Document:

Exhibit
10.2

 

 

SECURITY AGREEMENT

By

SHUFFLE MASTER,
INC.,

as Borrower

and

THE GUARANTORS
PARTY HERETO

and

DEUTSCHE BANK
TRUST COMPANY AMERICAS,

as Collateral Agent

Dated as of
November 30, 2006

 

 

TABLE
OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PREAMBLE

  	
   

  	
   

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RECITALS

  	
   

  	
   

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AGREEMENT

  	
   

  	
   

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DEFINITIONS AND
  INTERPRETATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  SECTION 1.2.

  	
   

  	
  Interpretation

  	
   

  	
  9

  
	
  SECTION 1.3.

  	
   

  	
  Resolution of Drafting Ambiguities

  	
   

  	
  9

  
	
  SECTION 1.4.

  	
   

  	
  Perfection Certificate

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GRANT OF
  SECURITY AND SECURED OBLIGATIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
   

  	
  Grant of Security Interest

  	
   

  	
  9

  
	
  SECTION 2.2.

  	
   

  	
  Filings

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PERFECTION;
  SUPPLEMENTS; FURTHER ASSURANCES;

  	
   

  	
   

  
	
  USE OF PLEDGED
  COLLATERAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
   

  	
  Delivery of Certificated Securities Collateral

  	
   

  	
  11

  
	
  SECTION 3.2.

  	
   

  	
  Perfection of Uncertificated Securities Collateral

  	
   

  	
  11

  
	
  SECTION 3.3.

  	
   

  	
  Financing Statements and Other Filings; Maintenance
  of Perfected Security Interest

  	
   

  	
  11

  
	
  SECTION 3.4.

  	
   

  	
  Other Actions

  	
   

  	
  11

  
	
  SECTION 3.5.

  	
   

  	
  Joinder of Additional Guarantors

  	
   

  	
  13

  
	
  SECTION 3.6.

  	
   

  	
  Supplements; Further Assurances

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
   

  	
  Title

  	
   

  	
  14

  
	
  SECTION 4.2.

  	
   

  	
  Validity of Security Interest

  	
   

  	
  14

  
	
  SECTION 4.3.

  	
   

  	
  Defense of Claims; Transferability of Pledged
  Collateral

  	
   

  	
  14

  
	
  SECTION 4.4.

  	
   

  	
  Other Financing Statements

  	
   

  	
  15

  

 

 i
 

 

 

	
  SECTION 4.5.

  	
   

  	
  Due Authorization and Issuance

  	
   

  	
  15

  
	
  SECTION 4.6.

  	
   

  	
  Consents, etc.

  	
   

  	
  15

  
	
  SECTION 4.7.

  	
   

  	
  Pledged Collateral

  	
   

  	
  15

  
	
  SECTION 4.8.

  	
   

  	
  Insurance

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CERTAIN
  PROVISIONS CONCERNING SECURITIES COLLATERAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
   

  	
  Pledge of Additional Securities Collateral

  	
   

  	
  16

  
	
  SECTION 5.2.

  	
   

  	
  Voting Rights; Distributions; etc.

  	
   

  	
  16

  
	
  SECTION 5.3.

  	
   

  	
  Defaults, etc.

  	
   

  	
  17

  
	
  SECTION 5.4.

  	
   

  	
  Certain Agreements of Pledgors As Issuers and
  Holders of Equity Interests

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CERTAIN PROVISIONS
  CONCERNING INTELLECTUAL

  	
   

  	
   

  
	
  PROPERTY
  COLLATERAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
   

  	
  Grant of Intellectual Property License

  	
   

  	
  18

  
	
  SECTION 6.2.

  	
   

  	
  Protection of Collateral Agent’s Security

  	
   

  	
  18

  
	
  SECTION 6.3.

  	
   

  	
  After-Acquired Property

  	
   

  	
  19

  
	
  SECTION 6.4.

  	
   

  	
  Litigation

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CERTAIN
  PROVISIONS CONCERNING RECEIVABLES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
   

  	
  Maintenance of Records

  	
   

  	
  20

  
	
  SECTION 7.2.

  	
   

  	
  Legend

  	
   

  	
  20

  
	
  SECTION 7.3.

  	
   

  	
  Modification of Terms, etc

  	
   

  	
  20

  
	
  SECTION 7.4.

  	
   

  	
  Collection

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TRANSFERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
   

  	
  Transfers of Pledged Collateral

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REMEDIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
   

  	
  Remedies

  	
   

  	
  21

  
	
  SECTION 9.2.

  	
   

  	
  Notice of Sale

  	
   

  	
  23

  
	
  SECTION 9.3.

  	
   

  	
  Waiver of Notice and Claims

  	
   

  	
  23

  

 

 ii
 

 

 

	
  SECTION 9.4.

  	
   

  	
  Certain Sales of Pledged Collateral

  	
   

  	
  23

  
	
  SECTION 9.5.

  	
   

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  24

  
	
  SECTION 9.6.

  	
   

  	
  Certain Additional Actions Regarding Intellectual
  Property

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  APPLICATION OF
  PROCEEDS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.1.

  	
   

  	
  Application of Proceeds

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.1.

  	
   

  	
  Concerning Collateral Agent

  	
   

  	
  25

  
	
  SECTION 11.2.

  	
   

  	
  Collateral Agent May Perform; Collateral Agent
  Appointed Attorney-in-Fact

  	
   

  	
  26

  
	
  SECTION 11.3.

  	
   

  	
  Continuing Security Interest; Assignment

  	
   

  	
  27

  
	
  SECTION 11.4.

  	
   

  	
  Termination; Release

  	
   

  	
  28

  
	
  SECTION 11.5.

  	
   

  	
  Modification in Writing

  	
   

  	
  28

  
	
  SECTION 11.6.

  	
   

  	
  Notices

  	
   

  	
  29

  
	
  SECTION 11.7.

  	
   

  	
  Governing Law, Consent to Jurisdiction and Service
  of Process; Waiver of Jury Trial

  	
   

  	
  29

  
	
  SECTION 11.8.

  	
   

  	
  Severability of Provisions

  	
   

  	
  29

  
	
  SECTION 11.9.

  	
   

  	
  Execution in Counterparts

  	
   

  	
  29

  
	
  SECTION 11.10.

  	
   

  	
  Business Days

  	
   

  	
  29

  
	
  SECTION 11.11.

  	
   

  	
  No Credit for Payment of Taxes or Imposition

  	
   

  	
  29

  
	
  SECTION 11.12.

  	
   

  	
  No Claims Against Collateral Agent

  	
   

  	
  29

  
	
  SECTION 11.13.

  	
   

  	
  No Release

  	
   

  	
  30

  
	
  SECTION 11.14.

  	
   

  	
  Obligations Absolute

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
  S-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT 1

  	
   

  	
  Form of Securities Pledge Amendment

  	
   

  	
   

  
	
  EXHIBIT 2

  	
   

  	
  Form of Joinder Agreement

  	
   

  	
   

  
	
  EXHIBIT 3

  	
   

  	
  Form of Copyright Security Agreement

  	
   

  	
   

  
	
  EXHIBIT 4

  	
   

  	
  Form of Patent Security Agreement

  	
   

  	
   

  
	
  EXHIBIT 5

  	
   

  	
  Form of Trademark Security Agreement

  	
   

  	
   

  

 

 iii

SECURITY AGREEMENT

This SECURITY AGREEMENT dated as of November 30,
2006 (as amended, supplemented or otherwise modified from time to time in
accordance with the provisions hereof, this “Agreement”) made by SHUFFLE
MASTER, INC., a Minnesota corporation (the “Borrower”), and the
Guarantors from to time to time party hereto (the “Guarantors”), as
pledgors, assignors and debtors (the Borrower, together with the Guarantors, in
such capacities and together with any successors in such capacities, the “Pledgors,”
and each, a “Pledgor”), in favor of DEUTSCHE BANK TRUST COMPANY
AMERICAS, in its capacity as collateral agent pursuant to the Credit Agreement
(as hereinafter defined), as pledgee, assignee and secured party (in such
capacities and together with any successors in such capacities, the “Collateral
Agent”).

R  E  C  I  T
A  L  S :

A.            The
Borrower, the Guarantors, the Collateral Agent and the lending institutions
listed therein (the “Lenders”) have, in connection with the execution
and delivery of this Agreement, entered into that certain credit agreement,
dated as of November 30, 2006 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”); which term shall
also include and refer to any increase in the amount of indebtedness under the
Credit Agreement and any refinancing or replacement of the Credit Agreement
(whether under a bank facility, securities offering or otherwise) or one or
more successor or replacement facilities whether or not with a different group
of agents or lenders (whether under a bank facility, securities offering or
otherwise) and whether or not with different obligors upon the Administrative
Agent’s acknowledgment of the termination of the predecessor Credit Agreement.

B.            Pursuant
to the Credit Agreement, the Borrower and the Guarantors have caused all Loan
amounts under the Credit Agreement and any Secured Hedging Agreements entered
into with any Lender or any affiliate of such Lender and all obligations of the
Guarantors under the Guaranty (the “Guaranty”) to be secured by a first
priority perfected security interest in certain assets as discussed herein.

C.            Each
Guarantor has, pursuant to the Credit Agreement, unconditionally guaranteed the
Secured Obligations.

D.            The
Borrower and each Guarantor has received substantial benefits from the
execution, delivery and performance of the obligations under the Credit
Agreement and the other Credit Documents and each is, therefore, willing to
enter into this Agreement.

E.             This
Agreement is given by each Pledgor in favor of the Collateral Agent for the
benefit of the Secured Parties (as hereinafter defined) to secure the payment
and performance of all of the Secured Obligations.

F.             It
is a condition to (i) the obligations of the Lenders to make the Loans under
the Credit Agreement , (ii) the obligations of the Issuing Bank to issue
Letters of Credit and (iii) the performance of the obligations of the Secured
Parties under Hedging Agreements that constitute Secured Obligations that each
Pledgor execute and deliver the applicable Loan Documents, including this Agreement.

 

A  G  R  E  E
M  E  N  T :

NOW THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Pledgor and the Collateral Agent hereby
agree as follows:

ARTICLE
I

DEFINITIONS
AND INTERPRETATION

SECTION 1.1.              Definitions.

(a)           Unless otherwise defined herein or in the
Credit Agreement, capitalized terms used herein that are defined in the UCC
shall have the meanings assigned to them in the UCC; provided that in
any event, the following terms shall have the meanings assigned to them in the
UCC:

“Accounts”; “Bank”; “Chattel Paper”;
“Commercial Tort Claim”; “Commodity Account”; “Commodity
Contract”; “Commodity Intermediary”; “Deposit Accounts”; “Documents”;
“Electronic Chattel Paper”; “Entitlement Order”; “Equipment”;
“Financial Asset”; “Fixtures”; “Goods”, “Inventory”;
“Letter-of-Credit Rights”; “Letters of Credit”; “Money”; “Payment
Intangibles”; “Proceeds”; “ Records”; “Securities Account”;
“Securities Intermediary”; “Supporting Obligations”; and “Tangible
Chattel Paper.”

(b)           Terms used but not otherwise defined herein
that are defined in the Credit Agreement shall have the meanings given to them
in the Credit Agreement.

(c)           The following terms shall have the following
meanings:

“Account Debtor” shall mean each person who is
obligated on a Receivable or Supporting Obligation related thereto.

“Agreement” shall have the meaning assigned to
such term in the Preamble hereof.

“Borrower” shall have the meaning assigned to
such term in the Preamble hereof.

“Collateral Agent” shall have the meaning
assigned to such term in the Preamble hereof.

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

“Contracts” shall mean, collectively, with
respect to each Pledgor, all sale, service, performance, equipment or property
lease contracts, agreements and grants and all other contracts, agreements or
grants (in each case, whether written or oral, or third party or intercompany),

 2
 

 

between such Pledgor and any third party, and all
assignments, amendments, restatements, supplements, extensions, renewals,
replacements or modifications thereof.

