Document:

exv10w4

 

Exhibit 10.4

EXECUTION COPY

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

dated as of

May 2, 2006,

among

LONE STAR HOLDING CORP.,

LONE
STAR MERGER CORP. (to be merged with, and into,
 Activant Solutions
Holdings Inc., which, in turn, will be merged with, 
and into, Activant Solutions Inc.),

CERTAIN OTHER SUBSIDIARIES OF LONE STAR HOLDING CORP.

IDENTIFIED HEREIN

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Collateral Agent

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I Definitions
	 	 	1	 
	 
	 	 	 	 
	Section 1.01. Credit Agreement
	 	 	1	 
	Section 1.02. Other Defined Terms
	 	 	2	 
	 
	 	 	 	 
	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
	 	 	12	 
	Section 3.03. Grant of License to Use Intellectual Property
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IV Indemnity, Subrogation and Subordination
	 	 	12	 
	 
	 	 	 	 
	Section 4.01. Indemnity
	 	 	12	 
	Section 4.02. Contribution and Subrogation
	 	 	12	 
	Section 4.03. Subordination
	 	 	13	 
	 
	 	 	 	 
	ARTICLE V Miscellaneous
	 	 	14	 
	 
	 	 	 	 
	Section 5.01. Notices
	 	 	14	 
	Section 5.02. Waivers; Amendment
	 	 	14	 
	Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification
	 	 	14	 
	Section 5.04. Successors and Assigns
	 	 	15	 
	Section 5.05. Survival of Agreement
	 	 	15	 
	Section 5.06. Counterparts; Effectiveness; Several Agreement
	 	 	15	 
	Section 5.07. Severability
	 	 	16	 
	Section 5.08. Right of Set-Off
	 	 	16	 
	Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process
	 	 	16	 
	Section 5.10. WAIVER OF JURY TRIAL
	 	 	17	 
	Section 5.11. Headings
	 	 	17	 
	Section 5.12. Security Interest Absolute
	 	 	17	 
	Section 5.13. Termination or Release
	 	 	18	 
	Section 5.14. Additional Restricted Subsidiaries
	 	 	19	 
	Section 5.15. General Authority of the Collateral Agent
	 	 	19	 
	Section 5.16. Collateral Agent Appointed Attorney-in-Fact
	 	 	19	 
	Section 5.17. Effectiveness of the Merger
	 	 	20	 

(i)

 

Table of Contents

	 	 	 
	SCHEDULES
	 
	 	 
	Schedule I

	 	Subsidiary Parties
	Schedule II

	 	Intellectual Property
	 
	 	 
	EXHIBITS
	 
	 	 
	Exhibit I

	 	Form of Supplement

(ii)

 

     INTELLECTUAL PROPERTY SECURITY AGREEMENT dated as of May 2, 2006, among LONE STAR MERGER
CORP., a Delaware corporation (to be merged with,
and into, Activant Solutions Holdings Inc., which, in turn, will be merged with, and into, Activant
Solutions Inc., “Merger Sub”), LONE STAR HOLDING CORP., a Delaware corporation
(“Holdings”), the Subsidiaries of Holdings identified herein and DEUTSCHE BANK TRUST
COMPANY AMERICAS, as Collateral Agent for the Secured Parties (as defined below).

     Reference is made to (i) the Credit Agreement, dated as of May 2, 2006 (as amended, restated,
supplemented and/or otherwise modified from time to time, the “Credit Agreement”), among
Merger Sub, Holdings, Deutsche Bank Trust Company Americas, as Administrative Agent, Swing Line
Lender and an L/C Issuer, each Lender from time to time party thereto, JPMorgan Chase Bank, N.A.,
as Syndication Agent, and Lehman Commercial Paper Inc., as Documentation Agent, (ii) the Holdings
Guaranty (as defined in the Credit Agreement), (iii) the Borrower Guaranty (as defined in the
Credit Agreement), (iv) the Subsidiary Guaranty (as defined in the Credit Agreement), (v) each
Secured Hedge Agreement (as defined in the Credit Agreement) and (vi) the Cash Management
Obligations (as defined in the Credit Agreement).

     The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions
set forth in the Credit Agreement, the Hedge Banks have agreed to enter into and/or maintain one or
more Secured Hedge Agreements on the terms and conditions set forth therein and the Cash Management
Banks have agreed to provide and/or maintain Cash Management Services on the terms and conditions
agreed upon by the Borrower or the respective Restricted Subsidiary and the respective Cash
Management Bank. The obligations of the Lenders to extend such credit, the obligation of the Hedge
Banks to enter into and/or maintain such Secured Hedge Agreements and the obligation of the Cash
Management Banks to provide and/or maintain Cash Management Services are, in each case, conditioned
upon, among other things, the execution and delivery of this Agreement by each Grantor. Holdings,
the Borrower and the Subsidiary Parties are affiliates of one another, will derive substantial
benefits from (i) the extensions of credit to the Borrower pursuant to the Credit Agreement, (ii)
the entering into and/or maintaining by the Hedge Banks of Secured Hedge Agreements with the
Borrower and/or one or more of its Restricted Subsidiaries and (iii) the providing and/or
maintaining of Cash Management Services by the Cash Management Banks to the Borrower and/or one or
more of its Restricted Subsidiaries, and are willing to execute and deliver this Agreement in order
to induce the Lenders to extend such credit, the Hedge Banks to enter into and/or maintain such
Secured Hedge Agreements and the Cash Management Banks to provide and/or maintain such Cash
Management Services. 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.

     “Bankruptcy Event of Default” shall mean any Event of Default under Section 8.01(f) of
the Credit Agreement.

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

     “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 subject to the copyright laws of the United States
or any other country, whether as author, assignee, transferee or otherwise, (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 and (c)
and all causes of action arising prior to or after the date hereof for infringement of any of
copyright or unfair competition regarding the same.

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

     “Domain Names” means all Internet domain names and associated URL addresses in or to
which any Grantor now or hereafter has any right, title or interest.

     “Grantor” means each of Holdings, the Borrower and each Subsidiary Party.

     “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, databases, all other
proprietary information, including but not limited to Domain Names, 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 .

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

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

     “License” means any Patent License, Trademark License, Copyright License or other
license or sublicense agreement 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” means a certificate substantially in the form of Exhibit II
to the Security Agreement, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by the chief financial officer and the chief legal officer
of the Borrower.

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

     “Secured Obligations” means the “Obligations” as defined in the Credit Agreement; it
being acknowledged and agreed that the term “Secured Obligations” as used herein shall include each
extension of credit under the Credit Agreement, all obligations of the Borrower and/or its
Restricted Subsidiaries under the Secured Hedge Agreements and all Cash Management Obligations, in
each case, whether outstanding on the date of this Agreement or extended from time to time after
the date of this Agreement.

     “Secured Credit Document” shall mean each Loan Document, each Secured Hedge Agreement
and any agreement evidencing any Cash Management Obligation.

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

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     “Subsidiary Parties” means (a) the Restricted Subsidiaries identified on Schedule I
and (b) each other Restricted 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, 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 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,
(c) all other assets, rights and interests that uniquely reflect or embody such goodwill and (d)
and all causes of action arising prior to or after the date hereof for infringement of any of
trademark or unfair competition regarding the same.

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 Secured Obligations, including each Guaranty, 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;

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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
(i) indicate the Collateral as all assets of such Grantor or words of similar effect as being of an
equal or lesser scope or with greater detail, and (ii) 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. 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.

     (d) Notwithstanding anything to the contrary contained in this Agreement or any other Secured
Credit Document, unless an Event of Default shall have occurred and be continuing, no Grantor shall
be required to enter into any security agreement (or any similar agreement granting or perfecting a
lien over the Collateral) governed by the laws of any jurisdiction outside of the United States (or
any political subdivision thereof) or make any registrations, filings or recordings outside of the
United States (or any political subdivision thereof), in each case, to perfect the Security
Interests created (or purported to be created ) by this Agreement.

