)          all
Trademarks;


 


(iv)          all
Licenses;


 


(v)           all
other Intellectual Property; and


 


(vi)          all
Proceeds and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;


 


provided that with respect to any
Trademarks, applications in the United States Patent and Trademark Office to
register Trademarks or service marks on the basis of any Grantor’s “intent to
use” such Trademarks or service marks will not be deemed to be Collateral
unless and until a “Statement of Use” or “Amendment to Allege Use” has been
filed and accepted in the United States Patent and Trademark Office, whereupon
such application shall be automatically subject to the security interest
granted herein and deemed to be included in the Collateral.


 


(b)           Each Grantor hereby irrevocably authorizes the Collateral
Agent for the benefit of the Secured Parties at any time and from time to time
to file in any relevant jurisdiction any initial financing statements with
respect to the Collateral or any part thereof and amendments thereto that
contain the information required by Article 9 of the Uniform Commercial Code or
the analogous legislation of each applicable jurisdiction for the filing of any
financing statement or amendment, including whether such Grantor is an
organization, the type of organization and any organizational identification
number issued to such Grantor. Each Grantor agrees to provide such information
to the Collateral Agent promptly upon request.


 


4

















 


The
Collateral Agent is further authorized to file with the United States Patent
and Trademark Office or United States Copyright Office (or any successor office
or any similar office in any other country) such documents as may be necessary
or advisable for the purpose of perfecting, confirming, continuing, enforcing
or protecting the Security Interest granted by each Grantor, without the
signature of any Grantor, and naming any Grantor or the Grantors as debtors and
the Collateral Agent as secured party.


 


(c)           The Security Interest is granted as security only and shall
not subject the Collateral Agent or any other Secured Party to, or in any way
alter or modify, any obligation or liability of any Grantor with respect to or
arising out of the Collateral.


 


Section 2.02           Representations and Warranties. Holdings
and the Borrower jointly and severally represent and warrant, as to themselves
and the other Grantors, to the Collateral Agent and the other Secured Parties
that:


 


(a)           Each
Grantor owns or has exclusive rights to the Collateral with respect to which it
has purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other Person other than any consent or approval that has been obtained.


 


(b)           The
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations prepared
by the Collateral Agent based upon the information provided to the Collateral
Agent in the Perfection Certificate (delivered pursuant to the Security
Agreement) for filing in each governmental, municipal or other office specified
in Schedule 2 to the Perfection Certificate (or specified by notice from the
Borrower to the Collateral Agent after the Closing Date in the case of filings,
recordings or registrations required by Section 6.11 of the Credit Agreement),
are all the filings, recordings and registrations (other than filings required
to be made in the United States Patent and Trademark Office and the United
States Copyright Office in order to perfect the Security Interest in Collateral
consisting of United States Patents, Trademarks and Copyrights) that are
necessary to establish a legal, valid and perfected security interest in favor
of the Collateral Agent (for the benefit of the Secured Parties) in respect of
all Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law
with respect to the filing of continuation statements. Each Grantor represents
and warrants that a fully executed agreement in the form hereof and containing
a description of all Collateral consisting of Intellectual Property with
respect to United States Patents and United States registered Trademarks (and
Trademarks for which United States registration applications are pending) and
United States registered Copyrights have been delivered to the Collateral Agent
for recording by the United States Patent and Trademark Office and the United
States Copyright Office pursuant to 35 U.S.C. § 261, 15 U.S.C. § 1060 or 17
U.S.C. § 205 and the regulations thereunder, as applicable, and otherwise as
may be required


 


5

















 


pursuant to
the laws of any other necessary jurisdiction, to protect the validity of and to
establish a legal, valid and perfected security interest in favor of the
Collateral Agent (for the benefit of the Secured Parties) in respect of all
Collateral consisting of Patents, Trademarks and Copyrights in which a security
interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than such
actions as are necessary to perfect the Security Interest with respect to any
Collateral consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof).


 


(c)           The
Security Interest constitutes (i) a legal and valid security interest in all
the Collateral securing the payment and performance of the Obligations,
including the Guaranties, (ii) subject to the filings described in Section
2.02(b), a perfected security interest in all Collateral in which a security
interest may be perfected by filing, recording or registering a financing
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the
Uniform Commercial Code and (iii) a security interest that shall be perfected
in all Collateral in which a security interest may be perfected upon the
receipt and recording of this Agreement with the United States Patent and
Trademark Office and the United States Copyright Office, as applicable, within
the three month period (commencing as of the date hereof) pursuant to 35 U.S.C.
§ 261 or 15 U.S.C. § 1060 or the one month period (commencing as of the date
hereof) pursuant to 17 U.S.C. § 205 and otherwise as may be required pursuant
to the laws of any other necessary jurisdiction. The Security Interest is and
shall be prior to any other Lien on any of the Collateral, other than (i) any
nonconsensual Lien that is expressly permitted pursuant to Section 7.01 of the
Credit Agreement and has priority as a matter of law and (ii) Liens expressly
permitted pursuant to Section 7.01 of the Credit Agreement.