“Copyrights” shall mean, collectively, with
respect to each Pledgor, all copyrights (whether statutory or common law,
whether established or registered in the United States or any other country or
any political subdivision thereof, whether registered or unregistered and
whether published or unpublished) and all copyright registrations and applications
made by such Pledgor, in each case, whether now owned or hereafter created or
acquired by or assigned to such Pledgor, together with any and all
(i) rights and privileges arising under applicable law with respect to
such Pledgor’s use of such copyrights, (ii) reissues, renewals,
continuations and extensions thereof and amendments thereto, (iii) income,
fees, royalties, damages, claims and payments now or hereafter due and/or
payable with respect thereto, including damages and payments for past, present
or future infringements thereof, (iv) rights corresponding thereto throughout
the world and (v) rights to sue for past, present or future infringements
thereof.

“Copyright Security Agreement” shall mean an
agreement substantially in the form of Exhibit 3 hereto.

“Credit Agreement” shall have the meaning
assigned to such term in Recital A hereof.

“Distributions” shall mean, collectively, with
respect to each Pledgor, all dividends, cash, options, warrants, rights,
instruments, distributions, returns of capital or principal, income, interest,
profits and other property, interests (debt or equity) or proceeds, including
as a result of a split, revision, reclassification or other like change of the
Pledged Securities, from time to time received, receivable or otherwise
distributed to such Pledgor in respect of or in exchange for any or all of the
Pledged Securities or Intercompany Notes.

“Excluded Property” shall mean

(a)           any permit or license issued by a
Governmental Authority to any Pledgor or any agreement to which any Pledgor is
a party, in each case, only to the extent and for so long as the terms of such
permit, license or agreement or any Requirement of Law applicable thereto,
validly prohibit the creation by such Pledgor of a security interest in such
permit, license or agreement in favor of the Collateral Agent (after giving
effect to Sections 9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or
any successor provision or provisions) or any other applicable law (including
the Bankruptcy Code) or principles of equity);

(b)           Equipment owned by any Pledgor on the date hereof
or hereafter acquired that is subject to a Lien securing a Purchase Money
Obligation or Capitalized Lease Obligation permitted to be incurred pursuant to
the provisions of the Credit Agreement if the contract or other agreement in
which such Lien is granted (or the documentation providing for such Purchase
Money Obligation or Capitalized Lease Obligation) validly prohibits the
creation of any other Lien on such Equipment;

 3
 

 

(c)           any application to register Trademarks in
the United States Patent and Trademark Office based upon Pledgor’s “intent to
use” such Trademark (but only if the grant of security interest to such
intent-to-use Trademark violates 15 U.S.C. § 1060(a)) unless and until a “Statement
of Use” or “Amendment to Allege Use” is filed in the United States Patent and
Trademark Office with respect thereto, at which point Pledged Collateral shall
include, and the security interest granted hereunder shall attach to, such
application;

(d)           any Equity Interests of any company
organized under any non-U.S. jurisdiction in excess of 65% of the issued and
outstanding voting Equity Interests of any such company; and

(e)           all cash, deposit accounts, leaseholds and
vehicles;

provided, however, that
Excluded Property shall not include any Proceeds, substitutions or replacements
of any Excluded Property referred to in clause (a) or (b) (unless such
Proceeds, substitutions or replacements would constitute Excluded Property
referred to in clause (a) or (b)).

“General Intangibles” shall mean, collectively,
with respect to each Pledgor, all “general intangibles,” as such term is
defined in the UCC, of such Pledgor and, in any event, shall include
(i) all of such Pledgor’s rights, title and interest in, to and under all
Contracts and insurance policies (including all rights and remedies relating
to monetary damages, including indemnification rights and remedies, and claims
for damages or other relief pursuant to or in respect of any Contract),
(ii) all know-how and warranties relating to any of the Pledged Collateral
or the Mortgaged Property, (iii) any and all other rights, claims,
choses-in-action and causes of action of such Pledgor against any other person
and the benefits of any and all collateral or other security given by any other
person in connection therewith, (iv) all guarantees, endorsements and
indemnifications on, or of, any of the Pledged Collateral or any of the
Mortgaged Property, (v) all lists, books, records, correspondence,
ledgers, printouts, files (whether in printed form or stored electronically), tapes
and other papers or materials containing information relating to any of the
Pledged Collateral or any of the Mortgaged Property, including all customer or
tenant lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, appraisals, recorded knowledge, surveys,
studies, engineering reports, test reports, manuals, standards, processing
standards, performance standards, catalogs, research data, computer and
automatic machinery software and programs and the like, field repair data,
accounting information pertaining to such Pledgor’s operations or any of the
Pledged Collateral or any of the Mortgaged Property and all media in which or
on which any of the information or knowledge or data or records may be recorded
or stored and all computer programs used for the compilation or printout of
such information, knowledge, records or data, (vi) all licenses, consents,
permits, variances, certifications, authorizations and approvals, however
characterized, now or hereafter acquired or held by such Pledgor, including
building permits, certificates of occupancy, environmental certificates,
industrial permits or licenses and certificates of operation and (vii) all
rights to reserves, deferred payments, deposits, refunds, indemnification of
claims and claims for tax or other refunds against any Governmental Authority.

“Goodwill” shall mean, collectively, with
respect to each Pledgor, the goodwill connected with such Pledgor’s business
including all goodwill connected with (i) the use of and 

 4
 

 

symbolized by any Trademark or Intellectual Property
License with respect to any Trademark in which such Pledgor has any interest,
(ii) all know-how, trade secrets, customer and supplier lists, proprietary
information, inventions, methods, procedures, formulae, descriptions,
compositions, technical data, drawings, specifications, name plates, catalogs,
confidential information and the right to limit the use or disclosure thereof
by any person, pricing and cost information, business and marketing plans and
proposals, consulting agreements, engineering contracts and such other assets
which relate to such goodwill and (iii) all product lines of such Pledgor’s
business.

“Governmental Authority” shall mean the
government of the United States or any other nation, or of any political
subdivision thereof, whether state, provincial or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

“Guarantors” shall have the meaning assigned to
such term in the Preamble hereof.

“Hedging Agreement” shall mean any swap, cap,
collar, forward purchase or similar agreements or arrangements dealing with
interest rates, currency exchange rates or commodity prices, either generally
or under specific contingencies.

“Instruments” shall mean, collectively, with
respect to each Pledgor, all “instruments,” as such term is defined in
Article 9, rather than Article 3, of the UCC, and shall include all
promissory notes, drafts, bills of exchange or acceptances.

“Intellectual Property Collateral” shall mean,
collectively, the Patents, Trademarks, Copyrights, Intellectual Property
Licenses and Goodwill.

“Intellectual Property Licenses” shall mean,
collectively, with respect to each Pledgor, all license and distribution
agreements with, and covenants not to sue, any other party with respect to any
Patent, Trademark or Copyright or any other patent, trademark or copyright,
whether such Pledgor is a licensor or licensee, distributor or distributee
under any such license or distribution agreement, together with any and all (i) renewals,
extensions, supplements and continuations thereof, (ii) income, fees,
royalties, damages, claims and payments now and hereafter due and/or payable
thereunder and with respect thereto including damages and payments for past,
present or future infringements or violations thereof, (iii) rights to sue
for past, present and future infringements or violations thereof and (iv) other
rights to use, exploit or practice any or all of the Patents, Trademarks or Copyrights
or any other patent, trademark or copyright.

“Intercompany Notes” shall mean, with respect
to each Pledgor, all intercompany notes described in Schedule 11 to
the Perfection Certificate and intercompany notes hereafter acquired by such
Pledgor and all certificates, instruments or agreements evidencing such intercompany
notes, and all assignments, amendments, restatements, supplements, extensions,
renewals, replacements or modifications thereof to the extent permitted pursuant
to the terms hereof.

 5
 

 

“Investment Property” shall mean a security,
whether certificated or uncertificated or Security Entitlement, excluding,
however, the Securities Collateral.

“Joinder Agreement” shall mean an agreement
substantially in the form of Exhibit 2 hereto.

“Lenders” shall have the meaning assigned to
such term in Recital A hereof.

“Material Intellectual Property Collateral”
shall mean any Intellectual Property Collateral that is material (i) to the use
and operation of the Pledged Collateral or Mortgaged Property or (ii) to the
business, results of operations, prospects or condition, financial or otherwise,
of any Pledgor.

“Organizational Documents” shall mean, with
respect to any person, (i) in the case of any corporation, the certificate
of incorporation and by-laws (or similar documents) of such person, (ii) in
the case of any limited liability company, the certificate of formation and operating
agreement (or similar documents) of such person, (iii) in the case of any
limited partnership, the certificate of formation and limited partnership
agreement (or similar documents) of such person, (iv) in the case of any
general partnership, the partnership agreement (or similar document) of such
person and (v) in any other case, the functional equivalent of the
foregoing.

“Patents” shall mean, collectively, with respect
to each Pledgor, all patents issued or assigned to, and all patent applications
and registrations made by, such Pledgor (whether established or registered or
recorded in the United States or any other country or any political subdivision
thereof), together with any and all (i) rights and privileges arising under
applicable law with respect to such Pledgor’s use of any patents, (ii)
inventions and improvements described and claimed therein, (iii) reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof and amendments thereto, (iv) income, fees, royalties, damages, claims
and payments now or hereafter due and/or payable thereunder and with respect
thereto including damages and payments for past, present or future infringements
thereof, (v) rights corresponding thereto throughout the world and (vi)
rights to sue for past, present or future infringements thereof.

“Patent Security Agreement” shall mean an
agreement substantially in the form of Exhibit 4 hereto.

“Perfection Certificate” shall mean that
certain perfection certificate dated November 30, 2006, executed and
delivered by each Pledgor in favor of the Collateral Agent for the benefit of
the Secured Parties, and each other Perfection Certificate (which shall be in
form and substance reasonably acceptable to the Collateral Agent) executed and
delivered by the applicable Guarantor in favor of the Collateral Agent for the
benefit of the Secured Parties contemporaneously with the execution and
delivery of each Joinder Agreement executed in accordance with Section 3.5
hereof, in each case, as the same may be amended, amended and restated, supplemented
or otherwise modified from time to time in accordance with the Credit Agreement
or upon the request of the Collateral Agent.

 6
 

 

“Permitted Collateral Liens” means (a) in the
case of Collateral other than Mortgaged Property, the Liens described in
clauses (i) through (xx) of Section 10.01 of the Credit Agreement and
(b) in the case of Mortgaged Property, “Permitted Collateral Liens” shall
mean the Liens described in clauses (i), (ii), (iv), (v), (viii), (xi) and
(xii) of Section 10.01; provided, however, on the Closing Date or upon the date of delivery of
each additional Mortgage under Section 9.11 of the Credit
Agreement, Permitted Collateral Liens shall mean only those Liens set forth in
Schedule B to the applicable Mortgage.

“Pledge Amendment” shall have the meaning
assigned to such term in Section 5.1 hereof.

“Pledged Collateral” shall have the meaning
assigned to such term in Section 2.1 hereof.

“Pledged Securities” shall mean, collectively,
with respect to each Pledgor, (i) all issued and outstanding Equity Interests
of each issuer set forth on Schedules 10(a) and 10(b) to the
Perfection Certificate as being owned by such Pledgor and all options,
warrants, rights, agreements and additional Equity Interests of whatever class
of any such issuer acquired by such Pledgor (including by issuance), together
with all rights, privileges, authority and powers of such Pledgor relating to
such Equity Interests in each such issuer or under any Organizational Document
of each such issuer, and the certificates, instruments and agreements
representing such Equity Interests and any and all interest of such Pledgor in
the entries on the books of any financial intermediary pertaining to such
Equity Interests, (ii) all Equity Interests of any issuer, which Equity
Interests are hereafter acquired by such Pledgor (including by issuance) and
all options, warrants, rights, agreements and additional Equity Interests of
whatever class of any such issuer acquired by such Pledgor (including by
issuance), together with all rights, privileges, authority and powers of such
Pledgor relating to such Equity Interests or under any Organizational Document
of any such issuer, and the certificates, instruments and agreements
representing such Equity Interests and any and all interest of such Pledgor in
the entries on the books of any financial intermediary pertaining to such
Equity Interests, from time to time acquired by such Pledgor in any manner, and
(iii) all Equity Interests issued in respect of the Equity Interests referred
to in clause (i) or (ii) upon any consolidation or merger of any issuer of such
Equity Interests.

