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   Exhibit 10.7  

SECURITY AGREEMENT  

        THIS SECURITY AGREEMENT (this "Agreement") is made as of March 26, 2002, by Specialty
Laboratories, Inc., a California corporation ("Debtor"), in favor of both BNP Paribas and BNP Paribas Leasing Corporation, both individually and
as agent (collectively, "Secured Party"). 

W I T N E S S E T H:  

        WHEREAS, Debtor, Secured Party, as Agent, and certain lenders (collectively, the "Lenders") are parties to a
Credit Agreement of even date herewith (as from time to time amended, supplemented, or restated, the "Credit Agreement"); and 

        WHEREAS,
pursuant to the Credit Agreement, Lenders have agreed to extend credit to Debtor; and 

        WHEREAS,
Debtor, BNPPLC, and the Lenders are also parties to certain Operative Documents; 

        WHEREAS,
in order to induce Lenders to extend such credit pursuant to the Credit Agreement and enter into the Operative Documents, Debtor has agreed to grant to Secured Party, a security
interest in the Collateral as defined herein; 

        NOW,
THEREFORE, in consideration of the premises and in order to induce Lenders to extend such credit under the Credit Agreement and enter into the Operative Documents, Debtor hereby
agrees with for the benefit of Lenders and Secured Party, as follows: 

ARTICLE I  

 Definitions and References  

        Section 1.1.    General Definitions.    As used herein, the terms "Agreement", "Debtor", and "Credit Agreement"
shall have the meanings indicated above, and the following terms shall have the following meanings: 

        "BNPPLC" means BNP Paribas Leasing Corporation, a Delaware corporation. 

        "Collateral" means all property, of whatever type, which is described in Section 2.1 as being at any time subject to a security
interest granted hereunder to Secured Party. 

        "Commercial Tort Claims" means a claim arising in tort with respect to which the claimant is Debtor. 

        "Commitment" means the agreement or commitment by Lenders to make loans or otherwise extend credit to Debtor under the Credit Agreement,
and any other agreement, commitment, statement of terms or other document contemplating the making of loans or advances or other extension of credit by Lenders to or for the account of Debtor which is
now or at any time hereafter intended to be secured by the Collateral under this Agreement. 

        "Copyright License" means any license or other agreement, whether now or hereafter in existence, under which is granted or authorized any
right to use, copy, reproduce, distribute, prepare derivative works, display or publish any records or other materials on which a Copyright is in existence or may come into existence, including the
agreements identified in Schedule 1 to Exhibit C. 

        "Copyrights" means all the following: (a) all copyrights under the laws of the United States or any other country (whether or not
the underlying works of authorship have been published), all registrations and recordings thereof, all intellectual property rights to works of authorship (whether or 

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not published), and all application for copyrights under the laws of the United States or any other country, including registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any State thereof or other country, or any political subdivision thereof, including those described in Schedule 1 to Exhibit C,
(b) all reissues, renewals and extensions thereof, (c) all claims for, and rights to sue for, past or future infringements of any of the foregoing, and (d) all income, royalties,
damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. 

        "Copyright Security Agreement" means a Copyright Security Agreement executed and delivered by Debtor in favor of Secured Party,
substantially in the form of Exhibit C. 

        "Deposit Accounts" means all "deposit accounts" (as defined in the UCC) or other demand, time, savings, passbook, or similar accounts
maintained with a bank, including nonnegotiable certificates of deposit. 

        "Documents" means all "documents" (as defined in the UCC) or other receipts covering, evidencing or representing inventory, equipment, or
other goods. 

        "Equipment" means all "equipment" (as defined in the UCC) in whatever form, wherever located, and whether now or hereafter existing, and
all parts thereof, all accessions thereto, and all replacements therefor. 

        "General Intangibles" means all "general intangibles" (as defined in the UCC) of any kind (including choses in action, Commercial Tort
Claims, Software, Payment Intangibles, tax refunds, insurance proceeds, and contract rights), and all instruments, security agreements, leases, contracts, and other rights (except those constituting
Receivables, Documents, or Instruments) to receive payments of money or the ownership or possession of property, including all general intangibles under which an account debtor's principal obligation
is a monetary obligation. 