 


(d)           The
Collateral is owned or exclusively licensed by the Grantors free and clear of
any Lien, except for Liens expressly permitted pursuant to Section 7.01 of the
Credit Agreement. None of the Grantors has filed or consented to the filing of
(i) any financing statement or analogous document under the Uniform Commercial
Code or any other applicable laws covering any Collateral, (ii) any assignment
in which any Grantor assigns any Collateral or any security agreement or
similar instrument covering any Collateral with the United States Patent and
Trademark Office or the United States Copyright Office or (iii) any assignment
in which any Grantor assigns any Collateral or any security agreement or
similar instrument covering any Collateral with any foreign governmental,
municipal or other office, which financing statement or analogous document,
assignment, security agreement or similar instrument is still in effect,
except, in each case, for Liens expressly permitted pursuant to Section 7.01 of
the Credit Agreement.


 


(e)           Such
Grantor owns, licenses or possesses the right to use, all of the trademarks,
service marks, trade names, domain names, copyrights, patents, patent rights,
licenses, technology, software, know-how database rights, design rights and
other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for


 


6

















 


the operation
of their respective businesses as currently conducted, and, without conflict
with the rights of any Person, except to the extent such conflicts, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. To such Grantor’s knowledge, as of the Closing Date,
the IP Rights set forth on Schedule II hereto are owned or exclusively licensed
by such Grantor, and to such Grantor’s knowledge, the IP Rights are valid and
enforceable. No IP Rights, advertising, product, process, method, substance,
part or other material used by such Grantor in the operation of the business as
currently conducted, infringes, misappropriates, dilutes, misuses or otherwise
violates any rights held by any Person except for such infringements,
misappropriation, dilution, and misuse, individually or in the aggregate, which
could not reasonably be expected to have a Material Adverse Effect. No claim,
investigation, proceeding or litigation regarding any of the IP Rights, is
pending or, to the knowledge of such Grantor, threatened against such Grantor,
which either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.


 


Section 2.03           Covenants.


 


(a)           The Borrower agrees promptly to notify the Collateral Agent
in writing of any change (i) in legal name of any Grantor, (ii) in the identity
or type of organization or corporate structure of any Grantor, or (iii) in the
jurisdiction of organization of any Grantor, in each case, within 10 days of
such change.


 


(b)           Each Grantor shall, at its own expense, take any and all
commercially reasonable actions necessary to defend title to the Collateral
against all Persons and to defend the Security Interest of the Collateral Agent
in the Collateral and the priority thereof against any Lien not expressly
permitted pursuant to Section 7.01 of the Credit Agreement.


 


(c)           The Borrower agrees, on its own behalf and on behalf of each
other Grantor, at its own expense, to execute, acknowledge, deliver and cause
to be duly filed all such further instruments and documents and take all such
actions as the Collateral Agent may from time to time reasonably request to
better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing statements or
other documents in connection herewith or therewith.


 


Without
limiting the generality of the foregoing, each Grantor hereby authorizes the
Collateral Agent, with prompt notice thereof to the Grantors, to supplement
this Agreement by supplementing Schedule II or adding additional
schedules hereto to specifically identify any asset or item that may constitute
Copyrights, Licenses, Patents or Trademarks; provided
that any Grantor shall have the right, exercisable within 10 days after it has
been notified by the Collateral Agent of the specific identification of such
Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Collateral. Each Grantor agrees that it will use its best efforts to take
such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it has been notified by the Collateral Agent of
the specific identification of such Collateral.


 


7

















 


(d)           At its option, the Collateral Agent may discharge past due
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Collateral and not permitted
pursuant to Section 7.01 of the Credit Agreement, and may pay for the
maintenance and preservation of the Collateral to the extent any Grantor fails
to do so as required by the Credit Agreement or this Agreement and within a
reasonable period of time after the Collateral Agent has requested that it do
so, and each Grantor jointly and severally agrees to reimburse the Collateral
Agent within 10 days after demand for any payment made or any reasonable
expense incurred by the Collateral Agent pursuant to the foregoing
authorization. Nothing in this paragraph shall be interpreted as excusing any
Grantor from the performance of, or imposing any obligation on the Collateral
Agent or any Secured Party to cure or perform, any covenants or other promises
of any Grantor with respect to taxes, assessments, charges, fees, Liens,
security interests or other encumbrances and maintenance as set forth herein or
in the other Loan Documents.