“Pledgor” shall have the meaning assigned to such
term in the Preamble hereof.

“Purchase Money Obligation” shall mean, for any
person, the obligations of such person in respect of Indebtedness (including
Capitalized Lease Obligations) incurred for the purpose of financing all or any
part of the purchase price of any property (including Equity Interests of any
person) or the cost of installation, construction or improvement of any
property and any refinancing thereof; provided, however, that (i) such Indebtedness is incurred within one
year after such acquisition, installation, construction or improvement of such
property by such person and (ii) the amount of such Indebtedness does not
exceed 100% of the cost of such acquisition, installation, construction or
improvement, as the case may be.

“Receivables” shall mean all (i) Accounts, (ii)
Chattel Paper, (iii) Payment Intangibles, (iv) General Intangibles, (v)
Instruments and (vi) all other rights to payment, whether or not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise 

 7
 

 

disposed of, or services rendered or to be rendered,
regardless of how classified under the UCC together with all of Pledgors’
rights, if any, in any goods or other property giving rise to such right to
payment and all Collateral Support and Supporting Obligations related thereto
and all Records relating thereto.

“Requirements of Law” shall mean, collectively,
any and all requirements of any Governmental Authority including any and all
laws, judgments, orders, decrees, ordinances, rules, regulations, statutes or
case law.

“Secured Obligations” shall mean (a) the
Obligations and (b) the due and punctual payment and performance of all
obligations of Borrower and the other Credit Parties under each Hedging Agreement
entered into with any counterparty that is a Secured Party.

“Secured Parties” shall mean, collectively, the
Administrative Agent, the Collateral Agent, each other Agent, the Lenders and
each party to a Hedging Agreement if at the date of entering into such Hedging
Agreement such person was a Lender or an Affiliate of a Lender and such person
executes and delivers to the Administrative Agent a letter agreement in form
and substance acceptable to the Administrative Agent pursuant to which such
person (i) appoints the Collateral Agent as its agent under the applicable
Credit Documents and (ii) agrees to be bound by the provisions of Sections 12.03,
13.01 and 12.06 of the Credit Agreement.

“Securities Collateral” shall mean,
collectively, the Pledged Securities and the Intercompany Notes.

“Trademarks” shall mean, collectively, with
respect to each Pledgor, all trademarks (including service marks), slogans,
logos, certification marks, trade dress, uniform resource locations (URL’s),
domain names, corporate names and trade names, whether registered or
unregistered, owned by or assigned to such Pledgor and all registrations and
applications for the foregoing (whether statutory or common law and whether
established or registered in the United States or any other country or any
political subdivision thereof), together with any and all (i) rights and
privileges arising under applicable law with respect to such Pledgor’s use of
any trademarks, (ii) reissues, continuations, extensions and renewals
thereof and amendments thereto, (iii) income, fees, royalties, damages and
payments now and hereafter due and/or payable thereunder and with respect
thereto, including damages, claims and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the
world and (v) rights to sue for past, present and future infringements thereof.

“Trademark Security Agreement” shall mean an
agreement substantially in the form of Exhibit 5 hereto.

“UCC” shall mean the Uniform Commercial Code as
in effect from time to time in the State of New York; provided, however,
that, at any time, if by reason of mandatory provisions of law, any or all of
the perfection or priority of the Collateral Agent’s and the Secured Parties’
security interest in any item or portion of the Pledged Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of New York, the term “UCC” shall mean the Uniform Commercial Code as in
effect, at such time, in such other jurisdiction 

 8
 

 

for purposes of the provisions hereof relating to such
perfection or priority and for purposes of definitions relating to such
provisions.

SECTION 1.2.              Interpretation.  The rules of interpretation specified in the
Credit Agreement shall be applicable to this Agreement.

SECTION 1.3.              Resolution of
Drafting Ambiguities.  Each Pledgor
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., the Collateral Agent) shall not be employed in the
interpretation hereof.

SECTION 1.4.              Perfection
Certificate.  The Collateral Agent
and each Secured Party agree that the Perfection Certificate and all
descriptions of Pledged Collateral, schedules, amendments and supplements
thereto are and shall at all times remain a part of this Agreement.

ARTICLE
II

GRANT
OF SECURITY AND SECURED OBLIGATIONS

SECTION 2.1.              Grant of Security
Interest.  As collateral security for
the payment and performance in full of all the Secured Obligations, each
Pledgor hereby pledges and grants to the Collateral Agent for the benefit of
the Secured Parties, a lien on and security interest in all of the right, title
and interest of such Pledgor in, to and under the following property, wherever
located, and whether now existing or hereafter arising or acquired from time to
time (collectively, the “Pledged Collateral”):

(i)       all Accounts;

(ii)      all Equipment, Goods, Inventory and Fixtures;

(iii)     all Documents, Instruments and Chattel Paper;

(iv)     all Letters of Credit and Letter-of-Credit Rights;

(v)      all Securities Collateral;

(vi)     all Investment Property;

(vii)    all Intellectual Property Collateral;

(viii)   the Commercial Tort Claims described on Schedule
13 to the Perfection Certificate;

(ix)     all General Intangibles;

(x)      all Supporting Obligations;

 9
 

 

(xi)     all books and records relating to the Pledged
Collateral; and

(xii)    to
the extent not covered by clauses (i) through (xiii) of this sentence, all
other personal property of such Pledgor, whether tangible or intangible, and
all Proceeds and products of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of, each of
the foregoing, any and all Proceeds of any insurance, indemnity, warranty or
guaranty payable to such Pledgor from time to time with respect to any of the
foregoing.

Notwithstanding anything to the contrary contained in
clauses (i) through (xiii) above, the security interest created by this
Agreement shall not extend to, and the term “Pledged Collateral” shall not
include, any Excluded Property and from and after the Closing Date, no Pledgor
shall permit to become effective in any document creating, governing or
providing for any permit, license or agreement a provision that would prohibit
the creation of a Lien on such permit, license or agreement in favor of the
Collateral Agent unless such Pledgor believes, in its reasonable judgment, that
such prohibition is usual and customary in transactions of such type.

SECTION 2.2.              Filings.

(a)           Each Pledgor hereby irrevocably authorizes
the Collateral Agent at any time and from time to time to file in any relevant
jurisdiction any financing statements (including fixture filings) and
amendments thereto that contain the information required by Article 9 of the
Uniform Commercial Code of each applicable jurisdiction for the filing of any
financing statement or amendment relating to the Pledged Collateral, including
(i) whether such Pledgor is an organization, the type of organization and any
organizational identification number issued to such Pledgor, (ii) any financing
or continuation statements or other documents without the signature of such
Pledgor where permitted by law, including the filing of a financing statement describing
the Pledged Collateral as “all assets now owned or hereafter acquired by the
Pledgor or in which Pledgor otherwise has rights” and (iii) in the case of a
financing statement filed as a fixture filing or covering Pledged Collateral
constituting minerals or the like to be extracted or timber to be cut, a
sufficient description of the real property to which such Pledged Collateral relates.  Each Pledgor agrees to provide all
information described in the immediately preceding sentence to the Collateral
Agent promptly upon request by the Collateral Agent.

(b)           Each Pledgor hereby ratifies its
authorization for the Collateral Agent to file in any relevant jurisdiction any
financing statements relating to the Pledged Collateral if filed prior to the
date hereof.

(c)           Each Pledgor hereby further authorizes the
Collateral Agent to file filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office), including
this Agreement, the Copyright Security Agreement, the Patent Security Agreement
and the Trademark Security Agreement, or other documents for the purpose of
perfecting, confirming, continuing, enforcing or protecting the security
interest granted by such Pledgor hereunder, without the signature of such
Pledgor, and naming such Pledgor, as debtor, and the Collateral Agent, as secured
party.

 10
 

 

ARTICLE
III

PERFECTION;
SUPPLEMENTS; FURTHER ASSURANCES;

USE OF PLEDGED COLLATERAL

SECTION 3.1.              Delivery of
Certificated Securities Collateral. 
Each Pledgor represents and warrants that all certificates, agreements
or instruments representing or evidencing the Securities Collateral in
existence on the date hereof have been delivered to the Collateral Agent in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank and that the Collateral Agent
has a perfected first priority security interest therein.  Each Pledgor hereby agrees that all
certificates, agreements or instruments representing or evidencing Securities
Collateral acquired by such Pledgor after the date hereof shall promptly (but
in any event within five days after receipt thereof by such Pledgor) be
delivered to and held by or on behalf of the Collateral Agent pursuant
hereto.  All certificated Securities Collateral
shall be in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. 
The Collateral Agent shall have the right, at any time upon the
occurrence and during the continuance of any Event of Default, to endorse,
assign or otherwise transfer to or to register in the name of the Collateral
Agent or any of its nominees or endorse for negotiation any or all of the
Securities Collateral, without any indication that such Securities Collateral
is subject to the security interest hereunder. 
In addition, upon the occurrence and during the continuance of an Event
of Default, the Collateral Agent shall have the right at any time to exchange
certificates representing or evidencing Securities Collateral for certificates
of smaller or larger denominations. 
Notwithstanding anything to the contrary contained herein, the Borrower
shall not be required to deliver on the Effective Date the stock certificates
listed on Schedule VIII to the Credit Agreement.

SECTION 3.2.              Perfection of
Uncertificated Securities Collateral. 
Each Pledgor represents and warrants that the Collateral Agent has a
perfected first priority security interest in all uncertificated Pledged
Securities pledged by it hereunder that are in existence on the date hereof.

SECTION 3.3.              Financing
Statements and Other Filings; Maintenance of Perfected Security Interest.  Each Pledgor represents and warrants that all
financing statements, agreements, instruments and other documents necessary to
perfect the security interest granted by it to the Collateral Agent in respect
of the Pledged Collateral have been delivered to the Collateral Agent in
completed and, to the extent necessary or appropriate, duly executed form for
filing in each governmental, municipal or other office specified in Schedule
7 to the Perfection Certificate. 
Each Pledgor agrees that at the sole cost and expense of the Pledgors,
such Pledgor will maintain the security interest created by this Agreement in
the Pledged Collateral as a perfected first priority security interest subject
only to Permitted Collateral Liens.

SECTION 3.4.              Other Actions.  In order to further ensure the attachment, perfection
and priority of, and the ability of the Collateral Agent to enforce, the
Collateral Agent’s security interest in the Pledged Collateral, each Pledgor
represents and warrants (as to itself) as 

 11
 

 

follows and agrees, in each case at such
Pledgor’s own expense, to take the following actions with respect to the
following Pledged Collateral:

(a)           Instruments and Tangible Chattel Paper.  As of the date hereof, no amounts payable under
or in connection with any of the Pledged Collateral are evidenced by any
Instrument or Tangible Chattel Paper in excess of $100,000 each, other than
such Instruments and Tangible Chattel Paper listed in Schedule 11
to the Perfection Certificate.  Each Instrument
and each item of Tangible Chattel Paper listed in Schedule 11 to the
Perfection Certificate has been properly endorsed, assigned and delivered to
the Collateral Agent, accompanied by instruments of transfer or assignment duly
executed in blank.  If any amount then
payable under or in connection with any of the Pledged Collateral shall be
evidenced by any Instrument or Tangible Chattel Paper, and such amount,
together with all amounts payable evidenced by any Instrument or Tangible
Chattel Paper not previously delivered to the Collateral Agent exceeds $500,000
in the aggregate for all Pledgors, the Pledgor acquiring such Instrument or
Tangible Chattel Paper shall promptly (but in any event within five days after
receipt thereof) endorse, assign and deliver the same to the Collateral Agent,
accompanied by such instruments of transfer or assignment duly executed in
blank as the Collateral Agent may from time to time specify.