        "Instruments" means all "instruments", "chattel paper" or "letters of credit" (as each is defined in the UCC) and all
Letter-of-Credit Rights. 

        "Intellectual Property" means any Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, and Trademark Licenses. 

        "Inventory" means all "inventory" (as defined in the UCC) in all of its forms, wherever located and whether now or hereafter existing,
including (a) all movable property and other goods held for sale or lease, all movable property and other goods furnished or to be furnished under contracts of service, all raw materials and
work in process, and all materials and supplies used or consumed in a business, (b) all movable property and other goods which are part of a product or mass, (c) all movable property and
other goods which are returned to or repossessed by the seller, lessor, or supplier thereof, (d) all goods and substances in which any of the foregoing is commingled or to which any of the
foregoing is added, and (e) all accessions to, products of, and documents for any of the foregoing. 

        "Investment Property" means all "investment property" (as defined in the UCC) and all other securities, whether certificated or
uncertificated, securities entitlements, securities accounts, commodity contracts, or commodity accounts. 

        "Letter-of-Credit Rights" means all rights to payment or performance under a "letter of credit" (as defined in the
UCC) whether or not the beneficiary has demanded or is at the time entitled to demand payment or performance. 

        "Lenders" means the Persons who are from time to time "Lenders" as defined in the Credit Agreement. 

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        "Obligation Documents" means the Credit Agreement, the Notes, the Loan Documents, the Operative Documents and all other documents and
instruments under, by reason of which, or pursuant to which any or all of the Secured Obligations are evidenced, governed, secured, or otherwise dealt with, and all other agreements, certificates, and
other documents, instruments and writings heretofore or hereafter delivered in connection herewith or therewith. 

        "Other Liable Party" means any Person, other than Debtor, who may now or may at any time hereafter be primarily or secondarily liable for
any of the Secured Obligations or who may now or may at any time hereafter have granted to Secured Party or Lenders a Lien upon any property as security for the Secured Obligations. 

        "Patent License" means any license or other agreement, whether now or hereafter in existence, under which is granted or authorized any
right with respect to any Patent or any invention now or hereafter
in existence, whether patentable or not, whether a patent or application for patent is in existence on such invention or not, and whether a patent or application for patent on such invention may come
into existence, including the agreements identified in Schedule 1 to Exhibit A. 

        "Patents" means all the following: (a) all letters patent and design letters patent of the United States or any other country and
all applications for letters patent and design letters patent of the United States or any other country, including applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or other country, or any political subdivision thereof, including those described in Schedule 1 to Exhibit A, (b) all
reissues, divisions, continuations, continuations-in-part, renewals and extensions thereof, (c) all claims for, and rights to sue for, past or future infringements of
any of the foregoing, and (d) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future
infringements thereof. 

        "Patent Security Agreement" means the Patent Security Agreement executed and delivered by Debtor in favor of Secured Party, substantially
in the form of Exhibit A. 

        "Payment Intangibles" means all "payment intangibles" (as defined in the UCC). 

        "Proceeds" means, with respect to any property of any kind, all proceeds of, and all other profits, products, rentals or receipts, in
whatever form, arising from any sale, exchange, collection, lease, licensing or other disposition of, distribution in respect of, or other realization upon, such property, including all claims against
third parties for loss of, damage to or destruction of, or for proceeds payable under (or unearned premiums with respect to) insurance in respect of, such property (regardless of whether Secured Party
is named a loss payee thereunder), and any payments paid or owing by any third party under any indemnity, warranty, or guaranty with respect to such property, and any condemnation or requisition
payments with respect to such property, in each case whether now existing or hereafter arising. 