 


(e)           Each Grantor (rather than the Collateral Agent or any
Secured Party) shall remain liable (as between itself and any relevant
counterparty) to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the other Secured Parties from and against
any and all liability for such performance.


 


(f)            On or prior to a date that is 60
days after the Closing Date, or such later date as the Collateral Agent may
reasonably determine after any request for extension by the Borrower, the
Collateral Agent shall receive a certificate from a Responsible Officer of the
Borrower confirming that all actions set forth on Schedule III have been
completed (with the exception of, if appropriate, any actions that the Borrower
certifies as not being able to complete, after having taken all commercially
reasonable efforts to complete such actions); provided,
that, with respect to any actions to be taken that have not been completed by
such date, the Collateral Agent may determine in its sole reasonable judgment to
waive such actions if it reasonably determines that the cost of completing such
action is excessive in relation to the benefits afforded to the Secured Parties
thereby. In addition, the Borrower shall take all commercially reasonable
actions to complete the actions set forth on Schedule III as soon as reasonably
practical after the Closing Date.


 


Section 2.04           As to Intellectual Property Collateral.


 


(a)           Except to the extent failure to act could not reasonably be
expected to have a Material Adverse Effect, with respect to registration or
pending application of each item of its Intellectual Property Collateral for
which such Grantor has standing to do so, each Grantor agrees to take, at its
expense, all steps, including, without limitation, in the U.S. Patent and
Trademark Office, the U.S. Copyright Office and any other governmental
authority located in the United States, to (i) maintain the validity and
enforceability of any registered Intellectual Property Collateral (or
applications therefor) and maintain such Intellectual Property Collateral in
full force and effect, and (ii) pursue the registration and maintenance of each
Patent, Trademark, or Copyright registration or application, now or hereafter
included in such Intellectual Property Collateral of such Grantor, including,
without limitation, the payment of required fees and taxes, the filing of
responses to office actions issued by the U.S. Patent and


 


8

















 


Trademark Office,
the U.S. Copyright Office or other governmental authorities, the filing of
applications for renewal or extension, the filing of affidavits under Sections
8 and 15 or the U.S. Trademark Act, the filing of divisional, continuation,
continuation-in-part, reissue and renewal applications or extensions, the
payment of maintenance fees and the participation in interference,
reexamination, opposition, cancellation, infringement and misappropriation
proceedings.


 


(b)           Except as could not reasonably be expected to have a
Material Adverse Effect, no Grantor shall do or permit any act or knowingly
omit to do any act whereby any of its Intellectual Property Collateral may
lapse, be terminated, or become invalid or unenforceable or placed in the
public domain (or in case of a trade secret, lose its competitive value).


 


(c)           Except where failure to do so could not reasonably be
expected to have a Material Adverse Effect, each Grantor shall take all steps
to preserve and protect each item of its Intellectual Property Collateral,
including, without limitation, maintaining the quality of any and all products
or services used or provided in connection with any of the Trademarks,
consistent with the quality of the products and services as of the date hereof,
and taking all steps necessary to ensure that all licensed users of any of the
Trademarks abide by the applicable license’s terms with respect to the
standards of quality.


 


(d)           Each Grantor agrees that, should it obtain an ownership or
other interest in any Intellectual Property Collateral after the Closing Date (“After-Acquired Intellectual Property”) (i)
the provisions of this Agreement shall automatically apply thereto, and (ii)
any such After-Acquired Intellectual Property and, in the case of Trademarks,
the goodwill symbolized thereby, shall automatically become part of the
Intellectual Property Collateral subject to the terms and conditions of this
Agreement with respect thereto.


 


(e)           Once every fiscal quarter of the Borrower, with respect to
issued or registered Patents (or published applications therefor) or Trademarks
(or applications therefor), and once every month, with respect to registered
Copyrights, each Grantor shall sign and deliver to the Collateral Agent an
appropriate Intellectual Property Security Agreement with respect to all
applicable Intellectual Property owned or exclusively licensed by it as of the
last day of such period, to the extent that such Intellectual Property is not
covered by any previous Intellectual Property Security Agreement so signed and
delivered by it. In each case, it will promptly cooperate as reasonably
necessary to enable the Collateral Agent to make any necessary or reasonably
desirable recordations with the U.S. Copyright Office or the U.S. Patent and
Trademark Office, as appropriate.


 


(f)            Nothing in this Agreement
prevents any Grantor from discontinuing the use or maintenance of any or its
Intellectual Property Collateral to the extent permitted by the Credit
Agreement if such Grantor determines in its reasonable business judgment that
such discontinuance is desirable in the conduct of its business.