(i)            As between the
Collateral Agent and the Pledgors, the Pledgors shall bear the investment risk
with respect to the Investment Property and Pledged Securities, and the risk of
loss of, damage to, or the destruction of the Investment Property and Pledged
Securities, whether in the possession of, or maintained as a Security Entitlement
or deposit by.

(b)           Electronic Chattel Paper and Transferable
Records.  As of the date hereof, no
amount under or in connection with any of the Pledged Collateral is evidenced
by any Electronic Chattel Paper or any “transferable record” (as that term is
defined in Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act, or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) other than such
Electronic Chattel Paper and transferable records listed in Schedule 11
to the Perfection Certificate.

(c)           Letter-of-Credit Rights.  If any Pledgor is at any time a beneficiary
under a Letter of Credit now or hereafter issued in excess of $500,000
individually or $1 million in the aggregate, such Pledgor shall promptly notify
the Collateral Agent thereof and such Pledgor shall, at the request of the
Collateral Agent, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, use commercially reasonable efforts to arrange
for the issuer and any confirmer of such Letter of Credit to consent to an
assignment to the Collateral Agent of the proceeds of any drawing under the
Letter of Credit, with the Collateral Agent agreeing, that the proceeds of any
drawing under the Letter of Credit are to be applied as provided in the Credit
Agreement.

(d)           Commercial Tort Claims.   As of the date hereof, each Pledgor hereby
represents and warrants that it holds no Commercial Tort Claims other than
those listed in Schedule 13 to the Perfection Certificate.  If any Pledgor shall at any time hold or
acquire a Commercial Tort Claim, such Pledgor shall immediately notify the
Collateral Agent in 

 12
 

 

writing signed by such Pledgor of the brief details thereof and grant
to the Collateral Agent in such writing a security interest therein and in the
Proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to the Collateral Agent.  The requirement in the preceding sentence shall
not apply to the extent that the amount of such Commercial Tort Claim, together
with the amount of all other Commercial Tort Claims held by any Pledgor in
which the Collateral Agent does not have a security interest, does not exceed
$500,000 in the aggregate for all Pledgors.

SECTION 3.5.              Joinder of
Additional Guarantors.  The Pledgors
shall cause each Subsidiary of the Borrower which, from time to time, after the
date hereof shall be required to pledge any assets to the Collateral Agent for
the benefit of the Secured Parties pursuant to the provisions of the Credit
Agreement, (a) to execute and deliver to the Collateral Agent (i) a Joinder
Agreement substantially in the form of Exhibit 2 hereto within
thirty (30) days of the date on which it was acquired or created and (ii) a
Perfection Certificate, in each case, within thirty (30) days of the date on
which it was acquired or created or (b) in the case of a Subsidiary
organized outside of the United States required to pledge any assets to the
Collateral Agent, to execute and deliver to the Collateral Agent such
documentation as the Collateral Agent shall reasonably request and, in each
case with respect to clauses (a) and (b) above, upon such execution and delivery,
such Subsidiary shall constitute a “Guarantor” and a “Pledgor” for all purposes
hereunder with the same force and effect as if originally named as a Guarantor
and Pledgor herein.  The execution and
delivery of such Joinder Agreement shall not require the consent of any Pledgor
hereunder.  The rights and obligations of
each Pledgor hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor and Pledgor as a party to this Agreement.

SECTION 3.6.              Supplements;
Further Assurances.  Each Pledgor
shall take such further actions, and execute and/or deliver to the Collateral
Agent such additional financing statements, amendments, assignments,
agreements, supplements, powers and instruments, as the Collateral Agent may in
its reasonable judgment deem necessary or appropriate in order to create,
perfect, preserve and protect the security interest in the Pledged Collateral
as provided herein and the rights and interests granted to the Collateral Agent
hereunder, to carry into effect the purposes hereof or better to assure and
confirm the validity, enforceability and priority of the Collateral Agent’s
security interest in the Pledged Collateral or permit the Collateral Agent to
exercise and enforce its rights, powers and remedies hereunder with respect to
any Pledged Collateral, including the filing of financing statements,
continuation statements and other documents (including this Agreement) under
the Uniform Commercial Code (or other similar laws) in effect in any
jurisdiction with respect to the security interest created hereby, all in form
reasonably satisfactory to the Collateral Agent and in such offices (including
the United States Patent and Trademark Office and the United States Copyright
Office) wherever required by law to perfect, continue and maintain the validity,
enforceability and priority of the security interest in the Pledged Collateral
as provided herein and to preserve the other rights and interests granted to
the Collateral Agent hereunder, as against third parties, with respect to the
Pledged Collateral.  Without limiting the
generality of the foregoing, each Pledgor shall make, execute, endorse, acknowledge,
file or refile and/or deliver to the Collateral Agent from time to time upon
reasonable request by the Collateral Agent such lists, schedules, descriptions
and designations of the 

 13
 

 

Pledged Collateral, copies of warehouse receipts,
receipts in the nature of warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, supplements,
additional security agreements, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments as the Collateral Agent shall reasonably request.  If an Event of Default has occurred and is
continuing, the Collateral Agent may institute and maintain, in its own name or
in the name of any Pledgor, such suits and proceedings as the Collateral Agent
may be advised by counsel shall be necessary or expedient to prevent any
impairment of the security interest in or the perfection thereof in the Pledged
Collateral.  All of the foregoing shall
be at the sole cost and expense of the Pledgors.

ARTICLE
IV

REPRESENTATIONS,
WARRANTIES AND COVENANTS

Each Pledgor represents, warrants and covenants as follows:

SECTION 4.1.              Title.  Except for the security interest granted to
the Collateral Agent for the ratable benefit of the Secured Parties pursuant to
this Agreement and Permitted Liens, such Pledgor owns and has rights and, as to
Pledged Collateral acquired by it from time to time after the date hereof, will
own and have rights in each item of Pledged Collateral pledged by it hereunder,
free and clear of any and all Liens or claims of others.  In addition, no Liens or claims exist on the
Securities Collateral, other than as permitted by Section 10.01 of
the Credit Agreement.

SECTION 4.2.              Validity of
Security Interest.  The security
interest in and Lien on the Pledged Collateral granted to the Collateral Agent
for the benefit of the Secured Parties hereunder constitutes (a) a legal
and valid security interest in all the Pledged Collateral securing the payment
and performance of the Secured Obligations, and (b) subject to the filings and
other actions described in Schedule 7 to the Perfection Certificate (to
the extent required to be listed on the schedules to the Perfection Certificate
as of the date this representation is made or deemed made), a perfected
security interest in all the Pledged Collateral that can be perfected either by
delivery of certificates or instruments or the filing of UCC financing
statements.  The security interest and
Lien granted to the Collateral Agent for the benefit of the Secured Parties
pursuant to this Agreement in and on the Pledged Collateral will at all times
constitute a perfected (to the extent perfectable by the filing of UCC
financing statements or delivery of instruments or certificates), continuing
security interest therein, prior to all other Liens on the Pledged Collateral except
for Permitted Collateral Liens.

SECTION 4.3.              Defense of Claims;
Transferability of Pledged Collateral. 
Subject to Section 9.08 and 9.09 of the Credit Agreement,
each Pledgor shall, at its own cost and expense, defend title to the Pledged
Collateral pledged by it hereunder and the security interest therein and Lien
thereon granted to the Collateral Agent and the priority thereof against all
claims and demands of all persons, at its own cost and expense, at any time
claiming any interest therein adverse to the Collateral Agent or any other
Secured Party other than Permitted Collateral Liens.  There is no agreement, order, judgment or
decree, and no Pledgor shall enter into any agreement or take any other action,
that would restrict the transferability of any of the Pledged 

 14
 

 

Collateral or otherwise impair or conflict
with such Pledgor’s obligations or the rights of the Collateral Agent hereunder.

SECTION 4.4.              Other Financing
Statements.  It has not filed, nor
authorized any third party to file (nor will there be), any valid or effective
financing statement (or similar statement, instrument of registration or public
notice under the law of any jurisdiction) covering or purporting to cover any
interest of any kind in the Pledged Collateral, except such as have been filed
in favor of the Collateral Agent pursuant to this Agreement or in favor of any
holder of a Permitted Collateral Lien with respect to such Permitted Collateral
Lien or financing statements or public notices relating to the termination
statements listed on Schedule 9 to the Perfection Certificate.  No Pledgor shall execute, authorize or permit
to be filed in any public office any financing statement (or similar statement,
instrument of registration or public notice under the law of any jurisdiction)
relating to any Pledged Collateral, except financing statements and other
statements and instruments filed or to be filed in respect of and covering the
security interests granted by such Pledgor to the holder of the Permitted Collateral
Liens.

SECTION 4.5.              Due Authorization
and Issuance.  All of the Pledged Securities
existing on the date hereof have been, and to the extent any Pledged Securities
are hereafter issued, such Pledged Securities will be, upon such issuance, duly
authorized, validly issued and fully paid and non-assessable to the extent
applicable.  There is no amount or other
obligation owing by any Pledgor to any issuer of the Pledged Securities in
exchange for or in connection with the issuance of the Pledged Securities or
any Pledgor’s status as a partner or a member of any issuer of the Pledged Securities.

SECTION 4.6.              Consents, etc.  In the event that the Collateral Agent
desires to exercise any remedies, voting or consensual rights or
attorney-in-fact powers set forth in this Agreement and determines it necessary
to obtain any approvals or consents of any Governmental Authority or any other
person therefor, then, upon the reasonable request of the Collateral Agent,
such Pledgor agrees to use its best efforts to assist and aid the Collateral
Agent to obtain as soon as practicable any necessary approvals or consents for
the exercise of any such remedies, rights and powers.

SECTION 4.7.              Pledged
Collateral.  All information set
forth herein, including the schedules hereto, and all information contained in
any documents, schedules and lists heretofore delivered to any Secured Party,
including the Perfection Certificate and the schedules thereto, in connection
with this Agreement, in each case, relating to the Pledged Collateral, is
accurate and complete in all material respects. 
The Pledged Collateral described on the schedules to the Perfection
Certificate constitutes all of the property of such type of Pledged Collateral
owned or held by the Pledgors.

SECTION 4.8.              Insurance.  In the event that the proceeds of any
insurance claim are paid to any Pledgor after the Collateral Agent has
exercised its right to foreclose after an Event of Default, such Net Cash
Proceeds shall be held in trust for the benefit of the Collateral Agent and
immediately after receipt thereof shall be paid to the Collateral Agent for
application in accordance with the Credit Agreement.

 15

 

ARTICLE V

CERTAIN PROVISIONS
CONCERNING SECURITIES COLLATERAL

SECTION 5.1.              Pledge of Additional Securities
Collateral.  Each Pledgor shall, upon
obtaining any Pledged Securities or Intercompany Notes of any person, accept
the same in trust for the benefit of the Collateral Agent and promptly (but in
any event within five days after receipt thereof) deliver to the Collateral
Agent a pledge amendment, duly executed by such Pledgor, in substantially the
form of Exhibit 1 hereto (each, a “Pledge Amendment”), and the
certificates and other documents required under Section 3.1 and Section 3.2
hereof in respect of the additional Pledged Securities or Intercompany Notes
which are to be pledged pursuant to this Agreement, and confirming the
attachment of the Lien hereby created on and in respect of such additional
Pledged Securities or Intercompany Notes. 
Each Pledgor hereby authorizes the Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Securities or
Intercompany Notes listed on any Pledge Amendment delivered to the Collateral
Agent shall for all purposes hereunder be considered Pledged Collateral.