       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 Secured Parties that:

     (a) Each Grantor has good and valid rights in and title 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.

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     (b) The Perfection Certificate has been duly prepared, completed, executed and delivered to
the Collateral Agent and the information set forth therein, including the exact legal name of each
Grantor, is correct and complete in all material respects as of the Closing Date. The Uniform
Commercial Code financing statements 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 for filing in each governmental, municipal or other office specified in
Schedule 2 to the Perfection Certificate (or specified by notice from the applicable Grantor 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 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 Secured Obligations, (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

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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 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) Each Grantor represents and warrants that (x) all Trademarks, Domain Names, Patents and
Copyrights listed on Schedule II include all material Trademarks, Domain Names, Patents and
Copyrights of such Grantor that are reasonably necessary for the operation of its business as
currently conducted on the date hereof (or, if later, the date upon which such Grantor becomes a
party to this Agreement) and (y) all Licenses listed on Schedule III include all material Licenses
of such Grantor that are reasonably necessary for the operation of its businesses as currently
conducted on the date hereof (or, if later, the date upon which such Grantor becomes a party to
this Agreement).

       Section 2.03. Covenants. (a) The Borrower agrees to provide the Collateral Agent 10
Business Days’ prior written notice of any change (i) in the legal name of any Grantor, (ii) in the
identity or type of organization or corporate structure of any Grantor, (iii) in the jurisdiction
of organization of any Grantor, (iv) in the Location of any Grantor or (v) in the organizational
identification number of any Grantor. In addition, if any Grantor does not have an organizational
identification number on the Closing Date (or the date such Grantor becomes a party to this
Agreement) and later obtains one, the Borrower shall promptly thereafter notify the Collateral
Agent of such organizational identification number and shall take all actions reasonably
satisfactory to the Collateral Agent to the extent necessary to maintain the security interests
(and the priority thereof) of the Collateral Agent in the Collateral intended to be granted hereby
fully perfected and in full force and effect.

     (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) Each year, at the time of delivery of annual financial statements with respect to the
preceding fiscal year pursuant to Section 6.01 of the Credit Agreement, the Borrower shall deliver
to the Collateral Agent a certificate executed by the chief financial officer and the chief legal
officer of the Borrower setting forth the information required pursuant to Sections 1(a),

-7-

 

1(c),
1(e), 1(f) and 2(b) of the Perfection Certificate or confirming that there has been no change in
such information since the date of such certificate or the date of the most recent certificate
delivered pursuant to this Section 2.03(c).

     (d) 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. If any amount
payable under or in connection with any of the Collateral that equals or exceeds $2,000,000 shall
be or become evidenced by any promissory note or an instrument, such note or instrument shall be
promptly pledged and delivered to the Collateral Agent, for the benefit of the Secured Parties,
duly endorsed in a manner reasonably satisfactory to the Collateral Agent.

     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.

     (e) 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.

     (f) 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 Secured Parties from and against any and all liability for such performance.

       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,

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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 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

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Agreement if
such Grantor determines in its reasonable business judgment that such discontinuance is desirable
in the conduct of its business.

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 anti-assignment provision contained in any then existing
licensing arrangements to the extent that (i) such anti-assignment provision is not rendered
ineffective by any applicable law, including the UCC or (ii) waivers cannot be obtained after using
commercially reasonable efforts), and, generally, to exercise any and all rights afforded to a
secured party with respect to the Secured 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 Secured 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

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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 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 Secured 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.

     Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful
agent (and attorney-in-fact) during the continuance of an Event of Default and after notice to the
Borrower of its intent to exercise such rights (except in the case of a Bankruptcy Event of
Default, in which case no such notice shall be required), for the purpose of (i) making, settling
and adjusting claims in respect of the Collateral under policies of insurance and endorsing the
name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of
such policies of insurance, (ii) making all determinations and decisions with respect thereto and
(iii) obtaining or maintaining the policies of insurance required by Section 6.07 of the Credit
Agreement or to pay any premium in whole or in part relating thereto. All sums disbursed by the
Collateral Agent in connection with this paragraph, including reasonable attorneys’ fees, court
costs, expenses and other charges relating thereto, shall be payable, within 10 days of demand, by
the Grantors to the Collateral Agent and shall be additional Secured Obligations secured hereby.

     By accepting the benefits of this Agreement and each other Collateral Document, the Secured
Parties expressly acknowledge and agree that this Agreement and each other Collateral Document may
be enforced only by the action of the Collateral Agent acting upon the instructions of the Required
Lenders and that no other Secured Party shall have any right individually to seek to enforce or to
enforce this Agreement or to realize upon the security to be granted hereby, it being understood
and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit
of the Secured Parties upon the terms of this Agreement and the other Collateral Documents.

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       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 the provisions of Section 8.04 of the Credit Agreement. 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. It is understood and agreed
that the Grantors shall remain jointly and severally liable to the extent of any deficiency between
the amount of the proceeds of the Collateral and the aggregate amount of the Secured Obligations.

       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.

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), each Guaranteed Party (as defined in the Guaranty)
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 owing directly by such
Guaranteed Party to any Secured Party (i.e., other than pursuant to its capacity as a
Guarantor under the Guaranty), such Guaranteed Party shall indemnify such Grantor in an amount
equal to the fair market value of the assets so sold.

       Section 4.02. Contribution and Subrogation. At any time a payment by any Subsidiary Party
in respect of the Secured Obligations is made under this Agreement or any other Collateral Document
as a result of a sale of assets by such Subsidiary Party that shall not have been fully indemnified
as provided in Section 4.01, the right of contribution of each Subsidiary Party against each other
Subsidiary Party shall be determined as provided in the immediately succeeding sentence, with the
right of contribution of each Subsidiary Party to be

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revised and restated as of each date on which
a payment (a “Relevant Payment”) is made on the Secured Obligations under this Agreement
and not indemnified pursuant to Section 4.01. At any time that a Relevant Payment is made by a
Subsidiary Party that results in the aggregate payments made by such Subsidiary Party in respect of
the Secured Obligations to and including the date of the Relevant Payment exceeding such Subsidiary
Party’s Contribution Percentage (as defined below) of the aggregate payments made by all Subsidiary
Parties in respect of the Secured Obligations to and including the date of the Relevant Payment
(such excess, the “Aggregate Excess Amount”), each such Subsidiary Party shall have a right of
contribution against each other Subsidiary Party who has made payments in respect of the Secured
Obligations to and including the date of the Relevant Payment in an aggregate amount less than such
other Subsidiary Party’s Contribution Percentage of the aggregate payments made to and including
the date of the Relevant Payment by all Subsidiary Parties in respect of the Secured Obligations
(the aggregate amount of such deficit, the “Aggregate Deficit Amount”) in an amount equal
to (x) a fraction the numerator of which is the Aggregate Excess Amount of such Subsidiary Party
and the denominator of which is the Aggregate Excess Amount of all Subsidiary Parties multiplied by
(y) the Aggregate Deficit Amount of such other Subsidiary Party. A Subsidiary Party’s right of
contribution pursuant to the preceding sentences shall arise at the time of each computation,
subject to adjustment to the time of each computation; provided that the contribution rights of
such Subsidiary Party shall be subject to Section 4.03. As used in this Section 4.02: (i) each
Subsidiary Party’s “Contribution Percentage” shall mean the percentage obtained by dividing
(x) the Adjusted Net Worth (as defined below) of such Subsidiary Party by (y) the aggregate
Adjusted Net Worth of all Subsidiary Parties; (ii) the “Adjusted Net Worth” of each
Subsidiary Party shall mean the greater of (x) the Net Worth (as defined below) of such Subsidiary
Party and (y) zero; and (iii) the “Net Worth” of each Subsidiary Party shall mean the
amount by which the fair saleable value of such Subsidiary Party’s assets on the date of any
Relevant Payment exceeds its existing debts and other liabilities (including contingent
liabilities, but without giving effect to any Guaranteed Obligations arising under the Subsidiary
Guaranty or any guaranteed obligations arising under any guaranty of the Senior Subordinated Notes
or any Permitted Refinancing thereof) on such date. Notwithstanding anything to the contrary
contained above, any Subsidiary Party that is released from this Agreement pursuant to Section 5.13
hereof shall thereafter have no contribution obligations, or rights, pursuant to this Section 4.02,
and at the time of any such release, if the released
Subsidiary Party had an Aggregate Excess Amount or an Aggregate Deficit Amount, same shall be
deemed reduced to $0, and the contribution rights and obligations of the remaining Subsidiary
Parties shall be recalculated on the respective date of release (as otherwise provided above) based
on the payments made hereunder by the remaining Subsidiary Parties. Each of the Subsidiary Parties
recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an
asset in favor of the party entitled to such contribution. In this connection, each Subsidiary
Party has the right to waive its contribution right against any other Subsidiary Party to the
extent that after giving effect to such waiver such Subsidiary Party would remain solvent, in the
determination of the Required Lenders.