 


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ARTICLE III



REMEDIES


 


Section 3.01           Remedies Upon Default. Upon the occurrence
and during the continuance of an Event of Default, each Grantor agrees to
deliver each item of Collateral to the Collateral Agent on demand, and it is
agreed that the Collateral Agent shall have the right, at the same or different
times, with respect to any Collateral consisting of Intellectual Property, on
demand, to cause the Security Interest to become an assignment, transfer and
conveyance of any of or all such Collateral by the applicable Grantors to the
Collateral Agent, or to license or sublicense, whether general, special or
otherwise, and whether on an exclusive or nonexclusive basis, any such
Collateral throughout the world on such terms and conditions and in such manner
as the Collateral Agent shall determine (other than in violation of any then
existing licensing arrangements to the extent that waivers cannot be obtained),
and, generally, to exercise any and all rights afforded to a secured party with
respect to the Obligations under the Uniform Commercial Code or other
applicable law. Without limiting the generality of the foregoing, each Grantor
agrees that the Collateral Agent shall have the right, subject to the mandatory
requirements of applicable law and the notice requirements described below, to
sell or otherwise dispose of all or any part of the Collateral securing the
Obligations at a public or private sale, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. Each such purchaser at
any sale of Collateral 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 law) all rights of redemption, stay and appraisal which
such Grantor now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted.


 


The
Collateral Agent shall give the applicable Grantors 10 days’ written notice
(which each Grantor agrees is reasonable notice within the meaning of Section 9
611 of the New York UCC or its equivalent in other jurisdictions) of the
Collateral Agent’s intention to make any sale of Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix and state in
the notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the sale price
is paid by the purchaser or purchasers thereof, but the Collateral Agent shall
not incur any liability in case any such purchaser or purchasers shall fail to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may be sold again upon like notice. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Agreement, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on


 


10

















 


the part of any Grantor (all said rights being also
hereby waived and released to the extent permitted by law), the Collateral or
any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from any Grantor as
a credit against the purchase price, and such Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to any Grantor therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and no Grantor shall be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in full.
As an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court appointed receiver. Any
sale pursuant to the provisions of this Section 3.01 shall be deemed to conform
to the commercially reasonable standards as provided in Section 9-610(b) of the
New York UCC or its equivalent in other jurisdictions.


 


Section 3.02           Application of Proceeds. The Collateral
Agent shall apply the proceeds of any collection or sale of Collateral,
including any Collateral consisting of cash, in accordance with Section 8.04 of
the Credit Agreement as of the Closing Date.


 


The Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of Collateral by the Collateral
Agent (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.


 


Section 3.03           Grant of License to Use Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under this Agreement at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor shall,
upon request by the Collateral Agent at any time after and during the
continuance of an Event of Default, grant to the Collateral Agent an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to the Grantors) to use, license or sublicense any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may
be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral
Agent may be exercised, at the option of the Collateral Agent, during the
continuation of an Event of Default; provided
that any license, sublicense or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.


 


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ARTICLE IV



INDEMNITY, SUBROGATION AND SUBORDINATION


 


Section 4.01           Indemnity. In addition to all such rights
of indemnity and subrogation as the Grantors may have under applicable law (but
subject to Section 4.03), the Borrower agrees that in the event any assets of
any Grantor shall be sold pursuant to this Agreement or any other Collateral
Document to satisfy in whole or in part an obligation owed to any Secured
Party, the Borrower shall indemnify such Grantor in an amount equal to the
greater of the book value or the fair market value of the assets so sold.


 


Section 4.02           Contribution and Subrogation. Each
Subsidiary Party (a “Contributing Party”)
agrees (subject to Section 4.03) that, in the event assets of any other
Subsidiary Party shall be sold pursuant to any Collateral Document to satisfy
any Obligation owed to any Secured Party and such other Subsidiary Party (the “Claiming Party”) shall not have been fully indemnified by
the Borrower as provided in Section 4.01, the Contributing Party shall
indemnify the Claiming Party in an amount equal to the greater of the book
value or the fair market value of such assets, in each case multiplied by a
fraction of which the numerator shall be the net worth of the Contributing
Party on the date hereof and the denominator shall be the aggregate net worth
of all the Grantors on the date hereof (or, in the case of any Grantor becoming
a party hereto pursuant to Section 5.14, the date of the Intellectual Property
Security Agreement Supplement executed and delivered by such Grantor). Any
Contributing Party making any payment to a Claiming Party pursuant to this
Section 4.02 shall be subrogated to the rights of such Claiming Party to the
extent of such payment.


 


Section 4.03           Subordination.


 


(a)           Notwithstanding any provision of this Agreement to the
contrary, all rights of the Grantors under Sections 4.01 and 4.02 and all other
rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full in
cash of the Obligations. No failure on the part of the Borrower or any Grantor
to make the payments required by Sections 4.01 and 4.02 (or any other payments
required under applicable law or otherwise) shall in any respect limit the
obligations and liabilities of any Grantor with respect to its obligations
hereunder, and each Grantor shall remain liable for the full amount of the
obligations of such Grantor hereunder.