        "Receivables" means (a) all "accounts" (as defined in the UCC) and all other rights to payment for goods or other personal property
which have been (or are to be) sold, leased, or exchanged or for services which have been (or are to be) rendered, regardless of whether such accounts or other rights to payment have been earned by
performance and regardless of whether such accounts or other rights to payment are evidenced by or characterized as accounts receivable, contract rights, book debts, notes, drafts or other obligations
of indebtedness, (b) all Documents and Instruments of any kind relating to such accounts or other rights to payment or otherwise arising out of or in connection with the sale, lease or exchange
of goods or other personal property or the rendering of services, (c) all rights in, to, or under all security agreements, leases and other contracts securing or otherwise relating to any such
accounts, rights to payment, Documents, or Instruments, (d) all rights in, to and under any purchase orders, service contracts, or other contracts out of which such accounts and other rights to
payment arose (or will arise on performance), and (e) all rights in or pertaining to any goods arising out of or in 

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connection with any such purchase orders, service contracts, or other contracts, including rights in returned or repossessed goods and rights of replevin, repossession, and reclamation. 

        "Related Person" means Debtor, each Subsidiary of Debtor and each Other Liable Party. 

        "Secured Obligations" has the meaning given such term in Section 2.2. 

        "Secured Party" means the Persons named as such at the beginning of this Agreement, together with their successors and assigns (as the
"Agent" under the Credit Agreement or as a successor to BNPPLC under the Operative Documents). 

        "Software" means all "software" (as defined in the UCC), including all computer programs, any supporting information provided in
connection with a transaction relating to a computer program, all licenses or other rights to use any of such computer programs, and all license fees and royalties arising from such use to the extent
permitted by such license or rights. 

        "Trademark License" means any license or agreement, whether now or hereafter in existence, under which is granted or authorized any right
to use any Trademark, including the agreements identified on Schedule 1 to Exhibit B hereto. 

        "Trademarks" means all of the following: (a) all trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, brand names, trade dress, prints and labels on which any of the foregoing have appeared or appear, package and other designs, and any
other source or business identifiers, and general intangibles of like nature, and the rights in any of the foregoing which arise under applicable law, (b) the goodwill of the business
symbolized thereby or associated with each of them, (c) all registrations and applications in connection therewith, including registrations and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any State thereof or other country, or any political subdivision thereof, including those described in Schedule 1 to
Exhibit B hereto, (d) all reissues, extensions and renewals thereof, (e) all claims for, and rights to sue for, past or future infringements of any of the foregoing, and
(f) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. 

        "Trademark Security Agreement" means the Trademark Security Agreement executed and delivered by Debtor in favor of Secured Party,
substantially in the form of Exhibit B hereto. 

        "UCC" means the Uniform Commercial Code in effect in the State of California from time to time. 

        Section 1.2.    Other Definitions.    Reference is hereby made to the Credit Agreement for a statement of the
terms thereof. All capitalized terms used in this Agreement which are defined in the Credit Agreement and not otherwise defined herein shall have the same meanings herein as set forth therein. All
terms used in this Agreement which are defined in the UCC and not otherwise defined herein or in the Credit Agreement shall have the same meanings herein as set forth therein, except where the context
otherwise requires. The parties intend that the terms used herein which are defined in the UCC have, at all times, the broadest and most inclusive meanings possible. Accordingly, if the UCC shall in
the future be amended or held by a court to define any term used herein more broadly or inclusively than the UCC in effect on the date hereof, then such term, as used herein, shall be given such
broadened meaning. If the UCC shall in the future be amended or held by a court to define any term used herein more narrowly, or less inclusively, than the UCC in effect on the date hereof, such
amendment or holding shall be disregarded in defining terms used herein. 

        Section 1.3.    Attachments.    All exhibits or schedules which may be attached to this Agreement are a part
hereof for all purposes. 

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        Section 1.4.    Amendment of Defined Instruments.    Unless the context otherwise requires or unless otherwise
provided herein, references in this Agreement to a particular agreement, instrument or document (including, but not limited to, references in Section 2.1) also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of any such agreement, instrument or document, provided that nothing contained in this Section shall be construed to
authorize any Person to execute or enter into any such renewal, extension, amendment, modification, supplement or restatement. 