       Section 4.03. Subordination. 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 Secured Obligations (or the
termination of this agreement in accordance with Section 5.13); provided, that if any amount

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shall
be paid to such Grantor on account of such subrogation rights at any time prior to the irrevocable
payment in full in cash of all the Secured Obligations (or the termination of this agreement in
accordance with Section 5.13), such amount shall be held in trust for the benefit of the Secured
Parties and shall forthwith be paid to the Collateral Agent to be credited and applied against the
Secured Obligations, whether matured or unmatured, in accordance with Section 3.02(a). 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.

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 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.

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     (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, performance or
enforcement 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 have resulted from the gross negligence or willful misconduct of such Indemnitee or of any
Affiliate, director, officer, employee, counsel, agent, trustee, investment advisor or
attorney-in-fact of such Indemnitee.

     (c) Any such amounts payable as provided hereunder shall be additional Secured 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 Secured 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 shall be as effective as delivery of a manually signed
counterpart of this Agreement. This Agreement shall become effective as to any Loan

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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, 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 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 and each Loan
Party 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 to or for the credit or the
account of the respective Loan Parties against any and all obligations owing to such Lender and its
Affiliates hereunder, now or hereafter existing, irrespective of whether or not such Lender or
Affiliate shall have made demand under this Agreement and although such obligations may be
contingent or unmatured or denominated in a currency different from that of the applicable deposit
or Indebtedness. Each Lender agrees promptly to notify the Borrower and the Collateral Agent after
any such set off and application made by such Lender; provided, that the failure to give
such notice shall not affect the validity of such setoff and application. The rights of each
Lender under this Section 5.08 are in addition to other rights and remedies (including other rights
of setoff) that such Lender 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 City 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

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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 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, the

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Secured
Hedge Agreements, any agreement with respect to any of the Secured 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 Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan
Document, the Secured Hedge Agreements 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
Secured Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor
in respect of the Secured 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 with respect to all Secured Obligations
when all the outstanding Secured Obligations have been indefeasibly paid in full and the Lenders
have no further commitment to lend under the Credit Agreement, the L/C Obligations have been
reduced to zero 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 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 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) At any time that the respective Grantor requests that the Collateral Agent take any
action described in the preceding clause (d), it shall, upon request of the Collateral Agent,
deliver to the Collateral Agent an officer’s certificate certifying that the release of the
respective Collateral is permitted pursuant to paragraph (a), (b) or (c). The Collateral Agent
shall have no liability whatsoever to any Secured Party as the result of any release of Collateral
by it as permitted (or which the Collateral Agent in good faith believes to be permitted) by this
Section 5.13.

     (f) 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

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Secured 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 Aggregate Commitments and
payment in full of all other Secured Obligations, in each case, unless the Secured 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 Agreement and the Security Interests granted herein
shall survive solely as to such due and payable Secured Obligations and until such time as such due
and payable Secured 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 (unless a
Bankruptcy Event of Default has occurred and is continuing) delivery of notice by the Collateral
Agent to the Borrower of its intent to exercise

-19-

 

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 sign the name of any Grantor on any invoice
relating to any of the Collateral; (d) to send verifications of Accounts to any Account Debtor; (e)
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 any Collateral; (f) to settle, compromise, compound, adjust or
defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify,
or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral
Agent or to a Collateral Account and adjust, settle or compromise the amount of payment of any
Account; and (h) 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
willful misconduct or that of any of their Affiliates, directors, officers, employees, counsel,
agents or attorneys-in-fact.

       Section 5.17. Effectiveness of the Merger. (a) Target and its Subsidiaries shall have no
rights or obligations hereunder until the consummation of the Merger and any representations and
warranties of Target or any of its Subsidiaries hereunder shall not become effective until such
time. Upon consummation of the Merger, Target shall succeed to all the rights and obligations of
Merger Sub under this Agreement and all rights, obligations, representations and warranties of
Target and its Subsidiaries shall become effective as of the date hereof, without any further
action by any Person.

     (b) Upon consummation of the Secondary Merger, Opco shall succeed to all the rights and
obligations of Target under this Agreement and all rights, obligations, representations and
warranties of Opco and its Subsidiaries shall become effective as of the date hereof, without any
further action by any Person.

       Section 5.18. Recourse; Limited Obligations. This Agreement is made with full recourse to
each Grantor and pursuant to and upon all the warranties, representations, covenants and agreements
on the part of such Grantor contained herein, in the Loan Documents and the other Secured Credit
Documents and otherwise in writing in connection herewith or therewith, with respect to the Secured
Obligations of each applicable Secured Party. It is the desire and intent of each Grantor and each
applicable Secured Party that this Agreement shall be enforced against each Grantor to the fullest
extent permissible under the
laws applied in each

-20-

 

jurisdiction in which enforcement is sought. Notwithstanding anything to the
contrary contained herein, and in furtherance of the foregoing, it is noted that the obligations of
each Grantor that is a Subsidiary Party have been limited as expressly provided in the Subsidiary
Guaranty and are limited hereunder as and to the same extent provided therein.

-21-

 

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

	 	 	 	 	 
	 	LONE STAR HOLDING CORP.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

	 	 	 	 	 
	 	LONE STAR MERGER CORP.

 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-23-

 

	 	 	 	 	 
	 	ACTIVANT SOLUTIONS HOLDINGS INC.

 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-24-

 

	 	 	 	 	 
	 	ACTIVANT SOLUTIONS INC.

 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-25-

 

	 	 	 	 	 
	 	CCI/ARD, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-26-

 

	 	 	 	 	 
	 	

CCI/TRIAD FINANCIAL HOLDING CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-27-

 

	 	 	 	 	 
	 	CCI/TRIAD GEM, INC.