 


(b)           Each Grantor hereby agrees that upon the occurrence and
during the continuance of an Event of Default and after notice from the
Collateral Agent all Indebtedness owed by it to any Subsidiary shall be fully
subordinated to the indefeasible payment in full in cash of the Obligations.


 


ARTICLE V



MISCELLANEOUS


 


Section 5.01           Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 10.02 of


 


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the Credit Agreement. All communications and notices
hereunder to any Subsidiary Party shall be given to it in care of the Borrower
as provided in Section 10.02 of the Credit Agreement.


 


Section 5.02           Waivers; Amendment.


 


(a)           No failure or delay by the Collateral Agent, any L/C Issuer
or any Lender in exercising any right or power hereunder or under any other
Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Collateral Agent, the L/C Issuers and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by any Loan
Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 5.02, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making
of a Loan or issuance of a Letter of Credit shall not be construed as a waiver
of any Default, regardless of whether the Collateral Agent, any Lender or any
L/C Issuer may have had notice or knowledge of such Default at the time. No
notice or demand on any Loan Party in any case shall entitle any Loan Party to
any other or further notice or demand in similar or other circumstances.


 


(b)           Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Loan Party or Loan Parties
with respect to which such waiver, amendment or modification is to apply,
subject to any consent required in accordance with Section 10.01 of the Credit
Agreement.


 


Section 5.03           Collateral Agent’s Fees and Expenses; Indemnification.


 


(a)           The parties hereto agree that the Collateral Agent shall be
entitled to reimbursement of its expenses incurred hereunder as provided in
Section 10.04 of the Credit Agreement.


 


(b)           Without limitation of its indemnification obligations under
the other Loan Documents, the Borrower agrees to indemnify the Collateral Agent
and the other Indemnitees (as defined in Section 10.05 of the Credit Agreement)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees, charges
and disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of,
the execution, delivery or performance of this Agreement or any claim,
litigation, investigation or proceeding relating to any of the foregoing
agreement or instrument contemplated hereby, or to the Collateral, whether or
not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of


 


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such Indemnitee or
any Affiliate, director, officer, employee, counsel, agent or attorney-in-fact
of such Indemnitee.


 


(c)           Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Collateral Documents. The
provisions of this Section 5.03 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 5.03 shall be payable within 10 days
of written demand therefor.


 


Section 5.04           Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Grantor or the
Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their respective successors and assigns.


 


Section 5.05           Survival of Agreement. All covenants,
agreements, representations and warranties made by the Loan Parties in the Loan
Documents and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Collateral Agent, any L/C
Issuer or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under
the Credit Agreement, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any fee or any other
amount payable under any Loan Document is outstanding and unpaid or any Letter
of Credit is outstanding and so long as the Commitments have not expired or
terminated.


 


Section 5.06           Counterparts; Effectiveness; Several Agreement.
This Agreement may be executed in counterparts, each of which shall constitute
an original but all of which when taken together shall constitute a single
contract. Delivery of an executed signature page to this Agreement by facsimile
transmission or other electronic transmission (i.e., a “PDF” or “TIF”) shall be
as effective as delivery of a manually signed counterpart of this Agreement. This
Agreement shall become effective as to any Loan Party when a counterpart hereof
executed on behalf of such Loan Party shall have been delivered to the
Collateral Agent and a counterpart hereof shall have been executed on behalf of
the Collateral Agent, and thereafter shall be binding upon such Loan Party and
the Collateral Agent and their respective permitted successors and assigns, and
shall inure to the benefit of such Loan Party, the Collateral Agent and the
other Secured Parties and their respective successors and assigns, except that
no Loan Party shall have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly contemplated by this
Agreement or the Credit Agreement. This Agreement shall be construed as a
separate agreement with respect to each Loan Party and may be amended,
modified, supplemented,


 


14

















 


waived or released with respect to any Loan Party
without the approval of any other Loan Party and without affecting the
obligations of any other Loan Party hereunder.


 


Section 5.07           Severability. Any provision of this
Agreement held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction. The parties shall endeavor
in good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.