SECTION 5.2.        Voting Rights; Distributions; etc.

(a)           So long as no Event of Default shall
have occurred and be continuing:

(i)            Each Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not inconsistent with
the terms or purposes hereof, the Credit Agreement or any other document
evidencing the Secured Obligations; provided, however, that no
Pledgor shall in any event exercise such rights in any manner which could
reasonably be expected to have a Material Adverse Effect.

(ii)           Each Pledgor shall be entitled to
receive and retain, and to utilize free and clear of the Lien hereof, any and
all Distributions, but only if and to the extent made in accordance with the
provisions of the Credit Agreement; provided, however, that any
and all such Distributions consisting of rights or interests in the form of
securities shall be forthwith delivered to the Collateral Agent to hold as
Pledged Collateral and shall, if received by any Pledgor, be received in trust
for the benefit of the Collateral Agent, be segregated from the other property or
funds of such Pledgor and be promptly (but in any event within five days after
receipt thereof) delivered to the Collateral Agent as Pledged Collateral in the
same form as so received (with any necessary endorsement).

(b)           So long as no Event of Default shall
have occurred and be continuing, the Collateral Agent shall be deemed without
further action or formality to have granted to each Pledgor all necessary
consents relating to voting rights and shall, if necessary, upon written
request of any Pledgor and at the sole cost and expense of the Pledgors, from
time to time execute and deliver (or cause to be executed and delivered) to
such Pledgor all such instruments as such Pledgor may reasonably request in
order to permit such Pledgor to exercise the voting and other rights which it
is entitled to exercise pursuant to Section 5.2(a)(i) hereof and to
receive the Distributions which it is authorized to receive and retain pursuant
to Section 5.2(a)(ii) hereof.

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(c)           Upon the occurrence and during the
continuance of any Event of Default:

(i)            All rights of each Pledgor to
exercise the voting and other consensual rights it would otherwise be entitled
to exercise pursuant to Section 5.2(a)(i) hereof shall immediately
cease, and all such rights shall thereupon become vested in the Collateral
Agent, which shall thereupon have the sole right to exercise such voting and
other consensual rights.

(ii)           All rights of each Pledgor to receive
Distributions which it would otherwise be authorized to receive and retain
pursuant to Section 5.2(a)(ii) hereof shall immediately cease and
all such rights shall thereupon become vested in the Collateral Agent, which
shall thereupon have the sole right to receive and hold as Pledged Collateral
such non-cash Distributions.

(d)           Each Pledgor shall, at its sole cost
and expense, from time to time execute and deliver to the Collateral Agent
appropriate instruments as the Collateral Agent may request in order to permit
the Collateral Agent to exercise the voting and other rights which it may be entitled
to exercise pursuant to Section 5.2(c)(i) hereof and to receive all
Distributions which it may be entitled to receive under Section 5.2(c)(ii)
hereof.

(e)           All non-cash Distributions which are
received by any Pledgor contrary to the provisions of Section 5.2(a)(ii)
hereof shall be received in trust for the benefit of the Collateral Agent,
shall be segregated from other funds of such Pledgor and shall immediately be
paid over to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement).

SECTION 5.3.        Defaults, etc.  Such Pledgor is not in default in the payment
of any portion of any mandatory capital contribution, if any, required to be
made under any agreement to which such Pledgor is a party relating to the
Pledged Securities pledged by it, and such Pledgor is not in violation of any
other provisions of any such agreement to which such Pledgor is a party, or
otherwise in default or violation thereunder. 
No Securities Collateral pledged by such Pledgor is subject to any
defense, offset or counterclaim, nor have any of the foregoing been asserted or
alleged against such Pledgor by any person with respect thereto, and as of the
date hereof, there are no certificates, instruments, documents or other writings
(other than the Organizational Documents and certificates representing such
Pledged Securities that have been delivered to the Collateral Agent) which
evidence any Pledged Securities of such Pledgor.

SECTION 5.4.        Certain Agreements of Pledgors As
Issuers and Holders of Equity Interests.

(a)           In the case of each Pledgor which is
an issuer of Securities Collateral, such Pledgor agrees to be bound by the
terms of this Agreement relating to the Securities Collateral issued by it and
will comply with such terms insofar as such terms are applicable to it.

(b)           In the case of each Pledgor which is
a partner, shareholder or member, as the case may be, in a partnership, limited
liability company or other entity, such Pledgor hereby consents to the extent
required by the applicable Organizational Document to the pledge by each

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other Pledgor, pursuant
to the terms hereof, of the Pledged Securities in such partnership, limited
liability company or other entity and, upon the occurrence and during the
continuance of an Event of Default, to the transfer of such Pledged Securities
to the Collateral Agent or its nominee and to the substitution of the
Collateral Agent or its nominee as a substituted partner, shareholder or member
in such partnership, limited liability company or other entity with all the
rights, powers and duties of a general partner, limited partner, shareholder or
member, as the case may be.

ARTICLE VI

CERTAIN PROVISIONS
CONCERNING INTELLECTUAL

PROPERTY COLLATERAL

SECTION 6.1.        Grant of Intellectual Property License.  For the purpose of enabling the Collateral
Agent, during the continuance of an Event of Default, to exercise rights and
remedies under Article IX hereof at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Pledgor hereby grants to the Collateral Agent, to the
extent assignable, an irrevocable, non-exclusive license to use, assign,
license or sublicense any of the Intellectual Property Collateral now owned or
hereafter acquired by such Pledgor, wherever the same may be located.  Such license shall include access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout hereof.

SECTION 6.2.        Protection of Collateral Agent’s
Security.  On a continuing basis,
each Pledgor shall, at its sole cost and expense, (i) promptly following its
becoming aware thereof, notify the Collateral Agent of any adverse
determination in any proceeding or the institution of any proceeding in any
federal, state or local court or administrative body or in the United States
Patent and Trademark Office or the United States Copyright Office regarding any
Material Intellectual Property Collateral, such Pledgor’s right to register
such Material Intellectual Property Collateral or its right to keep and
maintain such registration in full force and effect, (ii) maintain all
Material Intellectual Property Collateral as presently used and operated,
(iii) not permit to lapse or become abandoned any Material Intellectual
Property Collateral, and not settle or compromise any pending or future
litigation or administrative proceeding with respect to any such Material
Intellectual Property Collateral, in either case except as shall be consistent
with commercially reasonable business judgment, (iv) upon such Pledgor
obtaining knowledge thereof, promptly notify the Collateral Agent in writing of
any event which may be reasonably expected to materially and adversely affect
the value or utility of any Material Intellectual Property Collateral or the
rights and remedies of the Collateral Agent in relation thereto including a
levy or threat of levy or any legal process against any Material Intellectual
Property Collateral, (v) not license any Intellectual Property Collateral
other than licenses entered into by such Pledgor in, or incidental to, the
ordinary course of business, or amend or permit the amendment of any of the
licenses in a manner that materially and adversely affects the right to receive
payments thereunder, or in any manner that would materially impair the value of
any Intellectual Property Collateral or the Lien on and security interest in
the Intellectual Property Collateral created therein hereby, without the
consent of the Collateral Agent, (vi) diligently keep adequate records
respecting all Intellectual Property Collateral and (vii) furnish to the
Collateral Agent from time to time upon the Collateral Agent’s request therefor
reasonably detailed statements

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and amended schedules
further identifying and describing the Intellectual Property Collateral and
such other materials evidencing or reports pertaining to any Intellectual
Property Collateral as the Collateral Agent may from time to time request.

SECTION 6.3.        After-Acquired Property.  If any Pledgor shall at any time after the
date hereof (i) obtain any rights to any additional Intellectual Property
Collateral or (ii) become entitled to the benefit of any additional
Intellectual Property Collateral or any renewal or extension thereof, including
any reissue, division, continuation, or continuation-in-part of any
Intellectual Property Collateral, or any improvement on any Intellectual
Property Collateral, the provisions hereof shall automatically apply thereto
and any such item enumerated in the preceding clause (i) or (ii) shall
automatically constitute Intellectual Property Collateral as if such would have
constituted Intellectual Property Collateral at the time of execution hereof
and be subject to the Lien and security interest created by this Agreement
without further action by any party. 
Each Pledgor shall promptly provide to the Collateral Agent written
notice of any of the foregoing and execute and file with the applicable United
States federal intellectual property filing office a Trademark Security
Agreement, Patent Security Agreement or Copyright Security Agreement, covering
such additional Intellectual Property. 
Further, each Pledgor authorizes the Collateral Agent to modify this
Agreement by amending Schedules 12(a) and 12(b) to the Perfection
Certificate to include any Intellectual Property Collateral of such Pledgor
acquired or arising after the date hereof.

SECTION 6.4.        Litigation.  Unless there shall occur and be continuing
any Event of Default, each Pledgor shall have the right to commence and
prosecute in its own name, as the party in interest, for its own benefit and at
the sole cost and expense of the Pledgors, such applications for protection of
the Intellectual Property Collateral and suits, proceedings or other actions to
prevent the infringement, counterfeiting, unfair competition, dilution,
diminution in value or other damage as are necessary to protect the
Intellectual Property Collateral.  Upon
the occurrence and during the continuance of any Event of Default, the
Collateral Agent shall have the right but shall in no way be obligated to file
applications for protection of the Intellectual Property Collateral and/or
bring suit in the name of any Pledgor, the Collateral Agent or the Secured
Parties to enforce the Intellectual Property Collateral and any license
thereunder.  In the event of such suit,
each Pledgor shall, at the reasonable request of the Collateral Agent, do any
and all lawful acts and execute any and all documents requested by the
Collateral Agent in aid of such enforcement and the Pledgors shall promptly
reimburse and indemnify the Collateral Agent for all costs and expenses
incurred by the Collateral Agent in the exercise of its rights under this Section 6.4
in accordance with Section 12.06 and 13.01 of the Credit
Agreement.  In the event that the
Collateral Agent shall elect not to bring suit to enforce the Intellectual
Property Collateral, each Pledgor agrees, at the reasonable request of the
Collateral Agent, to take all commercially reasonable actions necessary,
whether by suit, proceeding or other action, to prevent the infringement,
counterfeiting, unfair competition, dilution, diminution in value of or other
damage to any of the Intellectual Property Collateral by any person.

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ARTICLE VII

CERTAIN PROVISIONS
CONCERNING RECEIVABLES

SECTION 7.1.        Maintenance of Records.  Each Pledgor shall keep and maintain at its
own cost and expense complete records of each Receivable, in a manner
consistent with prudent business practice, including records of all payments
received, all credits granted thereon, all merchandise returned and all other
documentation relating thereto.  Each
Pledgor shall, at such Pledgor’s sole cost and expense, upon the Collateral
Agent’s demand made at any time after the occurrence and during the continuance
of any Event of Default, deliver all tangible evidence of Receivables,
including all documents evidencing Receivables and any books and records
relating thereto to the Collateral Agent or to its representatives (copies of which
evidence and books and records may be retained by such Pledgor).  Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent may transfer a full
and complete copy of any Pledgor’s books, records, credit information, reports,
memoranda and all other writings relating to the Receivables to and for the use
by any person that has acquired or is contemplating acquisition of an interest
in the Receivables or the Collateral Agent’s security interest therein without
the consent of any Pledgor.

SECTION 7.2.        Legend.  Each Pledgor shall legend, at the request of
the Collateral Agent and in form and manner satisfactory to the Collateral
Agent, the Receivables and the other books, records and documents of such
Pledgor evidencing or pertaining to the Receivables with an appropriate
reference to the fact that the Receivables have been assigned to the Collateral
Agent for the benefit of the Secured Parties and that the Collateral Agent has
a security interest therein.