 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-28-

 

	 	 	 	 	 
	 	DISTRIBUTOR INFORMATION SYSTEMS CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-29-

 

	 	 	 	 	 
	 	ENTERPRISE COMPUTER SYSTEMS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-30-

 

	 	 	 	 	 

HM COOP LLC

By:
Activant Solutions Inc., as its Sole Member

	 	 	 	 	 
	 	 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-31-

 

	 	 	 	 	 
	 	PRELUDE SYSTEMS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-32-

 

	 	 	 	 	 
	 	PROPHET 21 CANADA INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-33-

 

	 	 	 	 	 
	 	PROPHET 21 INVESTMENT CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

-34-

 

	 	 	 	 	 
	 	PROPHET 21 (NEW JERSEY), INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-35-

 

	 	 	 	 	 

	 	 	 	 	 
	 	PROPHET 21, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-36-

 

	 	 	 	 	 

	 	 	 	 	 
	 	SDI MERGER CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-37-

 

	 	 	 	 	 

	 	 	 	 	 
	 	SPEEDWARE HOLDINGS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-38-

 

	 	 	 	 	 

	 	 	 	 	 
	 	SPEEDWARE USA INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-39-

 

	 	 	 	 	 

	 	 	 	 	 
	 	STANPAK SYSTEMS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-40-

 

	 	 	 	 	 

	 	 	 	 	 
	 	TRADE SERVICE SYSTEMS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-41-

 

	 	 	 	 	 

	 	 	 	 	 
	 	TRIAD DATA CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-42-

 

	 	 	 	 	 

	 	 	 	 	 
	 	TRIAD SYSTEMS CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-43-

 

	 	 	 	 	 

	 	 	 	 	 
	 	TRIAD SYSTEMS FINANCIAL CORPORATION

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-44-

 

	 	 	 	 	 

	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS, as
 	 
	 	     Collatral Agent

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

-45-

 

	 	 	 	 	 

SCHEDULE I

to the Intellectual Property

Security Agreement

SUBSIDIARY PARTIES

 

 

SCHEDULE II

U.S. COPYRIGHTS OWNED BY [NAME OR GRANTOR]

[Make a separate page of Schedule II for each Grantor and state if no copyrights are owned. List
in numerical order by Registration No.]

U.S. Copyright Registrations

	 	 	 	 	 
	Title	 	Reg. No.	 	Author
	 
	 	 
	 	 

Pending U.S. Copyright Applications for Registration

	 	 	 	 	 	 	 
	Title	 	Author	 	Class	 	Date Filed
	 
	 	 
	 	 
	 	 

 

 

Schedule II

Page 2

PATENTS OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule II for each Grantor and state if no patents are owned. List in
numerical order by Patent No./Patent Application No.]

U.S. Patent Registrations

	 	 	 
	Patent Numbers	 	Issue Date
	 
	 	 

U.S. Patent Applications

	 	 	 
	Patent Numbers	 	Filing Date
	 
	 	 

 

 

Schedule II

Page 3

TRADEMARK/TRADE NAMES OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule II for each Grantor and state if no trademarks/trade names are
owned. List in numerical order by trademark registration/application no.]

U.S. Trademark Registrations

	 	 	 	 	 
	Mark	 	Reg. Date	 	Reg. No.
	 
	 	 
	 	 

U.S. Trademark Applications

	 	 	 	 	 
	Mark	 	Filing Date	 	Application No.
	 
	 	 
	 	 

 

 

Schedule II

Page 4

DOMAIN NAMES OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule II for each Grantor and state if no Domain Names are owned.]

	 	 	 	 	 
	 	 	 	 	Registration No. (or other
	Internet Domain Names	 	Country	 	applicable identifier)
	 
	 	 
	 	 

 

 

SCHEDULE III

U.S. COPYRIGHTS LICENSES OWNED BY [NAME OR GRANTOR]

[Make a separate page of Schedule III for each Grantor and state if no Copyrights Licenses are
owned. ]

 

 

Schedule III

Page 2

PATENTS LICENSES OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule III for each Grantor and state if no Patents Licenses are owned.]

 

 

Schedule III

Page 3

TRADEMARK LICENSES OWNED BY [NAME OF GRANTOR]

[Make a separate page of Schedule III for each Grantor and state if no Trademark Licenses are
owned.]

 

 

EXHIBIT I

to the Intellectual Property

Security Agreement

     SUPPLEMENT
NO. ___ dated as of, to the Intellectual Property Security Agreement dated as of May
2, 2006 among LONE STAR HOLDINGS CORP., a Delaware corporation (“Holdings”), ACTIVANT SOLUTIONS
INC., a Delaware corporation (the “Borrower”), the Subsidiaries of Holdings identified therein and
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent for the Secured Parties (as defined
below).

     A. Reference is made to (i) the Credit Agreement dated as of May 2, 2006 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Holdings, the Borrower, Deutsche Bank Trust Company Americas, as Administrative Agent, Swing
Line Lender and an L/C Issuer, each Lender from time to time party thereto, JPMorgan Chase Bank,
N.A., as Syndication Agent, and Lehman Commercial Paper Inc., as Documentation Agent, (ii) the
Holdings Guaranty (as defined in the Credit Agreement), (iii) the Borrower Guaranty (as defined in
the Credit Agreement), (iv) the Subsidiary Guaranty (as defined in the Credit Agreement), (v) each
Secured Hedge Agreement (as defined in the Credit Agreement) and (vi) the Cash Management
Obligations (as defined in the Credit Agreement).

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

     C. The Grantors have entered into the Intellectual Property Security Agreement in order to
induce (x) the Lenders to make Loans and the L/C Issuers to issue Letters of Credit, (y) the Hedge
Banks to enter into and/or maintain Secured Hedge Agreements and (z) the Cash Management Banks to
provide the Cash Management Services. 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
substantially 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; provided that, to the extent that such representations
and warranties specifically refer to an earlier date, they shall be true and correct in all
respects as of such earlier date. In furtherance of the foregoing, the New Subsidiary, as security
for the

 

 

Exhibit I

Page 2

payment and performance in full of the Secured 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 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 (or if different, its “location” as determined in accordance with Section
9-307 of the Uniform Commercial Code).

     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.

     Section 9.
The New Subsidiary agrees to reimburse the Collateral Agent for
its

 

 

Exhibit I

Page 3

reasonable out-of-pocket expenses in connection with this Supplement, including Attorney Costs 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:
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,	 	 
	 

	 	 	 	as Collateral Agent,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

INTELLECTUAL PROPERTYexv10w6

 

Exhibit 10.6

Execution Copy

EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) dated May 2, 2006, is made by and between Lone
Star Holding Corp., a Delaware corporation (the “Company”), and Pervez Qureshi (the “Executive”).

     Whereas, the Company desires to employ Executive, and Executive is willing to serve
in the employ of the Company upon the terms and conditions provided in this Agreement; and

     Whereas, in connection with the merger by and among the Company, Lone Star Merger
Corp. and Activant Solutions Holdings Inc., as detailed in that certain Agreement and Plan of
Merger dated March 12, 2006 (the “Merger Agreement”), Executive and the Company desire to enter
into this Agreement effective as of the “Closing Date” (as defined in the Merger Agreement).

     Now, Therefore, in consideration of the promises and mutual covenants herein and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive agree as follows:

     1. Term of Employment. Executive shall be employed by the Company for the period
commencing on the Closing Date and ending on the date of Executive’s termination of employment
(such period, the “Employment Term”) on the terms and subject to the conditions set forth in this
Agreement.

     2. Position.

          a. During the Employment Term, Executive shall serve as the Company’s President and Chief
Executive Officer. In such position, Executive shall have such duties and authority as shall be
determined from time to time by the Board of Directors of the Company (the “Board”). Prior to an
initial public offering of the Company’s common stock (an “IPO”), Executive shall serve as a member
of the Board so long as Executive remains the President and Chief Executive Officer of the Company.
Subsequent to an IPO, the Company shall nominate Executive for election to serve as member of the
Board as long as Executive continues to serve as the Company’s President and Chief Executive
Officer. All service as a member of the Board pursuant to this paragraph 2.a. shall be without
additional compensation to Executive.

          b. During the Employment Term, Executive will devote Executive’s full business time to the
performance of Executive’s duties hereunder and will not engage in any other business, profession
or occupation for compensation or otherwise which would conflict or interfere with the rendition of
such services either directly or indirectly, without the prior written consent of the Board;
provided that nothing herein shall preclude Executive from (i) accepting appointment to or
continuing to serve on any board of directors or trustees of any charitable or religious
organization, (ii) otherwise participating in charitable or religious activities, or (iii) managing
his personal investments and affairs; provided in each case, and in the aggregate,

 

 

that
such activities do not conflict or interfere with the performance of Executive’s duties hereunder.