 


Section 5.08           Right of Set-Off. In addition to any
rights and remedies of the Lenders provided by Law, upon the occurrence and
during the continuance of any Event of Default, each Lender and its Affiliates
and each L/C Issuer and its Affiliates is authorized at any time and from time
to time, without prior notice to the Borrower or any other Loan Party, any such
notice being waived by the Borrower (on its behalf and on behalf of each Loan
Party and its Subsidiaries) to the fullest extent permitted by applicable Law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other Indebtedness at any time
owing by, such Lender and its Affiliates or such L/C Issuer and its Affiliates,
as the case may be, to or for the credit or the account of the respective Loan
Parties and their Subsidiaries against any and all Obligations owing to such
Lender and its Affiliates or such L/C Issuer and its Affiliates hereunder or
under any other Loan Document, now or hereafter existing, irrespective of
whether or not such Agent or such Lender or Affiliate shall have made demand
under this Agreement or under any other Loan Document and although such Obligations
may be contingent or unmatured or denominated in a currency different from that
of the applicable deposit or Indebtedness; provided
that in the case of any such deposits or other Indebtedness for the credit or
the account of any Foreign Subsidiary, such set off may only be against any
obligations of Foreign Subsidiaries. Each Lender and each L/C Issuer agrees
promptly to notify the Borrower and the Collateral Agent after any such set off
and application made by such Lender or such L/C Issuer, as the case may be; provided, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of each Lender and each L/C Issuer under this Section 6.08 are in addition to
other rights and remedies (including other rights of setoff) that the
Collateral Agent, such Lender and such L/C Issuer may have.


 


Section 5.09           Governing Law; Jurisdiction; Consent to Service of
Process.


 


(a)           This Agreement shall be construed in accordance with and
governed by the law of the State of New York.


 


(b)           Each of the Loan Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and


 


15

















 


unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Nothing
in this Agreement or any other Loan Document shall affect any right that the
Collateral Agent, any L/C Issuer or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against any Grantor or its properties in the courts of any jurisdiction.


 


(c)           Each of the Loan Parties hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section 5.09. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.


 


(d)           Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 5.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.


 


Section 5.10           WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.


 


Section 5.11           Headings. Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.


 


Section 5.12           Security Interest Absolute. All rights of
the Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Pledged Collateral and all obligations of each Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any


 


16

















 


departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument, (c) any exchange, release or non-perfection
of any Lien on other collateral, or any release or amendment or waiver of or
consent under or departure from any guarantee, securing or guaranteeing all or
any of the Obligations or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of
the Obligations or this Agreement.


 


Section 5.13           Termination or Release.


 


(a)           This Agreement, the Security Interest and all other security
interests granted hereby shall terminate when all the outstanding Obligations
have been indefeasibly paid in full (other than (x) obligations under Secured
Hedge Agreements not yet due and payable, (y) Cash Management Obligations not
yet due and payable and (z) contingent indemnification obligations not yet
accrued and payable) and the Lenders have no further commitment to lend under
the Credit Agreement, the L/C Obligations have been reduced to zero (unless the
L/C Obligations shall have been collateralized on terms and conditions
reasonably satisfactory to the relevant L/C Issuer following the termination of
the Commitments) and the L/C Issuers have no further obligations to issue
Letters of Credit under the Credit Agreement.


 


(b)           A Subsidiary Party shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Party shall be automatically released upon the consummation of any
transaction permitted by the Credit Agreement as a result of which such
Subsidiary Party ceases to be a Subsidiary or is designated as an Unrestricted
Subsidiary of the Borrower; provided
that the Required Lenders shall have consented to such transaction (to the
extent required by the Credit Agreement) and the terms of such consent did not
provide otherwise.


 


(c)           Upon any sale or other transfer by any Grantor of any
Collateral (other than any transfer to another Grantor) that is permitted under
the Credit Agreement, or upon the effectiveness of any written consent to the
release of the security interest granted hereby in any Collateral pursuant to
Section 10.01 of the Credit Agreement, the security interest in such Collateral
shall be automatically released.


 


(d)           In connection with any termination or release pursuant to
paragraph (a), (b) or (c), the Collateral Agent shall execute and deliver to
any Grantor, at such Grantor’s expense, all documents that such Grantor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 5.13 shall be without recourse
to or warranty by the Collateral Agent.


 


(e)           Notwithstanding anything to contrary set forth in this
Agreement, each Cash Management Bank and each Hedge Bank by the acceptance of
the benefits under this Agreement hereby acknowledge and agree that (i) the
Security Interests granted under this Agreement of the Obligations of the
Borrower or any Subsidiary under any Secured Hedge Agreement and the Cash
Management Obligations shall be automatically released upon termination of the
Commitments and payment in full of all other Obligations, in each case, unless
the Obligations under the Secured Hedge Agreement or the Cash Management
Obligations are due and payable at such time (it being understood and agreed
that this


 


17

















 


Agreement and the
Security Interests granted herein shall survive solely as to such due and
payable Obligations and until such time as such due and payable Obligations
have been paid in full) and (ii) any release of Collateral or of a Grantor, as
the case may be, effected in the manner permitted by this Agreement shall not
require the consent of any Hedge Bank or Cash Management Bank.