SECTION 7.3.        Modification of Terms, etc.  No Pledgor shall rescind or cancel any
obligations evidenced by any Receivable or modify any term thereof or make any
adjustment with respect thereto except in the ordinary course of business
consistent with prudent business practice, or extend or renew any such
obligations except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal
proceeding relating thereto or sell any Receivable or interest therein except
in the ordinary course of business consistent with prudent business practice
without the prior written consent of the Collateral Agent.  Each Pledgor shall timely fulfill all
obligations on its part to be fulfilled under or in connection with the Receivables.

SECTION 7.4.        Collection.  Each Pledgor shall cause to be collected from
the Account Debtor of each of the Receivables, as and when due in the ordinary
course of business and consistent with prudent business practice (including
Receivables that are delinquent, such Receivables to be collected in accordance
with generally accepted commercial collection procedures), any and all amounts
owing under or on account of such Receivable, and apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of such
Receivable, except that any Pledgor may, with respect to a Receivable, allow in
the ordinary course of business (i) a refund or credit due as a result of
returned or damaged or defective merchandise and (ii) such extensions of time
to pay amounts due in respect of Receivables and such other modifications of
payment terms or settlements in respect of Receivables as shall be commercially

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reasonable in the
circumstances, all in accordance with such Pledgor’s ordinary course of
business consistent with its collection practices as in effect from time to
time.  The costs and expenses (including
attorneys’ fees) of collection, in any case, whether incurred by any Pledgor,
the Collateral Agent or any Secured Party, shall be paid by the Pledgors.

ARTICLE VIII

TRANSFERS

SECTION 8.1.        Transfers of Pledged Collateral.  No Pledgor shall sell, convey, assign or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral pledged by it hereunder except as expressly permitted by the Credit
Agreement.

ARTICLE IX

REMEDIES

SECTION 9.1.        Remedies.  Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent may from time to time
exercise in respect of the Pledged Collateral, in addition to the other rights
and remedies provided for herein or otherwise available to it, the following
remedies:

(i)            Personally, or by agents or
attorneys, immediately take possession of the Pledged Collateral or any part
thereof, from any Pledgor or any other person who then has possession of any
part thereof with or without notice or process of law, and for that purpose may
enter upon any Pledgor’s premises where any of the Pledged Collateral is
located, remove such Pledged Collateral, remain present at such premises to
receive copies of all communications and remittances relating to the Pledged
Collateral and use in connection with such removal and possession any and all
services, supplies, aids and other facilities of any Pledgor;

(ii)           Demand, sue for, collect or receive
any money or property at any time payable or receivable in respect of the
Pledged Collateral including instructing the obligor or obligors on any
agreement, instrument or other obligation constituting part of the Pledged
Collateral to make any payment required by the terms of such agreement,
instrument or other obligation directly to the Collateral Agent, and in
connection with any of the foregoing, compromise, settle, extend the time for
payment and make other modifications with respect thereto; provided, however,
that in the event that any such payments are made directly to any Pledgor,
prior to receipt by any such obligor of such instruction, such Pledgor shall
segregate all amounts received pursuant thereto in trust for the benefit of the
Collateral Agent and shall promptly (but in no event later than one (1)
Business Day after receipt thereof) pay such amounts to the Collateral Agent;

(iii)          Sell, assign, grant a license to use
or otherwise liquidate, or direct any Pledgor to sell, assign, grant a license
to use or otherwise liquidate, any and all investments

 21
 

 

made in whole or in part with the Pledged Collateral
or any part thereof, and take possession of the proceeds of any such sale,
assignment, license or liquidation;

(iv)          Take possession of the Pledged
Collateral or any part thereof, by directing any Pledgor in writing to deliver
the same to the Collateral Agent at any place or places so designated by the
Collateral Agent, in which event such Pledgor shall at its own expense:  (A) forthwith cause the same to be moved
to the place or places designated by the Collateral Agent and therewith
delivered to the Collateral Agent, (B) store and keep any Pledged
Collateral so delivered to the Collateral Agent at such place or places pending
further action by the Collateral Agent and (C) while the Pledged
Collateral shall be so stored and kept, provide such security and maintenance
services as shall be necessary to protect the same and to preserve and maintain
them in good condition.  Each Pledgor’s
obligation to deliver the Pledged Collateral as contemplated in this Section 9.1(iv)
is of the essence hereof.  Upon
application to a court of equity having jurisdiction, the Collateral Agent
shall be entitled to a decree requiring specific performance by any Pledgor of
such obligation;

(v)           Withdraw all moneys, instruments,
securities and other property in any bank, financial securities, deposit or
other account of any Pledgor constituting Pledged Collateral for application to
the Secured Obligations as provided in Article X hereof;

(vi)          Retain and apply the Distributions to
the Secured Obligations as provided in Article X hereof;

(vii)         Exercise any and all rights as
beneficial and legal owner of the Pledged Collateral, including perfecting
assignment of and exercising any and all voting, consensual and other rights
and powers with respect to any Pledged Collateral; and

(viii)        Exercise all the rights and remedies of
a secured party on default under the UCC, and the Collateral Agent may also in
its sole discretion, without notice except as specified in Section 9.2
hereof, sell, assign or grant a license to use the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any of the Collateral Agent’s offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Collateral Agent may deem commercially reasonable.  The Collateral Agent or any other Secured
Party or any of their respective Affiliates may be the purchaser, licensee,
assignee or recipient of the Pledged Collateral or any part thereof at any such
sale and shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Pledged Collateral
sold, assigned or licensed at such sale, to use and apply any of the Secured
Obligations owed to such person as a credit on account of the purchase price of
the Pledged Collateral or any part thereof payable by such person at such
sale.  Each purchaser, assignee, licensee
or recipient at any such sale shall acquire the property sold, assigned or
licensed absolutely free from any claim or right on the part of any Pledgor,
and each Pledgor hereby waives, to the fullest extent permitted by law, all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted.  The Collateral Agent shall not
be obligated to make any sale of the Pledged Collateral or any part

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thereof regardless of notice of sale having been
given.  The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. 
Each Pledgor hereby waives, to the fullest extent permitted by law, any
claims against the Collateral Agent arising by reason of the fact that the
price at which the Pledged Collateral or any part thereof may have been sold,
assigned or licensed at such a private sale was less than the price which might
have been obtained at a public sale, even if the Collateral Agent accepts the
first offer received and does not offer such Pledged Collateral to more than
one offeree.

SECTION 9.2.        Notice of Sale.  Each Pledgor acknowledges and agrees that, to
the extent notice of sale or other disposition of the Pledged Collateral or any
part thereof shall be required by law, ten (10) days’ prior notice to such
Pledgor of the time and place of any public sale or of the time after which any
private sale or other intended disposition is to take place shall be
commercially reasonable notification of such matters.  No notification need be given to any Pledgor
if it has signed, after the occurrence of an Event of Default, a statement
renouncing or modifying any right to notification of sale or other intended
disposition.

SECTION 9.3.        Waiver of Notice and Claims.  Each Pledgor hereby waives, to the fullest extent
permitted by applicable law, notice or judicial hearing in connection with the
Collateral Agent’s taking possession or the Collateral Agent’s disposition of
the Pledged Collateral or any part thereof, including any and all prior notice
and hearing for any prejudgment remedy or remedies and any such right which
such Pledgor would otherwise have under law, and each Pledgor hereby further
waives, to the fullest extent permitted by applicable law:  (i) all damages occasioned by such
taking of possession, (ii) all other requirements as to the time, place
and terms of sale or other requirements with respect to the enforcement of the
Collateral Agent’s rights hereunder and (iii) all rights of redemption,
appraisal, valuation, stay, extension or moratorium now or hereafter in force
under any applicable law.  The Collateral
Agent shall not be liable for any incorrect or improper payment made pursuant
to this Article IX in the absence of gross negligence or willful
misconduct on the part of the Collateral Agent. 
Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity against such Pledgor and against any and all persons claiming or
attempting to claim the Pledged Collateral so sold, optioned or realized upon,
or any part thereof, from, through or under such Pledgor.

SECTION 9.4.        Certain Sales of Pledged Collateral.

(a)           Each Pledgor recognizes that, by
reason of certain prohibitions contained in law, rules, regulations or orders
of any Governmental Authority, the Collateral Agent may be compelled, with
respect to any sale of all or any part of the Pledged Collateral, to limit
purchasers to those who meet the requirements of such Governmental
Authority.  Each Pledgor acknowledges
that any such sales may be at prices and on terms less favorable to the
Collateral Agent than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
restricted sale shall be deemed to have been made in a

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commercially reasonable
manner and that, except as may be required by applicable law, the Collateral
Agent shall have no obligation to engage in public sales.

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

(c)           If the Collateral Agent determines to
exercise its right to sell any or all of the Securities Collateral or
Investment Property, upon written request, the applicable Pledgor shall from
time to time furnish to the Collateral Agent all such information as the
Collateral Agent may request in order to determine the number of securities
included in the Securities Collateral or Investment Property which may be sold
by the Collateral Agent as exempt transactions under the Securities Act and the
rules of the Securities and Exchange Commission thereunder, as the same are
from time to time in effect.

(d)           Each Pledgor further agrees that a
breach of any of the covenants contained in this Section 9.4 will cause
irreparable injury to the Collateral Agent and the other Secured Parties, that
the Collateral Agent and the other Secured Parties have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every
covenant contained in this Section 9.4 shall be specifically enforceable
against such Pledgor, and such Pledgor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred and is continuing.

SECTION 9.5.        No Waiver; Cumulative Remedies.

(a)           No failure on the part of the
Collateral Agent to exercise, no course of dealing with respect to, and no
delay on the part of the Collateral Agent in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power, privilege or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, privilege or remedy; nor shall the Collateral Agent be required
to look first to, enforce or exhaust any other security, collateral or
guaranties.  All rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
provided by law or otherwise available.

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(b)           In the event that
the Collateral Agent shall have instituted any proceeding to enforce any right,
power, privilege or remedy under this Agreement or any other Credit Document by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case, the Pledgors,
the Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Pledged
Collateral, and all rights, remedies, privileges and powers of the Collateral
Agent and the other Secured Parties shall continue as if no such proceeding had
been instituted.

SECTION 9.6.        Certain Additional Actions Regarding
Intellectual Property.  If any Event
of Default shall have occurred and be continuing, upon the written demand of
the Collateral Agent, each Pledgor shall execute and deliver to the Collateral
Agent an assignment or assignments of the registered Patents, Trademarks and/or
Copyrights and Goodwill and such other documents as are necessary or
appropriate to carry out the intent and purposes hereof.  Within five (5) Business Days of written
notice thereafter from the Collateral Agent, each Pledgor shall make available
to the Collateral Agent, to the extent within such Pledgor’s power and
authority, such personnel in such Pledgor’s employ on the date of the Event of
Default as the Collateral Agent may reasonably designate to permit such Pledgor
to continue, directly or indirectly, to produce, advertise and sell the
products and services sold by such Pledgor under the registered Patents, Trademarks
and/or Copyrights, and such persons shall be available to perform their prior
functions on the Collateral Agent’s behalf.

ARTICLE X

APPLICATION OF
PROCEEDS

SECTION 10.1.      Application of Proceeds.  The proceeds received by the Collateral Agent
in respect of any sale of, collection from or other realization upon all or any
part of the Pledged Collateral pursuant to the exercise by the Collateral Agent
of its remedies shall be applied, together with any other sums then held by the
Collateral Agent pursuant to this Agreement, in accordance with the Credit
Agreement.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1.      Concerning Collateral Agent.