     3. Base Salary. During the Employment Term, the Company shall pay Executive a base
salary at the annual rate of $400,000, payable in regular installments in accordance with the
Company’s usual payment practices. Executive’s base salary will be subject to an annual review for
increases by the compensation committee of the Board (the “Compensation Committee”). Executive’s
annual base salary, as in effect from time to time, is hereinafter referred to as the “Base
Salary.”

     4. Bonus Opportunity. With respect to each full fiscal year during the Employment
Term, Executive shall be eligible to earn an annual bonus under a program similar to Activant
Solutions Holdings Inc.’s fiscal year 2006 incentive performance program. For each full fiscal
year during the Employment Term, Executive shall be eligible to earn an annual bonus of one hundred
percent (100%) of Executive’s Base Salary (the “Target Bonus”) based upon the achievement of
budgeted EBITDA and revenue based performance targets established by the Board and the Compensation
Committee, and Executive shall have a maximum annual bonus opportunity equal to one hundred and
seventy-five percent (175%) of the Target Bonus. For the fiscal year in which the Closing Date
occurs, Executive’s annual Target Bonus shall be determined by dividing (i) the sum of $250,000 and
$400,000 by (ii) two (2). The Company and Executive intend that a portion of the annual bonus
payment (the “Bonus Payment”) will continue to be advanced on a quarterly basis to the extent
performance targets have been achieved in accordance with the terms of the 2006 incentive
performance plan. In all cases, any earned Bonus Payment will be paid to Executive prior to the
sixth day following the completion of the annual audit of the Company’s financial statements, but
in no event later than two and one-half (21/2) months after the end of the applicable fiscal year in
which it was earned (or such longer or shorter period as may be applicable pursuant to the
“short-term deferral” rules under Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and the regulations thereunder).

     5. Equity Arrangements. Executive will be granted a non-statutory stock option to
purchase 2,166,667 shares of the Company’s common stock (the “Option”) pursuant to the terms of the
Company’s 2006 Stock Incentive Plan (the “Plan”) and the form of stock option award agreement (the
“Stock Option Agreement”) approved by the Board for use under the Plan. The Option shall have a
per share exercise price of $4.00. The Option will vest as to twenty percent (20%) of the total
number of shares subject to the Option on the twelve (12) month anniversary of the Closing Date,
and as to five percent (5%) of the total number of shares subject to the Option at the end of each
full three (3) month period thereafter, so that the award will be fully vested on the fifth
anniversary of the Closing Date, subject to Executive’s continuous employment during that time. In
the event of a consummation of a “Change of Control” (as defined below), all unvested Options that
were not previously cancelled will accelerate and become immediately vested and exercisable. For
the purposes of this Agreement, the term “Change of Control” shall mean (i) the sale or
disposition, in one or a series of related transactions, of all or substantially all of the assets
of the Company to any “person” or “group” (as such terms are defined in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) other than the “Initial Investors” (as
defined below) or affiliates of the Initial Investors, or (ii) (A) any person or group, other than
the Initial Investors or affiliates of the Initial

 

 

Investors, is or becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of more than 50% of the total voting power of the voting stock of the
Company, including by way of merger,
consolidation or otherwise and (B) the Initial Investors or affiliates of the Initial
Investors cease to control the Board. For the purposes of this Agreement, “Initial Investors”
shall mean Hellman & Friedman Capital Partners V, L.P. and its affiliated funds, Thoma Cressey Fund
VII, L.P. and its affiliated funds, and JMI Equity Fund IV, L.P. and its affiliated funds.

     6. Employee Benefits. During the Employment Term, Executive shall be entitled to the
following benefits:

          a. Benefits. Executive shall be entitled to participate in the Company’s employee
benefit plans as in effect from time to time (collectively “Employee Benefits”), on the same basis
as those benefits are generally made available to other executive officers of the Company.

          b. Life Insurance. The Company shall acquire and maintain a life insurance policy on
the life of the Executive with a death benefit payable to Executive’s beneficiaries equal to two
million dollars ($2,000,000), provided that such a policy can be obtained at standard premium
rates. To the extent that proceeds payable upon Executive’s death exceed $2,000,000, the Company
shall be entitled to retain such excess proceeds without liability to Executive’s beneficiaries or
any other person or entity.

     7. Business Expenses. During the Employment Term, reasonable business expenses
incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the
Company in accordance with Company policies and practices as in effect from time to time.

     8. Termination. The Employment Term and Executive’s employment hereunder may be
terminated by either the Company or Executive at any time and for any reason; provided that
Executive will be required to give the Company at least 30 days advance written notice of any
resignation of Executive’s employment. Notwithstanding any other provision of this Agreement, the
provisions of this Section 8 shall exclusively govern Executive’s rights upon termination of
employment with the Company and its affiliates.

               a. Accrued Rights. In the event of a termination of Executive’s employment for any
reason, Executive shall be entitled to receive Accrued Rights. “Accrued Rights” shall mean:

	 	(i)	 	Base Salary through the date of termination of
employment;
	 
	 	(ii)	 	any Target Bonus earned, but unpaid, as of the date of
termination for the fiscal year immediately preceding the fiscal year in
which the termination occurs (the amount earned shall be determined by the
Company in good faith based on the achievement of the relevant performance
criteria for the entire applicable fiscal year);

 

 

	 	(iii)	 	any quarterly bonus earned, but unpaid, as of the date
of termination for the fiscal quarter immediately preceding the fiscal
quarter in which the termination occurs (the amount earned shall be
determined by the
Company in good faith based on the achievement of the relevant performance
criteria for the entire applicable fiscal quarter);
	 
	 	(iv)	 	an amount representing any accrued but unused vacation;
	 
	 	(v)	 	reimbursement for any unreimbursed business expenses
properly incurred by Executive in accordance with Company policy on or
prior to the date of Executive’s termination; provided claims for
such reimbursement (accompanied by appropriate supporting documentation)
are submitted to the Company within 90 days following the date of
Executive’s termination of employment; and
	 
	 	(vi)	 	such Employee Benefits, if any, as to which Executive
may be entitled under the employee benefit plans of the Company in
accordance with their terms.

               b. Termination by the Company without Cause or Resignation by Executive for Good
Reason

          (i) If Executive’s employment is terminated by the Company without Cause (and other than by
reason of death or Disability) or if Executive resigns for Good Reason, Executive shall be entitled
to receive:

     (A) the Accrued Rights; and

     (B) subject to Executive’s (i) delivery of a valid and irrevocable general release
of all claims against the Company, the Initial Investors and their respective affiliates
(collectively, the “Company Group”), in a form that is reasonably acceptable to the
Company, and (ii) continued compliance, in all material respects, with the restrictive
covenants set forth in Sections 9 and 10 below:

     (1) a payment equal to one hundred and fifty percent (150%) of the Base Salary then in effect,
payable within ten (10) business days following the date of such termination, and an additional
termination payment of 150% of such Base Salary paid in equal monthly installments over the nine
month period following termination, with the first such payment being due one month after
termination of employment;

     (2) a pro rata portion of any annual Target Bonus that Executive would have earned in the
fiscal year in which such termination of employment occurs (the amount of the annual Target Bonus
that Executive would have earned shall be determined by the Company is good faith based on whether
and to what extent the applicable performance targets were achieved), payable within ten (10)
business days following the date of such termination;

     (3) continued participation for a period of eighteen (18) months following termination of
employment at the Company’s expense for Executive and his then-

 

 

eligible dependents in the Company’s
group health plans pursuant to the Consolidated Budget Omnibus Reconciliation Act of 1985, as
amended (“COBRA”); and

     (4) vesting of the Option shall be accelerated such that Executive will be vested in, and the
Option will be exercisable as to, that number of shares that would have been vested and exercisable
on the six (6) month anniversary of the termination of Executive’s employment. Executive shall
have a period of 180 days following termination of employment to exercise the vested portion of the
Option and any other vested options to acquire the Company’s common stock granted to Executive
(provided that the term of assumed options shall in no event be extended).