 


Section 5.14           Additional Restricted Subsidiaries. Pursuant
to (and to the extent required by) Section 6.11 of the Credit Agreement,
certain Restricted Subsidiaries of the Loan Parties that were not in existence
or not Restricted Subsidiaries on the date of the Credit Agreement are required
to enter in this Agreement as Subsidiary Parties upon becoming Restricted Subsidiaries.
Upon execution and delivery by the Collateral Agent and a Restricted Subsidiary
of an Intellectual Property Security Agreement Supplement, such Restricted
Subsidiary shall become a Subsidiary Party hereunder with the same force and
effect as if originally named as a Subsidiary Party herein. The execution and
delivery of any such instrument shall not require the consent of any other Loan
Party hereunder. The rights and obligations of each Loan Party hereunder shall
remain in full force and effect notwithstanding the addition of any new Loan
Party as a party to this Agreement.


 


Section 5.15           General Authority of the Collateral Agent.
By acceptance of the benefits of this Agreement and any other Collateral
Documents, each Secured Party (whether or not a signatory hereto) shall be
deemed irrevocably (a) to consent to the appointment of the Collateral Agent as
its agent hereunder and under such other Collateral Documents, (b) to confirm
that the Collateral Agent shall have the authority to act as the exclusive
agent of such Secured Party for the enforcement of any provisions of this
Agreement and such other Collateral Documents against any Grantor, the exercise
of remedies hereunder or thereunder and the giving or withholding of any
consent or approval hereunder or thereunder relating to any Collateral or any
Grantor’s obligations with respect thereto, (c) to agree that it shall not take
any action to enforce any provisions of this Agreement or any other Collateral
Document against any Grantor, to exercise any remedy hereunder or thereunder or
to give any consents or approvals hereunder or thereunder except as expressly
provided in this Agreement or any other Collateral Document and (d) to agree to
be bound by the terms of this Agreement and any other Collateral Documents.


 


Section 5.16           Collateral Agent Appointed Attorney-in-Fact.
Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof at any time after
and during the continuance of an Event of Default, which appointment is
irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default and notice by the Collateral
Agent to the Borrower of its intent to exercise such rights, with full power of
substitution either in the Collateral Agent’s name or in the name of such
Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to commence and prosecute any and all suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Collateral or to enforce any
rights in respect of


 


18

















 


any Collateral; (d) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to all or any of
the Collateral; and (e) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; provided that nothing herein contained shall be construed as
requiring or obligating the Collateral Agent to make any commitment or to make
any inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or to present or file any claim or notice, or to take any
action with respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby. The
Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor 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 wilful misconduct or that
of any of their Affiliates, directors, officers, employees, counsel, agents or
attorneys-in-fact.


 


19














 


IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.


 


	
   

  	
   

  	
  ENCORE
  MEDICAL HOLDINGS LLC,

  
	
   

  	
   

  	
  as Holdings,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ENCORE
  MEDICAL FINANCE LLC,

  
	
   

  	
   

  	
  as Borrower

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ENCORE
  MEDICAL LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ENCORE
  MEDICAL FINANCE CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ENCORE
  MEDICAL IHC, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 

















 


	
   

  	
   

  	
  ENCORE
  MEDICAL, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ENCORE MEDICAL
  GP, INC., its

  
	
   

  	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ENCORE
  MEDICAL PARTNERS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ENCORE
  MEDICAL ASSET CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ENCORE
  MEDICAL GP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMPI,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMPI
  CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


2

















 


	
   

  	
   

  	
  EMPI
  SALES CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPEX
  TECHNOLOGIES, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry
  Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SPECTRABRACE,
  LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Harry Zimmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF
  AMERICA, N.A.,

  
	
   

  	
   

  	
  as Collateral
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Alysa Trakas

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Alysa
  Trakas

  
	
   

  	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


3

















 


Schedule I to the


Intellectual Property


Security Agreement


 


SUBSIDIARY PARTIES


 


	
   

  	
  Encore Medical LLC

  
	
   

  	
  Encore Medical Finance Corp.

  
	
   

  	
  Encore Medical IHC, Inc.

  
	
   

  	
  Encore Medical, L.P.

  
	
   

  	
  Encore Medical Partners, Inc.

  
	
   

  	
  Encore Medical Asset Corporation

  
	
   

  	
  Encore Medical GP, Inc.

  
	
   

  	
  Empi, Inc.

  
	
   

  	
  Empi Corp.

  
	
   

  	
  Empi Sales Corp.

  
	
   

  	
  Compex Technologies, LLC

  
	
   

  	
  SpectraBrace Ltd.