        Section 1.5.    References and Titles.    All references in this Agreement to Exhibits, Articles, Sections,
subsections, and other subdivisions refer to the Exhibits, Articles, Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any subdivision are for convenience only and do not constitute any part of any such subdivision and shall be disregarded in construing the language contained in this Agreement. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The
phrases "this Section" and "this subsection" and similar phrases refer only to the Sections or subsections hereof in which the phrase occurs. The word "or" is not exclusive, and the word "including"
(in all of its forms) means "including without limitation". Pronouns in masculine, feminine and neuter gender shall be construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa unless the context otherwise requires. 

ARTICLE II  

 Security Interest  

        Section 2.1.    Grant of Security Interest.    As collateral security for all of the Secured Obligations,
Debtor hereby pledges and assigns to Secured Party and grants to Secured Party a continuing security interest, for the benefit of Lenders and BNPPLC, in and to all right, title and interest of Debtor
in and to any and all of the following property, whether now owned or existing or hereafter acquired or arising and regardless of where located: 

        (a)  all
Receivables. 

        (b)  all
General Intangibles. 

        (c)  all
Documents. 

        (d)  all
Instruments. 

        (e)  all
Inventory. 

        (f)    all
Equipment. 

        (g)  all
Deposit Accounts. 

        (h)  all
Investment Property 

        (i)    all
Intellectual Property. 

        (j)    All
books and records (including, without limitation, customer lists, marketing information, credit files, price lists, operating records, vendor and supplier price
lists, sales literature, computer software, computer hardware, computer disks and tapes and other storage media, printouts and other materials and records) of Debtor pertaining to any of the
Collateral. 

        (k)  All
moneys and property of any kind of Debtor in the possession or under the control of Secured Party. 

        (l)    All
Proceeds of any and all of the foregoing Collateral. 

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In
each case, the foregoing shall be covered by this Agreement, whether Debtor's ownership or other rights therein are presently held or hereafter acquired and howsoever Debtor's interests therein may
arise or appear (whether by ownership, security interest, claim or otherwise). 

        Section 2.2.    Secured Obligations Secured.    The security interest created hereby in the Collateral
constitutes continuing collateral security for all of the following obligations, indebtedness and liabilities, whether now existing or hereafter incurred or arising: 

        (a)    Credit Agreement Indebtedness and Operative Documents.    The payment by Debtor, as and when due and payable,
of all amounts from time to time owing by Debtor under or in respect of the Credit Agreement, the Notes, the Operative Documents or any of the other Obligation Documents. 

        (b)    Hedging Contracts.    The payment by Debtor, as and when due and payable, of all obligations and liabilities
under any Hedging Contract required or permitted under the Credit Agreement and to which Debtor and any Lender (or any Affiliate of a Lender) are parties. 

        (c)    Renewals.    All renewals, extensions, amendments, modifications, supplements, or restatements of or
substitutions for any of the foregoing. 

        (d)    Performance.    The due performance and observance by Debtor of all of its other obligations from time to time
existing under or in respect of any of the Obligation Documents. 

As
used herein, the term "Secured Obligations" refers to all present and future indebtedness, obligations and liabilities of whatever type which are described above in this section, including any
interest which accrues after the commencement of any case, proceeding, or other action relating to the bankruptcy, insolvency, or reorganization of Debtor. Debtor hereby acknowledges that the Secured
Obligations are owed to the various Lenders and BNPPLC that each Lender and BNPPLC is entitled to the benefits of the Liens given under this Agreement. 

ARTICLE III  

 Representations, Warranties and Covenants  

        Section 3.1.    Representations and Warranties.    Each of the representations and warranties in the Credit
Agreement made by Debtor or any Restricted Person is true and correct. In addition, Debtor hereby represents as of the date hereof and warrants to Secured Party and Lenders as follows: 

        (a)    Name, Place of Business and Formation.    Debtor is a corporation organized under the laws of the State of
California, which is Debtor's location pursuant to the UCC. Debtor has not during the preceding five years conducted business under any name except the name in which it has executed this Agreement,
which is the exact name as it appears in Debtor's organizational documents, as amended, as filed with Debtor's jurisdiction of organization. Debtor's principal place of business and chief executive
office, and the place where Debtor kept its books and records concerning the Collateral was for the four month period prior to July 1, 2001 located at Debtor's address set forth in the Credit
Agreement. 