          (ii) Notwithstanding the provisions of Sections 9(b)(i)(B)(1) and 9(b)(i)(B)(2), which provide
that certain amounts shall be payable within ten (10) business days following the date of
Executive’s termination of employment, Executive and the Company agree that such amounts may be
payable at a later date to the extent required pursuant to the provisions of Sections 8(f) and
12(f) of this Agreement.

          (iii) Notwithstanding any other provision of this Agreement, the aggregate amount described in
this Section 8(b)(i) shall be reduced by the present value of any other severance or termination
benefits payable to Executive under any other plans, programs or arrangements of the Company or its
affiliates. Except as set forth in this Section 8(b)(i), following Executive’s termination of
employment by the Company without Cause (other than by reason of Executive’s death or Disability)
or by Executive’s resignation for Good Reason, Executive shall have no further rights to any
compensation or any other benefits under this Agreement or other plans, programs or arrangements of
the Company or its affiliates.

               c. Termination by the Company for Cause, by Executive’s Resignation without Good Reason or
upon Executive’s Death or Disability.

          (i) If Executive’s employment is terminated by the Company for Cause, if Executive resigns
without Good Reason, or if Executive’s employment is terminated by reason of death or Disability,
Executive shall have no further rights to any compensation or any other benefits under this
Agreement other than the Accrued Rights.

          (ii) In the event that Executive’s employment is terminated by the Company for Cause, the
Option and all other options to acquire the common stock of the Company issued to Executive,
whether vested or unvested, shall terminate on the date of Executive’s termination of employment by
the Company for Cause.

               d. Definitions. The following capitalized terms used in this Agreement have the
respective meanings set forth below:

          (i) “Cause” shall mean (i) dishonest or fraudulent statements or acts of Executive with
respect to the Company or any of its affiliates, (ii) Executive’s conviction of, or entry of a plea
of guilty or nolo contendere for, any crime that constitutes a felony or any misdemeanor (excluding
minor traffic violations) involving moral turpitude, deceit, dishonesty or fraud, (iii) gross
negligence or willful misconduct by Executive with respect to the Company or its subsidiaries, or
(iv) a material breach by Executive of this Agreement and any other

 

 

agreement to which Executive
and the Company are now or hereafter parties.

          (ii) “Disability” shall mean a disability under Section 409A(a)(2)(C)(i) of the
Code.

          (iii) “Good Reason” shall mean (i) the failure by the Company to comply with any material
provision of this Agreement, (ii) the assignment to Executive of any duties materially inconsistent
with Executive’s status as President and Chief Executive Officer of the Company or a reduction of
Executive’s authority or title, including, but not limited to, Executive’s assignment following a
Change of Control to a position where Executive is not Chief Executive Officer of the consolidated
group of which the Company is a part; provided, however, that “Good Reason” shall cease to exist
for an event described in this clause (ii) on the 60th day following such assignment or
reduction, unless Executive has given the Company written notice of his intention to resign prior
to such date), (iii) a reduction by the Company of Executive’s base salary or bonus opportunity, or
(iv) the transfer of Executive’s primary workplace to a location that is more than fifty (50) miles
from Livermore, CA; provided, however, that if Executive enters into a separate written agreement
to waive any of the clauses above, such agreement shall cause that clause not to constitute “Good
Reason”.

               e. No Mitigation or Offset. Notwithstanding anything herein to the contrary, the
amount of any payment or benefit provided for in Section 8 shall not be reduced, offset or subject
to recovery by the Company or any of its affiliates by reason of any compensation earned by
Executive as the result of employment by another employer after Executive’s employment with the
Company terminates.

               f. Section 4999.

          (i) Prior to an IPO, in order to allow Executive to avoid the 20% excise tax imposed under
Section 4999 of the Code, Executive and the Company shall use commercially reasonable efforts to
obtain stockholder approval in accordance with the terms of Section 280G(b)(5) of the Code in
connection with any “change in the ownership or effective control” of the Company or any “change in
the ownership of a substantial portion of the assets” of the Company (each as defined under Section
280G of the Code).

          (ii) In the event that, despite the efforts taken pursuant to Section 8(f)(i), any amounts
payable under this Agreement or otherwise to Executive would (1) constitute “parachute payments”
within the meaning of Section 280G of the Code, or any comparable successor provisions, and (2) but
for this Section 8(f)(ii) would be subject to the excise tax imposed by Section 4999 of the Code,
or any comparable successor provisions (the “Excise Tax”), then such amounts payable to Executive
hereunder shall be either:

     (A) provided to Executive in full, or

     (B) provided to Executive as to such lesser extent that would result in no portion
of such benefits being subject to the Excise Tax,

     whichever of the foregoing amounts, when taking into account applicable federal, state, local
and foreign income and employment taxes, the Excise Tax, and any other applicable

 

 

taxes, results in
the receipt by Executive, on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax.
Unless the Company and Executive otherwise agree in writing, any determination required under
this Section 8(f)(ii) shall be made in writing in good faith by a nationally recognized
accounting firm (the “Accountants”). In the event of a reduction in benefits hereunder, Executive
shall be given the choice of which benefits to reduce. If Executive does not provide written
identification to the Company of which benefits he chooses to reduce within ten (10) days of his
receipt of the Accountants’ determination, and Executive has not disputed the Accountants’
determination, then the Company shall select the benefits to be reduced. For purposes of making
the calculations required by this Section 8(f)(ii), the Accountants may make reasonable assumptions
and approximations concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code and other applicable legal authority. The
Company and Executive shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this Section 8(f)(ii).
The Company shall bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section 8(f)(ii).

     If, notwithstanding any reduction described in this Section 8(f)(ii), the Internal Revenue
Service (“IRS”) determines that Executive is liable for the Excise Tax as a result of the receipt
of amounts payable under this Agreement or otherwise as described above, then Executive shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS determination or in
the event that Executive challenges the final IRS determination, a final judicial determination, a
portion of such amounts equal to the “Repayment Amount”. The Repayment Amount with respect to the
payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to
the Company so that Executive’s net after-tax proceeds with respect to any payment of benefits
(after taking into account the payment of the Excise Tax and all other applicable taxes imposed on
such payment) shall be maximized. The Repayment Amount with respect to the payment of benefits
shall be zero if a Repayment Amount of more than zero would not result in Executive’s net after-tax
proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not
eliminated pursuant to this paragraph, Executive shall pay the Excise Tax.

     Notwithstanding any other provision of this Section 8(f)(ii), if (1) there is a reduction in
the payment of benefits as described in this Section 8(f)(ii), (2) the IRS later determines that
Executive is liable for the Excise Tax, the payment of which would result in the maximization of
Executive’s net after-tax proceeds (calculated as if Executive’s benefits had not previously been
reduced), and (3) Executive pays the Excise Tax, then the Company shall pay to Executive those
benefits which were reduced pursuant to this Section 8(f)(ii) as soon as administratively possible
after Executive pays the Excise Tax so that Executive’s net after-tax proceeds with respect to the
payment of benefits are maximized.

               g. Board/Committee Resignation. Upon termination of Executive’s employment for any
reason, Executive agrees to resign, as of the date of such termination and to the extent
applicable, from all positions he holds with the Company Group, including any position on the Board
(and any committees thereof).