  



 


4

















 


Schedule II to the


Intellectual Property


Security Agreement


 

















 


Schedule III to the


Intellectual Property


Security Agreement


 


Post-Closing Items


 

















 


Exhibit I to the


Intellectual Property


Security Agreement


 


SUPPLEMENT
NO.      dated as of, to the Intellectual Property Security
Agreement dated as of November 3, 2006 (as amended, supplemented or
otherwise modified from time to time, the “Intellectual Property
Security Agreement”), among ENCORE MEDICAL HOLDINGS LLC (“Holdings”), ENCORE MEDICAL FINANCE LLC (the “Borrower”), the Subsidiaries of Holdings from time to time
party hereto and BANK OF AMERICA, N.A., as Collateral Agent.


 


A.            Reference is made to the Credit
Agreement dated as of November 3, 2006 (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, Holdings, BANK OF AMERICA, N.A., as Administrative Agent,
Swing Line Lender and an L/C Issuer, each lender from time to time party
thereto (collectively, the “Lenders”
and individually, a “Lender”),
BANC OF AMERICA SECURITIES LLC, as Arranger and Book Runner, CREDIT SUISSE
SECURITIES (USA) LLC, as Arranger, Book Runner and Syndication Agent, and
GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent.


 


B.            Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement and the Intellectual Property Security Agreement referred
to therein.


 


C.            The Grantors have entered into the
Intellectual Property Security Agreement in order to induce the Lenders to make
Loans and the L/C Issuers to issue Letters of Credit. Section 5.14 of the
Intellectual Property Security Agreement provides that additional Restricted
Subsidiaries of the Borrower may become Subsidiary Parties under the
Intellectual Property Security Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Restricted
Subsidiary (the “New Subsidiary”)
is executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Subsidiary Party under the Intellectual Property Security
Agreement in order to induce the Lenders to make additional Loans and the L/C
Issuers to issue additional Letters of Credit and as consideration for Loans
previously made and Letters of Credit previously issued.


 


Accordingly,
the Collateral Agent and the New Subsidiary agree as follows:


 


SECTION 1. In accordance with Section 5.14 of the
Intellectual Property Security Agreement, the New Subsidiary by its signature
below becomes a Subsidiary Party (and accordingly, becomes a Grantor) and
Grantor under the Intellectual Property Security Agreement with the same force
and effect as if originally named therein as a Subsidiary Party and the New
Subsidiary hereby (a) agrees to all the terms and provisions of the
Intellectual Property Security Agreement applicable to it as a Subsidiary Party
and Grantor thereunder and (b) represents and warrants that the representations
and warranties made by it as a Grantor thereunder are true and correct on and
as of the date hereof. In furtherance of the foregoing, the New Subsidiary, as
security for the payment and performance in full of the Obligations, does
hereby create and grant


 

















 


to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all
of the New Subsidiary’s right, title and interest in and to the Collateral (as
defined in the Intellectual Property Security Agreement) of the New Subsidiary.
Each reference to a “Grantor” in the Intellectual Property Security Agreement
shall be deemed to include the New Subsidiary. The Intellectual Property
Security Agreement is hereby incorporated herein by reference.


 


SECTION 2. The New Subsidiary represents and warrants
to the Collateral Agent and the other Secured Parties that this Supplement has
been duly authorized, executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.


 


SECTION 3. This Supplement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Collateral Agent shall have received a counterpart of this Supplement that
bears the signature of the New Subsidiary and the Collateral Agent has executed
a counterpart hereof. Delivery of an executed signature page to this Supplement
by facsimile transmission or other electronic transmission (i.e. a “TIF” or “PDF”)
shall be as effective as delivery of a manually signed counterpart of this
Supplement.


 


SECTION 4. The New Subsidiary hereby represents and
warrants that (a) set forth on Schedule I attached hereto is a true and
correct schedule of any and all Collateral of the New Subsidiary consisting of
Intellectual Property and (b) set forth under its signature hereto, is the true
and correct legal name of the New Subsidiary, its jurisdiction of formation and
the location of its chief executive office.


 


SECTION 5. Except as expressly supplemented hereby,
the Intellectual Property Security Agreement shall remain in full force and
effect.


 


SECTION 6. THIS SUPPLEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.


 


SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Intellectual Property Security Agreement
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.


 


SECTION 8. All communications and notices hereunder
shall be in writing and given as provided in Section 5.01 of the Intellectual
Property Security Agreement.


 


2

















 


SECTION 9. The New Subsidiary agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in connection with
this Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.


 


IN
WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have duly executed
this Supplement to the Intellectual Property Security Agreement as of the day
and year first above written.


 


	
   

  	
   

  	
  [NAME OF NEW
  SUBSIDIARY],

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Legal Name:

  
	
   

  	
   

  	
   

  	
  Jurisdiction of
  Formation:

  
	
   

  	
   

  	
   

  	
  Location of
  Chief Executive office:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA,
  N.A.,

  
	
   

  	
   

  	
  as Collateral
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


3

















 


Schedule I to the


Supplement No.      to


the Intellectual Property


Security Agreement


 


INTELLECTUAL PROPERTY