(a)           The Collateral Agent has been
appointed as collateral agent pursuant to the Credit Agreement.  The actions of the Collateral Agent hereunder
are subject to the provisions of the Credit Agreement.  The Collateral Agent shall have the right
hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including the
release or substitution of the Pledged Collateral), in accordance with this
Agreement and the Credit Agreement.  The
Collateral Agent may employ agents and attorneys-in-fact in connection herewith
and shall not be liable for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. 
The Collateral Agent may

 25
 

 

resign and a successor
Collateral Agent may be appointed in the manner provided in the Credit
Agreement.  Upon the acceptance of any
appointment as the Collateral Agent by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Collateral Agent
under this Agreement, and the retiring Collateral Agent shall thereupon be
discharged from its duties and obligations under this Agreement.  After any retiring Collateral Agent’s
resignation, the provisions hereof shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was the
Collateral Agent.

(b)           The Collateral Agent shall be deemed
to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equivalent to that which the Collateral Agent, in its
individual capacity, accords its own property consisting of similar instruments
or interests, it being understood that neither the Collateral Agent nor any of
the Secured Parties shall have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Securities Collateral, whether or not the
Collateral Agent or any other Secured Party has or is deemed to have knowledge
of such matters or (ii) taking any necessary steps to preserve rights against
any person with respect to any Pledged Collateral.

(c)           The
Collateral Agent shall be entitled to rely upon any written notice, statement,
certificate, order or other document or any telephone message believed by it to
be genuine and correct and to have been signed, sent or made by the proper
person, and, with respect to all matters pertaining to this Agreement and its
duties hereunder, upon advice of counsel selected by it.

(d)           If
any item of Pledged Collateral also constitutes collateral granted to the
Collateral Agent under any other deed of trust, mortgage, security agreement,
pledge or instrument of any type, in the event of any conflict between the
provisions hereof and the provisions of such other deed of trust, mortgage,
security agreement, pledge or instrument of any type in respect of such
collateral, the Collateral Agent, in its sole discretion, shall select which
provision or provisions shall control.

(e)           The
Collateral Agent may rely on advice of counsel as to whether any or all UCC
financing statements of the Pledgors need to be amended as a result of any of
the changes described in Section 9.01 of the Credit Agreement.  If any Pledgor fails to provide information
to the Collateral Agent about such changes on a timely basis, the Collateral
Agent shall not be liable or responsible to any party for any failure to
maintain a perfected security interest in such Pledgor’s property constituting
Pledged Collateral, for which the Collateral Agent needed to have information
relating to such changes.  The Collateral
Agent shall have no duty to inquire about such changes if any Pledgor does not
inform the Collateral Agent of such changes, the parties acknowledging and
agreeing that it would not be feasible or practical for the Collateral Agent to
search for information on such changes if such information is not provided by
any Pledgor.

SECTION 11.2.      Collateral Agent May Perform;
Collateral Agent Appointed Attorney-in-Fact.  If any Pledgor shall fail to perform any
covenants contained in this Agreement

 26
 

 

(including such Pledgor’s
covenants to (i) pay the premiums in respect of all required insurance policies
hereunder, (ii) pay and discharge any taxes, assessments and special
assessments, levies, fees and governmental charges imposed upon or assessed
against, and landlords’, carriers’, mechanics’, workmen’s, repairmen’s,
laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims
arising by operation of law against, all or any portion of the Pledged
Collateral, (iii) make repairs, (iv) discharge Liens or (v) pay or perform any
obligations of such Pledgor under any Pledged Collateral) or if any
representation or warranty on the part of any Pledgor contained herein shall be
breached, the Collateral Agent may (but shall not be obligated to) do the same
or cause it to be done or remedy any such breach, and may expend funds for such
purpose; provided, however, that the Collateral Agent shall in no
event be bound to inquire into the validity of any tax, Lien, imposition or
other obligation which such Pledgor fails to pay or perform as and when
required hereby and which such Pledgor does not contest in accordance with the
provisions of the Credit Agreement.  Any
and all amounts so expended by the Collateral Agent shall be paid by the
Pledgors in accordance with the provisions of Section 13.01 of the
Credit Agreement.  Neither the provisions
of this Section 11.2 nor any action taken by the Collateral Agent pursuant
to the provisions of this Section 11.2 shall prevent any such failure to
observe any covenant contained in this Agreement nor any breach of
representation or warranty from constituting an Event of Default.  Each Pledgor hereby appoints the Collateral
Agent its attorney-in-fact, with full power and authority in the place and
stead of such Pledgor and in the name of such Pledgor, or otherwise, from time
to time in the Collateral Agent’s discretion after the occurrence and during
the continuance of an Event of Default to take any action and to execute any
instrument consistent with the terms of the Credit Agreement, this Agreement
and the other Security Documents which the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof (but the Collateral Agent shall
not be obligated to and shall have no liability to such Pledgor or any third
party for failure to so do or take action). 
The foregoing grant of authority is a power of attorney coupled with an
interest and such appointment shall be irrevocable for the term hereof.  Each Pledgor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof.

SECTION 11.3.      Continuing Security Interest;
Assignment.  This Agreement shall
create a continuing security interest in the Pledged Collateral and shall
(i) be binding upon the Pledgors, their respective successors and assigns
and (ii) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and the other Secured
Parties and each of their respective successors, transferees and assigns.  No other persons (including any other
creditor of any Pledgor) shall have any interest herein or any right or benefit
with respect hereto.  Without limiting
the generality of the foregoing clause (ii), any Secured Party may assign
or otherwise transfer any indebtedness held by it secured by this Agreement to
any other person, and such other person shall thereupon become vested with all
the benefits in respect thereof granted to such Secured Party, herein or
otherwise, subject however, to the provisions of the Credit Agreement and, in
the case of a Secured Party that is a party to a Hedging Agreement, such
Hedging Agreement.  Each of the Pledgors
agrees that its obligations hereunder and the security interest created
hereunder shall continue to be effective or be reinstated, as applicable, if at
any time payment, or any part thereof, of all or any part of the Secured
Obligations is rescinded or must otherwise be restored by the Secured Party
upon the bankruptcy or reorganization of any Pledgor or otherwise.

 27
 

 

 

SECTION 11.4.      Termination; Release.

(a)           When all the Secured Obligations have
been paid in full and the Commitments of the Lenders to make any Loan or to
issue any Letter of Credit under the Credit Agreement shall have expired or
been sooner terminated and all Letters of Credit have been terminated in
accordance with the provisions of the Credit Agreement, this Agreement shall
terminate.  Upon termination of this
Agreement the Pledged Collateral shall be released from the Lien of this
Agreement.  Upon such release or any
release of Pledged Collateral or any part thereof in accordance with the
provisions of the Credit Agreement, the Collateral Agent shall, upon the
request and at the sole cost and expense of the Pledgors, assign, transfer and
deliver to Pledgor, against receipt and without recourse to or warranty by the
Collateral Agent except as to the fact that the Collateral Agent has not
encumbered the released assets, such of the Pledged Collateral or any part
thereof to be released (in the case of a release) as may be in possession of
the Collateral Agent and as shall not have been sold or otherwise applied
pursuant to the terms hereof, and, with respect to any other Pledged
Collateral, proper documents and instruments (including UCC-3 termination
financing statements or releases) acknowledging the termination hereof or the
release of such Pledged Collateral, as the case may be.

(b)           Notwithstanding the foregoing, if (i)
the Obligations have been paid in full and the Commitments of the Lenders to
make any Loan or to issue any Letter of Credit under the Credit Agreement shall
have expired or been sooner terminated and all Letters of Credit have been
terminated in accordance with the provisions of the Credit Agreement, (ii)
Secured Obligations of the type described in clause (b) of the definition of
Secured Obligations (“Remaining Secured Obligations”) remain outstanding
and (iii) all or a portion of the repayment of the Obligations is financed by
the proceeds of Indebtedness of one or more Credit Parties or any affiliate of
a Credit Party (“Refinancing Indebtedness”) which Refinancing
Indebtedness is secured by property of such persons, this Agreement shall
terminate as if the Remaining Secured Obligations have been paid in full and
the provisions of paragraph (a) of this Section 11.4 shall apply
concurrently with the incurrence of the Refinancing Indebtedness and the
securing of the Refinancing Indebtedness and the Remaining Secured Obligations
on an equal and ratable basis. For the avoidance of doubt, if the Refinancing
Indebtedness is not secured, this Agreement shall not terminate but shall
remain in full force and effect.

SECTION 11.5.      Modification in Writing.  No amendment, modification, supplement,
termination or waiver of or to any provision hereof, nor consent to any
departure by any Pledgor therefrom, shall be effective unless the same shall be
made in accordance with the terms of the Credit Agreement and unless in writing
and signed by the Collateral Agent.  Any
amendment, modification or supplement of or to any provision hereof, any waiver
of any provision hereof and any consent to any departure by any Pledgor from
the terms of any provision hereof in each case shall be effective only in the
specific instance and for the specific purpose for which made or given.  Except where notice is specifically required
by this Agreement or any other document evidencing the Secured Obligations, no
notice to or demand on any Pledgor in any case shall entitle any Pledgor to any
other or further notice or demand in similar or other circumstances.

 28
 

 

 

SECTION 11.6.      Notices.  Unless otherwise provided herein or in the
Credit Agreement, any notice or other communication herein required or permitted
to be given shall be given in the manner and become effective as set forth in
the Credit Agreement, as to any Pledgor, addressed to it at the address of the
Borrower set forth in the Credit Agreement and as to the Collateral Agent,
addressed to it at the address set forth in the Credit Agreement, or in each
case at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this Section 11.6.

SECTION 11.7.      Governing Law, Consent to Jurisdiction
and Service of Process; Waiver of Jury Trial.  Section 13.08 of the Credit Agreement
are incorporated herein, mutatis mutandis,
as if a part hereof.

SECTION 11.8.      Severability of Provisions.  Any provision hereof which is invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without invalidating the remaining provisions hereof or affecting the validity,
legality or enforceability of such provision in any other jurisdiction.

SECTION 11.9.      Execution in Counterparts.  This Agreement and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all such
counterparts together shall constitute one and the same agreement.

SECTION 11.10.    Business Days.  In the event any time period or any date
provided in this Agreement ends or falls on a day other than a Business Day,
then such time period shall be deemed to end and such date shall be deemed to
fall on the next succeeding Business Day, and performance herein may be made on
such Business Day, with the same force and effect as if made on such other day.

SECTION 11.11.    No Credit for Payment of Taxes or
Imposition.  Such Pledgor shall not
be entitled to any credit against the principal, premium, if any, or interest
payable under the Credit Agreement, and such Pledgor shall not be entitled to
any credit against any other sums which may become payable under the terms
thereof or hereof, by reason of the payment of any Tax on the Pledged
Collateral or any part thereof.

SECTION 11.12.    No Claims Against Collateral Agent.  Nothing contained in this Agreement shall
constitute any consent or request by the Collateral Agent, express or implied,
for the performance of any labor or services or the furnishing of any materials
or other property in respect of the Pledged Collateral or any part thereof, nor
as giving any Pledgor any right, power or authority to contract for or permit
the performance of any labor or services or the furnishing of any materials or
other property in such fashion as would permit the making of any claim against
the Collateral Agent in respect thereof or any claim that any Lien based on the
performance of such labor or services or the furnishing of any such materials
or other property is prior to the Lien hereof.

 29
 

 

 

SECTION 11.13.    No Release.  Nothing set forth in this Agreement or any
other Credit Document, nor the exercise by the Collateral Agent of any of the
rights or remedies hereunder, shall relieve any Pledgor from the performance of
any term, covenant, condition or agreement on such Pledgor’s part to be
performed or observed under or in respect of any of the Pledged Collateral or
from any liability to any person under or in respect of any of the Pledged
Collateral or shall impose any obligation on the Collateral Agent or any other
Secured Party to perform or observe any such term, covenant, condition or
agreement on such Pledgor’s part to be so performed or observed or shall impose
any liability on the Collateral Agent or any other Secured Party for any act or
omission on the part of such Pledgor relating thereto or for any breach of any
representation or warranty on the part of such Pledgor contained in this
Agreement, the Credit Agreement or the other Credit Documents, or under or in
respect of the Pledged Collateral or made in connection herewith or
therewith.  Anything herein to the
contrary notwithstanding, neither the Collateral Agent nor any other Secured
Party shall have any obligation or liability under any contracts, agreements
and other documents included in the Pledged Collateral by reason of this
Agreement, nor shall the Collateral Agent or any other Secured Party be
obligated to perform any of the obligations or duties of any Pledgor thereunder
or to take any action to collect or enforce any such contract, agreement or
other document included in the Pledged Collateral hereunder.  The obligations of each Pledgor contained in
this Section 11.13 shall survive the termination hereof and the
discharge of such Pledgor’s other obligations under this Agreement, the Credit
Agreement and the other Credit Documents.