 

 

     9. Non-Competition/Non-Solicit.

          a. Executive acknowledges and recognizes the highly competitive nature of the businesses of
the Company and its affiliates and accordingly agrees as follows:

     (1) During the Employment Term and for a period of eighteen (18) months following the date
Executive ceases to be employed by the Company for any reason (other than death) (the “Restricted
Period”), Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction
with any person, firm, partnership, joint venture, association, corporation or other business
organization, entity or enterprise whatsoever (“Person”), directly or indirectly solicit or assist
in soliciting in competition with the Company the business of any client or prospective client of
the Company or any of its subsidiaries.

     (2) During the Restricted Period, Executive will not directly or indirectly:

	 	(i)	 	engage in any business that competes with the
business of the Company or its subsidiaries (the “Competitive Group”),
as the Competitive Group existed during the Employment Term or at the
time Executive ceases to be employed by the Company, or with any
business that the Competitive Group had specific plans to conduct
during the Employment Term or at the time Executive ceases to be
employed by the Company (so long as such plans were documented in an
actual business plan of the Competitive Group) (a “Competitive
Business”), in any geographical area that is within 100 miles of any
geographical area where the Competitive Group manufactures, produces,
sells, leases, rents, licenses or otherwise provides its products or
services;
	 
	 	(ii)	 	enter the employ of, or render any services to,
any Person (or any division or controlled or controlling affiliate of
any Person) who or which engages in a Competitive Business;
	 
	 	(iii)	 	acquire a financial interest in, or otherwise
become actively involved with, any Competitive Business, directly or
indirectly, as an individual, partner, shareholder, officer, director,
principal, agent, trustee or consultant; or
	 
	 	(iv)	 	interfere with, or attempt to interfere with,
business relationships (whether formed before, on or after the date of
this Agreement) between the Competitive Group and business partners,
customers, clients or suppliers of the Competitive Group or induce or
attempt to induce such business partners, customers, clients or
suppliers to reduce or cease their relationship with the Competitive
Group.

     (3) Notwithstanding any provision of Section 9.a.(1), Section 9.a.(2)(i) or Section
9.a.(2)(ii) of this Agreement to the contrary, Executive will not be deemed to be competing or
interfering with the Competitive Group if, after termination of employment,

 

 

Executive is employed by an entity with multiple business units or divisions, some of which
engage in a Competitive Business, so long as Executive is employed by a subsidiary, division or
other business unit that does not engage in a Competitive Business and Executive does not directly
or indirectly provide any services, information or assistance to the subsidiary, division or other
business unit that engages in a Competitive Business.

     (4) Notwithstanding anything to the contrary in this Agreement, Executive may, directly or
indirectly own, solely as an investment, securities of any Person engaged in the business of the
Company or its affiliates which are publicly traded on a national or regional stock exchange or on
the over-the-counter market if Executive (i) is not a controlling person of, or a member of a group
which controls, such person and (ii) does not, directly or indirectly, own 5% or more of any class
of securities of such Person.

     (5) During the Restricted Period, Executive will not, whether on Executive’s own behalf or on
behalf of or in conjunction with any Person, directly or indirectly solicit, induce or encourage
any employee of the Company or its affiliates, or any person who was an employee of the Company or
any affiliate of the Company at any time during the twelve (12) month period immediately prior to
the termination of the Executive’s employment with the Company, to leave the employment of the
Company or its affiliates.

     (6) During the Restricted Period, Executive will not, whether on Executive’s own behalf or on
behalf of or in conjunction with any Person, directly or indirectly, solicit, induce or encourage
any consultant, contractor or similar person under contract with the Company or its affiliates, or
any person who was a consultant, contractor or similar person of the Company or any affiliate of
the Company at any time during the twelve (12) month period immediately prior to the termination of
the Executive’s employment with the Company, to cease to work with the Company or its affiliates.

          b. It is expressly understood and agreed that although Executive and the Company consider the
restrictions contained in this Section 9 to be reasonable, if a final judicial determination is
made by a court of competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive, the provisions of
this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum
time and territory and to such maximum extent as such court may judicially determine or indicate to
be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the other restrictions
contained herein.

          c. Executive acknowledges that the promises and restrictive covenants that Executive is
providing under this Section 9 are reasonable and necessary to the protection of the business to be
acquired by the Initial Investors pursuant to the Merger Agreement. Executive acknowledges that
Executive sold equity interests in Activant Solutions Holdings Inc. in connection with the
transactions contemplated by the Merger Agreement and that the goodwill of Activant Solutions
Holdings Inc. was a material consideration in the Initial Investors’ decision to enter into the
transactions contemplated by the Merger Agreement. Executive further acknowledges that if
Executive were to engage in the restricted activities

 

 

described in this Section 9 during the Restricted Period, such competition could materially
and adversely affect the value of the business acquired by the Initial Investors in the
transactions contemplated by the Merger Agreement. Executive and the Company agree that each of
the Initial Investors are express third party beneficiaries of the provisions set forth in this
Section 9.

     10. Confidentiality; Intellectual Property.

          a. Confidentiality.

          (i) Executive will not at any time (whether during or after Executive’s employment with the
Company) (x) retain or use for the benefit, purposes or account of Executive or any other Person;
or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person
outside the Company (other than its professional advisers who are bound by confidentiality
obligations), any non-public, proprietary or confidential information —including without
limitation trade secrets, know-how, research and development, software, databases, inventions,
processes, formulae, technology, designs and other intellectual property, information concerning
finances, investments, profits, pricing, costs, products, services, vendors, customers, clients,
partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing,
promotions, government and regulatory activities and approvals — concerning the past, current or
future business, activities and operations of the Company, its subsidiaries or affiliates and/or
any third party that has disclosed or provided any of same to the Company on a confidential basis
(“Confidential Information”) without the prior written authorization of the Board.

          (ii) “Confidential Information” shall not include any information that is (a) generally known
to the industry or the public other than as a result of Executive’s breach of this covenant or any
breach of other confidentiality obligations by third parties; (b) made legitimately available to
Executive by a third party without breach of any confidentiality obligation; or (c) required by law
to be disclosed; provided that Executive shall give prompt written notice to the Company of
such requirement, disclose no more information than is so required, and cooperate with any attempts
by the Company to obtain a protective order or similar treatment.

          (iii) Except as required by law, Executive will not disclose to anyone, other than Executive’s
immediate family and legal or financial advisors, the existence or contents of this Agreement;
provided that Executive may disclose to any prospective future employer the provisions of
Sections 9 and 10 of this Agreement if such prospective employer agrees to maintain the
confidentiality of such terms.

          (iv) Upon termination of Executive’s employment with the Company for any reason, Executive
shall (x) cease and not thereafter commence use of any Confidential Information or intellectual
property (including without limitation, any patent, invention, copyright, trade secret, trademark,
trade name, logo, domain name or other source indicator) owned or used by the Company, its
subsidiaries or affiliates; (y) immediately destroy, delete, or return to the Company, at the
Company’s option, all originals and copies in any form or medium (including memoranda, books,
papers, plans, computer files, letters and other data) in Executive’s possession or control
(including any of the foregoing stored or located in

 

 

Executive’s office, home, laptop or other
computer, whether or not Company property) that
contain Confidential Information or otherwise relate to the business of the Company, its
affiliates and subsidiaries, except that Executive may retain only those portions of any personal
notes, notebooks and diaries that do not contain any Confidential Information; and (z) notify and
fully cooperate with the Company regarding the delivery or destruction of any other Confidential
Information of which Executive is or becomes aware.

               b. Intellectual Property.