        (b)    Ownership Free of Liens.    Debtor has good and marketable title to the Collateral, free and clear of all
Liens, encumbrances or adverse claims except for the security interest created by this Agreement and any Permitted Liens. No effective financing statement or other registration or instrument similar
in effect covering all or any part of the Collateral is on file in any recording office except any which have been filed in favor of Secured Party relating to this Agreement and any which have been
filed to perfect or protect any Permitted Lien. None of the Collateral is in the possession of any Person other than Debtor or Secured Party, except for Collateral being held or transported in the
ordinary course of business. 

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        (c)    No Conflicts or Consents.    Neither the ownership or the intended use of the Collateral by Debtor, nor the
grant of the security interest by Debtor to Secured Party herein, nor the exercise by Secured Party of its rights or remedies hereunder, will (i) conflict with any provision of (a) any
domestic or foreign law, statute, rule or regulation to the best of Debtor's knowledge, (b) the articles or certificate of incorporation, charter or bylaws of Debtor, or (c) any
agreement, judgment, license, order or permit applicable to or binding upon Debtor, or (ii) result in or require the creation of any Lien, charge or encumbrance upon any assets or properties of
Debtor except for the security interest created by this Agreement and any Permitted Liens. Except as expressly contemplated in the Obligation Documents, no consent, approval, authorization or order
of, and no notice to or filing with any court, governmental authority or third party is required in connection with the grant by Debtor of the security interest herein, or to the best of Debtor's
knowledge the exercise by Secured Party of its rights and remedies hereunder. 

        (d)    Security Interest.    Debtor has and will have at all times full right, power and authority to grant a security
interest in the Collateral to Secured Party as provided herein, free and clear of any Lien, adverse claim, or encumbrance except for the security interest created by this Agreement and any Permitted
Liens. This Agreement creates a valid and binding security interest in favor of Secured Party in the Collateral, which security interest secures all of the Secured Obligations. 

        (e)    Perfection.    The taking possession by Secured Party of all money constituting Collateral from time to time
will perfect, and establish the first priority of, Secured Party's security interest hereunder in such Collateral. Secured Party's control of all Investment Property, Deposit Accounts, and
Letter-of-Credit Rights constituting Collateral from time to time will perfect, and establish the first priority of, Secured Party's security interest hereunder in such
Collateral. The filing of a financing statement with the secretary of state (or equivalent governmental official) of the state in which Debtor is organized which sufficiently indicates all other
Collateral will perfect, and establish the first priority of, Secured Party's security interest hereunder in such Collateral. No further or subsequent filing, recording, registration, other public
notice or other action is necessary or desirable to perfect or otherwise continue, preserve or protect such security interest except (i) for continuation statements described in UCC
§9.515(d), (ii) for filings required to be filed in the event of a change in the name, identity, or corporate structure of Debtor, or (iii) in the event any financing
statement filed by Secured Party relating hereto otherwise becomes inaccurate or incomplete. 

        (f)    Receivables.    Each Receivable in excess of $100,000 represents the valid and legally binding indebtedness of
a bona fide account debtor arising from the sale or lease by Debtor of goods or the rendition by Debtor of services and is not subject to contra-accounts, setoffs, defenses or counterclaims by or
available to account debtors obligated on the Receivables except as disclosed to Secured Party in a Borrowing Base Report. Goods which have been delivered to, and services which have been rendered by
Debtor to the account debtor on each such Receivable have been accepted by such account debtor except where failure to accept such services will not result in a Material Adverse Change, and the amount
shown as to each Receivable on Debtor's books is the true and, to the best of Debtor's knowledge, undisputed amount owing and unpaid thereon, subject only to discounts, allowances, rebates, credits
and adjustments to which such account debtor has a right and which have been disclosed to Secured Party in a Borrowing Base Report. 