SECTION 11.14.    Obligations Absolute.  All obligations of each Pledgor hereunder
shall be absolute and unconditional irrespective of:

(i)            any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or the like of any other Pledgor;

(ii)           any
lack of validity or enforceability of the Credit Agreement, any Hedging
Agreement or any other Credit Document, or any other agreement or instrument
relating thereto;

(iii)          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 Hedging Agreement or
any other Credit Document or any other agreement or instrument relating
thereto;

(iv)          any
pledge, exchange, release or non-perfection of any other collateral, or any
release or amendment or waiver of or consent to any departure from any
guarantee, for all or any of the Secured Obligations;

(v)           any
exercise, non-exercise or waiver of any right, remedy, power or privilege under
or in respect hereof, the Credit Agreement, any Hedging Agreement or any other
Credit Document except as specifically set forth in a waiver granted pursuant
to the provisions of Section 11.5 hereof; or

(vi)          any
other circumstances which might otherwise constitute a defense available to, or
a discharge of, any Pledgor.

 30
 

 

 

[REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK.]

 31

 

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

 

	
   

  	
  SHUFFLE MASTER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark L. Yoseloff

  
	
   

  	
   

  	
  Name: Mark L. Yoseloff

  
	
   

  	
   

  	
  Title: CEO & COB

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SHUFFLE MASTER INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark L. Yoseloff

  
	
   

  	
   

  	
  Name: Mark L. Yoseloff

  
	
   

  	
   

  	
  Title: CEO & COB

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SHUFFLE UP PRODUCTIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark L. Yoseloff

  
	
   

  	
   

  	
  Name: Mark L. Yoseloff

  
	
   

  	
   

  	
  Title: CEO

  

 

 S-1
 

 

 

	
  

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS,

  
	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven P. Lapham

  
	
   

  	
   

  	
  Name: Steven P. Lapham

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary Kay Coyle

  
	
   

  	
   

  	
  Name: Mary Kay Coyle

  
	
   

  	
   

  	
  Title: Managing Director

  

 

 S-2Exhibit 10.11.2

EXECUTION VERSION

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT
AGREEMENT (this “Second Amendment”) is made and entered into as of
November 29, 2006, by and among the financial institutions identified on
the signature pages hereof (such financial institutions, together with their
respective successors and assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a California
corporation, as arranger and administrative agent for the Lenders (in
such capacities, together with any successor arranger and administrative agent,
“Agent”), and TRC COMPANIES, INC., a Delaware corporation (the “Administrative
Borrower”), on behalf of all Borrowers.

WITNESSETH:

WHEREAS, the Administrative
Borrower, the Administrative Borrower’s Subsidiaries party thereto, the Lenders
and Agent are parties to that certain Credit Agreement, dated as of July 17,
2006 (as amended as of October 31, 2006, and as the same may be amended,
modified, supplemented or amended and restated from time to time, the “Credit
Agreement”); and

WHEREAS, Agent, the Lenders and
the Borrowers wish to amend the Credit Agreement as herein provided;

NOW, THEREFORE, in consideration
of the agreements and provisions herein contained, the parties hereto do hereby
agree as follows:

Section 1.   Definitions.  Any
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement.

Section 2.   Amendments to Credit Agreement.  Subject
to the terms and conditions set forth herein, the Credit Agreement is hereby
amended, as of the Effective Date (defined below), as follows:

2.01   Amendment to Section 2.12.  Section 2.12(a) of the Credit
Agreement is hereby amended by deleting the words “the Letter of Credit Usage
would exceed $5,000,000” in clause (ii) thereof and inserting “the Letter of
Credit Usage would exceed $7,500,000” in lieu thereof.

2.02   Amendment to Schedule 5.3.  The left hand column in the second row of the
table in Schedule 5.3 to the Credit Agreement is hereby amended by
deleting the words “on or prior to November 30, 2006” therein and inserting “on
or prior to December 31, 2006” in lieu thereof.

Section 3.   Representations and Warranties.  In order to induce Agent and the Lenders to enter into this Second
Amendment, the Administrative Borrower, for itself and on behalf of all of the
other Borrowers, hereby represents and warrants that:

 

 

3.01   No
Default.  At and as of the date of this Second
Amendment and at and as of the Effective Date and both prior to and after
giving effect to this Second Amendment, no Default or Event of Default exists
and is continuing.

3.02   Representations
and Warranties True and Correct.  At and as
of the date of this Second Amendment and both prior to and after giving effect
to this Second Amendment, each of the representations and warranties contained
in the Credit Agreement and other Loan Documents is true and correct in all
material respects.

3.03   Corporate
Power, Etc.  Administrative Borrower (a) has all requisite
corporate power and authority to execute and deliver this Second Amendment and
to consummate the transactions contemplated hereby for itself and, in the case
of Administrative Borrower, on behalf of all of the other Borrowers, and (b)
has taken all action, corporate or otherwise, necessary to authorize the
execution and delivery of this Second Amendment and the consummation of the
transactions contemplated hereby for itself and, in the case of Administrative
Borrower, on behalf of all of the other Borrowers.

3.04   No
Conflict.  The execution, delivery and performance by
Administrative Borrower (on behalf of itself and all of the other Borrowers) of
this Second Amendment will not (a) violate any provision of federal, state, or
local law or regulation applicable to any Borrower, the Governing Documents of
any Borrower, or any order, judgment or decree of any court or other
Governmental Authority binding on any Borrower, (b) conflict with or result in
any breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of any Borrower, (c) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of any Borrower, other than Permitted Liens, or
(d) require any approval of any Borrower’s interestholders or any approval or
consent of any Person under any material contractual obligation of any
Borrower, other than consents or approvals that have been obtained and that are
still in force and effect.

3.05   Binding
Effect.  This Second Amendment has been duly executed
and delivered by the Administrative Borrower (on behalf of itself and all of
the other Borrowers) and constitutes the legal, valid and binding obligation of
the Administrative Borrower (on behalf of itself and all of the other
Borrowers), enforceable against the Administrative Borrower (on behalf of
itself and all of the other Borrowers) in accordance with its terms, except as
such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, relating to or
affecting the enforcement of creditors’ rights generally, and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

Section 4.   Conditions.   This Second Amendment shall be effective upon the fulfillment by the Borrowers, in a
manner satisfactory to Agent and the Lenders, of all of the following
conditions precedent set forth in this Section 4  (such date, the “Effective
Date”):

4.01   Execution
of the Second Amendment.  Each of the parties hereto shall
have executed an original counterpart of this Second Amendment and shall have
delivered (including by way of telefacsimile or electronic mail) the same to
Agent.

 2
 

 

 

4.02   Representations
and Warranties.  As of the Effective Date, the representations and
warranties set forth in Section 3 hereof shall be true and correct.

4.03   Amendment
Fee.  Borrowers
shall have paid to Agent, for its own account, in immediately available funds
an amendment fee equal to $15,000.00.

4.04   Compliance with Terms.  Borrowers shall have complied in all respects
with the terms hereof and of any other agreement, document, instrument or other
writing to be delivered by Borrowers in connection herewith.

4.05   Delivery
of Other Documents.  Agent
shall have received all such other instruments, documents and agreements as
Agent may reasonably request, in form and substance reasonably satisfactory to Agent.

Section
5.   Miscellaneous.

5.01   Continuing
Effect.  Except as
specifically provided herein, the Credit Agreement and the other Loan Documents
shall remain in full force and
effect in accordance with their respective terms and are hereby ratified and
confirmed in all respects.

5.02   No
Waiver; Reservation of Rights.  This Second Amendment is limited as specified and
the execution, delivery and effectiveness of this Second Amendment shall not
operate as a modification, acceptance or waiver of any provision of the Credit Agreement,
or any other Loan Document, except as specifically set forth herein.  Notwithstanding anything contained in
this Second Amendment to the contrary, Agent and the Lenders expressly reserve
the right to exercise any and all of their rights and remedies under the Credit
Agreement, any other Loan Document and applicable law in respect of any Default
or Event of Default.

5.03   References.

(a)           From
and after the Effective Date, (i) the Credit Agreement, the other Loan Documents and all agreements,
instruments and documents executed and delivered in connection with any of the
foregoing shall each be deemed amended hereby to the extent necessary, if any,
to give effect to the provisions of this Second Amendment and (ii) all of
the terms and provisions of this Second Amendment are hereby incorporated by
reference into the Credit Agreement, as applicable, as if such terms and provisions
were set forth in full therein, as applicable.

(b)           From
and after the Effective Date, (i) all references in the Credit Agreement
to “this Agreement”, “hereto”, “hereof”, “hereunder” or words of like import
referring to the Credit Agreement shall mean the Credit Agreement as amended
hereby and (ii) all references in the Credit Agreement, the other Loan
Documents or any other agreement, instrument or document executed and delivered
in connection therewith to  “Credit
Agreement”, “thereto”, “thereof”, “thereunder” or words of like import
referring to the Credit Agreement shall mean the Credit Agreement as amended
hereby.

 3
 

 

 

5.04   Governing
Law.  THIS SECOND AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

5.05   Severability.  The
provisions of this Second Amendment are severable, and if any clause or
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision in this Second Amendment in any jurisdiction.

5.06   Counterparts.  This
Second Amendment may be executed in any number of counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.  Delivery of an executed counterpart of this
Second Amendment by telefacsimile or electronic mail shall be equally effective
as delivery of a manually executed counterpart. 
A complete set of counterparts shall be lodged with the Administrative
Borrower, Agent and each Lender.

5.07   Headings.  Section
headings in this Second Amendment are included herein for convenience of
reference only and shall not constitute a part of this Second Amendment for any
other purpose.

5.08   Binding
Effect; Assignment.  This Second Amendment shall be
binding upon and inure to the benefit of Borrowers, Agent and the Lenders and
their respective successors and assigns; provided, however, that
the rights and obligations of Borrowers under this Second Amendment shall not
be assigned or delegated without the prior written consent of Agent and the
Lenders.

5.09   Expenses.  Borrowers
agree to pay Agent upon demand, for all reasonable expenses, including
reasonable fees of attorneys and paralegals for Agent and the Lenders (who may
be employees of Agent or the Lenders), incurred by Agent and the Lenders in
connection with the preparation, negotiation and execution of this Second
Amendment and any document required to be furnished herewith.

5.10   Integration.  This
Second Amendment, together with the other Loan Documents, incorporates all
negotiations of the parties hereto with respect to the subject matter hereof
and is the final expression and agreement of the parties hereto with respect to
the subject matter hereof.

[Signature page follows]

 4

 

IN WITNESS WHEREOF, the parties hereto have caused this
Second Amendment to be executed by their respective officers thereunto duly
authorized, as of e date first above written.

	
  

  	
  ADMINISTRATIVE BORROWER:

  
	
   

  	
   

  
	
   

  	
  TRC COMPANIES, INC., a
  Delaware corporation, 

  as Administrative Borrower, on 

  behalf of itself and all other Borrowers

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin H. Dodd

  
	
   

  	
  Name:

  	
  Martin H. Dodd

  
	
   

  	
  Title:

  	
   Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGENT AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, INC., 

  as Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul G. Chao

  
	
   

  	
  Name:

  	
  Paul G. Chao

  
	
   

  	
  Title:

  	
  Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]