          (i) If Executive has created, invented, designed, developed, contributed to or improved any
works of authorship, inventions, intellectual property, materials, documents or other work product
(including without limitation, research, reports, software, databases, systems, applications,
presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with
third parties, prior to Executive’s employment by the Company, that are relevant to or implicated
by such employment (“Prior Works”), Executive hereby grants the Company a perpetual, non-exclusive,
royalty-free, worldwide, assignable, sublicensable license under all rights and intellectual
property rights (including rights under patent, industrial property, copyright, trademark, trade
secret, unfair competition and related laws) therein for all purposes in connection with the
Company’s current and future business. A list of all such Works as of the date hereof is attached
hereto as Exhibit A.

          (ii) If Executive creates, invents, designs, develops, contributes to or improves any Works,
either alone or with third parties, at any time during Executive’s employment by the Company and
within the scope of such employment and/or with the use of any the Company resources (“Company
Works”), Executive shall promptly and fully disclose same to the Company and hereby irrevocably
assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and
intellectual property rights therein (including rights under patent, industrial property,
copyright, trademark, trade secret, unfair competition and related laws) to the Company to the
extent ownership of any such rights does not vest originally in the Company.

          (iii) Executive agrees to keep and maintain adequate and current written records (in the form
of notes, sketches, drawings, and any other form or media requested by the Company) of all Company
Works. The records will be available to and remain the sole property and intellectual property of
the Company at all times.

          (iv) Executive shall take all requested actions and execute all requested documents (including
any licenses or assignments required by a government contract) at the Company’s expense (but
without further remuneration) to assist the Company in validating, maintaining, protecting,
enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Prior
Works and Company Works. If the Company is unable for any other reason to secure Executive’s
signature on any document for this purpose, then Executive hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney
in fact, to act for and in Executive’s behalf and stead to execute any documents and to do all
other lawfully permitted acts in connection with the foregoing.

 

 

          (v) Executive shall not improperly use for the benefit of, bring to any
premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share
with the Company any confidential, proprietary or non-public information or intellectual property
relating to a former employer or other third party without the prior written permission of such
third party. Executive hereby indemnifies, holds harmless and agrees to defend the Company and its
officers, directors, partners, employees, agents and representatives from any breach of the
foregoing covenant. Executive shall comply with all relevant policies and guidelines of the
Company, including regarding the protection of confidential information and intellectual property
and potential conflicts of interest. Executive acknowledges that the Company may amend any such
policies and guidelines from time to time, and that Executive remains at all times bound by their
most current version.

          (vi) The provisions of Section 10 shall survive the termination of Executive’s employment for
any reason.

     11. Specific Performance. Executive acknowledges and agrees that the Company’s
remedies at law for a breach or threatened breach of any of the provisions of Section 9 or Section
10 would be inadequate and the Company would suffer irreparable damages as a result of such breach
or threatened breach. In recognition of this fact, Executive agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to cease making any payments or providing any benefit otherwise required by
this Agreement and obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable remedy which may then
be available.

     12. Miscellaneous.

               a. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts of laws principles
thereof. Any and all disputes between the parties which may arise pursuant to this Agreement will
be heard and determined before an appropriate state court in Santa Clara, California. The parties
acknowledge that such courts have jurisdiction to interpret and enforce the provisions of this
Agreement, and the parties consent to, and waive any and all objections that they may have as to,
personal jurisdiction and/or venue in such courts.

               b. Entire Agreement; Amendments. This Agreement contains the entire understanding of
the parties with respect to the employment of Executive by the Company. There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties hereto. In the
event that the Closing fails to occur, this Agreement shall be void ab initio.

               c. No Waiver. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive
such party of the right thereafter to insist upon strict adherence to that term or any other term
of this Agreement.

 

 

               d. Assignment. This Agreement, and all of Executive’s rights and duties hereunder,
shall not be assignable or delegable by Executive except to the extent permitted by the Company in
writing. Any purported assignment or delegation by Executive in violation of the foregoing shall
be null and void ab initio and of no force and effect. This Agreement may be assigned by the
Company to a person or entity which is a successor in interest to substantially all of the business
operations of the Company. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such successor person or entity.

               e. Set Off. The Company’s obligation to pay Executive the amounts provided for in
Section 8 hereunder shall be subject to set-off, counterclaim or recoupment of amounts owed by
Executive to the Company or its affiliates.

               f. Compliance with IRC Section 409A. Notwithstanding anything herein to the contrary,
(i) if at the time of Executive’s termination of employment with the Company Executive is a
“specified employee” as defined in Section 409A of the Code and the deferral of the commencement of
any payments or benefits otherwise payable hereunder as a result of such termination of employment
is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code,
then the Company will defer the commencement of the payment of any such payments or benefits
hereunder (without any reduction in such payments or benefits ultimately paid or provided to
Executive) until the date that is six months following Executive’s termination of employment with
the Company (or the earliest date as is permitted under Section 409A of the Code without the
imposition of any accelerated or additional tax) and (ii) if any other payments of money or other
benefits due to Executive hereunder could cause the application of an accelerated or additional tax
under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will
avoid such acceleration or additional tax, or otherwise such payment or other benefits shall be
restructured, to the extent possible, in a manner, determined by the Board, that does not cause
such an accelerated or additional tax and that preserves, to the greatest extent possible, the
value of such payment or other benefits.

               g. Successors; Binding Agreement. This Agreement shall inure to the benefit of and be
binding upon personal or legal representatives, executors, administrators, successors, assigns,
agents, affiliates, heirs, distributees, devisees and legatees.

               h. Notice. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered by hand or overnight courier or three days after it has been mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the respective addresses
set forth below in this Agreement, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.

 

 

If to the Company:

Lone Star Holding Corp.

c/o Hellman & Friedman LLC

One Maritime Plaza, 12th Floor

San Francisco, CA 94111

Attention: David R. Tunnell

          C. Andrew Ballard

If to Executive:

To the most recent address of Executive set forth in the personnel records of the

Company.

               i. Executive Representation. Executive hereby represents to the Company that the
execution and delivery of this Agreement by Executive and the performance by Executive of
Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms
of any employment agreement or other agreement or policy to which Executive is a party or otherwise
bound.

               j. Prior Agreements This Agreement supersedes all prior agreements and understandings
(including verbal agreements) between Executive and the Company and/or its affiliates regarding the
terms and conditions of Executive’s employment with the Company and/or its affiliates.

               k. Cooperation. Executive shall provide Executive’s reasonable cooperation in
connection with any action or proceeding (or any appeal from any action or proceeding) which
relates to events occurring during Executive’s employment with the Company or its affiliates. This
provision shall survive any termination of this Agreement.

               l. Expenses. In the event of any dispute between the Company and Executive as to the
interpretation, terms, validity or enforceability of (including any dispute about the amount of any
payment pursuant to) this Agreement, the prevailing party shall be entitled to recover from the
non-prevailing party any and all of such prevailing party’s costs and expenses incurred in
connection with any such dispute, including reasonable attorneys’ fees.

               m. Withholding Taxes. The Company may withhold from any amounts payable under this
Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.

               n. Counterparts. This Agreement may be signed in counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were upon the same
instrument.

 

 

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

	 	 	 	 	 	 	 
	LONE STAR HOLDING CORP.	 	PERVEZ QURESHI
	 
	 	 	 	 	 	 
	 	 	 	 	 
	By:

	 	David Tunnell	 	 	 	 
	Title:

	 	President	 	 	 	 

 

 

EXHIBIT A

WORKS

     None.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]