        (g)    General Intangibles.    Each General Intangible included within the Collateral which is material to Debtor's
business represents the valid and legally binding obligation of each other Person who is a party thereto or who is otherwise stated to be obligated thereunder, subject to no contra-accounts, setoffs,
defenses, counterclaims, discounts, allowances, rebates, credits or adjustments by or available to account debtors obligated thereon, except for those which do not materially impair the value to
Debtor or the enforcement by Debtor of such General Intangibles. 

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        (h)    Intellectual Property.    All Intellectual Property included within the Collateral which is material to
Debtor's business is listed on Schedule 1 to Exhibit C (in the case of Copyrights and Copyright Licenses), on Schedule 1 to Exhibit A (in the case of Patents and Patent
Licenses), and on Schedule 1 to Exhibit B (in the case of Trademarks and Trademark Licenses). All such Intellectual Property is valid and enforceable and is not subject to any claim,
judgment or administrative or arbitral decision that questions its validity or enforceability, Debtor's purported rights thereunder, or Debtor's rights to use the same in its business. 

        (i)    Documents and Instruments.    All Documents and Instruments included within the Collateral are valid and
genuine. Any such Document or Instrument has only one original counterpart which constitutes collateral within the meaning of the UCC or the law of any applicable jurisdiction, and all such original
counterparts (other than checks delivered in payment of Receivables in the ordinary course of business) have been delivered into the possession of Secured Party. 

        (j)    Goods.    None of the Collateral which constitutes goods (i) is covered by any Document (other than
Documents which are subject hereto and have been delivered to Secured Party), (ii) is subject to any landlord's lien or similar Lien, (iii) has been related to, attached to, or used in
connection with any real property so as to constitute a fixture upon such real property (except for real property which is subject to a Lien in favor of Secured Party), (iv) is installed in or
affixed to other goods so as to be an accession to such other goods (unless such other goods are included in the Collateral), or (v) has been produced in violation of the Fair Labor Standards
Act, as amended. All such goods are insured to the extent required under the Credit Agreement. 

        Section 3.2.    General Covenants Applicable to Collateral.    Unless Secured Party shall otherwise consent in
writing, Debtor will at all times comply with the covenants contained in the Credit Agreement which are applicable to Debtor for so long as any part of the Secured Obligations or the Commitment is
outstanding. In addition, Debtor will at all times comply with the covenants contained in this Section 3.2. 

        (a)    Change of Name, Location, or Structure; Additional Filings.    Debtor recognizes that financing statements
pertaining to the Collateral have been or may be filed with the secretary of state (or equivalent governmental official) of the state in which Debtor is organized. Without limitation of any other
covenant herein, Debtor will not cause or permit any change to be made in its name, identity or corporate structure, or any change to be made to its jurisdiction of organization, unless Debtor shall
have first (1) notified Secured Party of such change at least forty-five (45) days prior to the effective date of such change, (2) taken all action requested by
Secured Party (under the following subsection (b) or
otherwise) for the purpose of further confirming and protecting Secured Party's security interests and rights under this Agreement and the perfection and priority thereof, and (3) if requested
by Secured Party, provided to Secured Party a legal opinion to its satisfaction confirming that such change will not adversely affect in any way Secured Party's security interests and rights under
this Agreement or the perfection or priority thereof. In any notice furnished pursuant to this subsection, Debtor will expressly state that the notice is required by this Agreement and contains facts
that may require additional filings of financing statements or other notices for the purposes of continuing perfection of Secured Party's security interest in the Collateral. 

        (b)    Further Assurances.    Debtor will, at its expense as from time to time requested by Secured Party, promptly
execute and deliver all further instruments, agreements, filings and registrations, and take all further action, in order: (i) to confirm and validate this Agreement and Secured Party's rights
and remedies hereunder, (ii) to correct any errors or omissions in the descriptions herein of the Secured Obligations or the Collateral or in any other provisions hereof, (iii) to
perfect, register and protect the security interests and rights created or purported to be 

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created hereby or to maintain or upgrade in rank the priority of such security interests and rights, (iv) to enable Secured Party to exercise and enforce its rights and remedies hereunder in
respect of the Collateral, or (v) to otherwise give Secured Party the full benefits of the rights and remedies described in or granted under this Agreement. As part of the foregoing Debtor
will, whenever requested by Secured Party (1) execute and file any financing statements, continuation statements, and other filings or registrations relating to Secured Party's security
interests and rights hereunder, and any amendments thereto, and (2) mark its books and records relating to any Collateral to reflect that such Collateral is subject to this Agreement and the
security interests hereunder. To the extent requested by Secured Party from time to time, Debtor will obtain from any material account debtor or other obligor on the Collateral the acknowledgment of
such account debtor or obligor that such Collateral is subject to this Agreement. 

        (c)    Inspection of Collateral.    Debtor will keep adequate records concerning the Collateral and will permit
Secured Party and all representatives appointed by Secured Party, including independent accountants, agents, attorneys, appraisers and any other persons, to inspect any of the Collateral and the books
and records of or relating to the Collateral at any time during normal business hours, and to make photocopies and photographs thereof, and to write down and record any information which such
representatives obtain. 

        (d)    Information.    Upon request from time to time by Secured Party, Debtor will furnish to Secured Party
(i) any information concerning any covenant, provision or representation contained herein or any other matter in connection with the Collateral or Debtor's business, properties, or financial
condition, and (ii) statements and schedules identifying and describing the Collateral and other reports and information requested in connection with the Collateral, all in reasonable detail. 

        (e)    Ownership, Liens, Possession and Transfers.    Debtor will maintain good and marketable title to all
Collateral, free and clear of all Liens, encumbrances or adverse claims except for the security interest created by this Agreement and any Permitted Liens, and Debtor will not grant or allow any such
Liens,
encumbrances or adverse claims to exist. Debtor will not grant or allow to remain in effect, and Debtor will cause to be terminated, any financing statement or other registration or instrument similar
in effect covering all or any part of the Collateral, except any which have been filed in favor of Secured Party relating to this Agreement and any which have been filed to perfect or protect any
Permitted Lien. Debtor will defend Secured Party's right, title and special property and security interest in and to the Collateral against the claims of any Person. Debtor (i) will insure that
all of the Collateral—whether goods, Documents, Instruments, or otherwise—is and remains in the possession of Debtor or Secured Party (or a bailee selected by Secured Party who
is holding such Collateral for the benefit of Secured Party), except for goods being transported in the ordinary course of business, and (ii) will not sell, assign (by operation of law or
otherwise), transfer, exchange, lease or otherwise dispose of any of the Collateral. 

        (f)    Impairment of Security Interest.    Debtor will not take or fail to take any action which would in any manner
impair the value or enforceability of Secured Party's security interest in any Collateral. 

        (g)    Insurance.    

        (i)    Debtor
will, at its own expense, maintain insurance with respect to all Collateral which constitutes goods in such amounts, against such risks, in such form and with
such insurers, as shall be satisfactory to Secured Party from time to time. Each policy for liability insurance shall provide for all losses to be paid on behalf of Secured Party (for the benefit of
Lenders) and Debtor as their respective interests may appear, and each policy for property damage insurance shall provide for all losses to be paid directly to Secured Party. Each such policy shall in
addition (A) name Debtor and Secured Party as insured parties thereunder (without any representation or warranty by or obligation upon Secured Party) as their interests 

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may appear, (B) contain the agreement by the insurer that any loss thereunder shall be payable to Secured Party notwithstanding any action, inaction or breach of representation or warranty by
Debtor, (C) provide that there shall be no recourse against Secured Party for payment of premiums or other amounts with respect thereto and (D) provide that at least thirty
(30) days' prior written notice of cancellation or of lapse shall be given to Secured Party by the insurer. Debtor will, if so requested by Secured Party, deliver to Secured Party original or
duplicate policies of such insurance and, as often as Secured Party may reasonably request, a report of a reputable insurance broker with respect to such insurance. Debtor will also, at the request of
Secured Party, duly execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment. 

        (ii)  Reimbursement
under any liability insurance maintained by Debtor pursuant to this Section 3.2(g) may be paid directly to the Person who has incurred the
liability covered by such insurance. With respect to any loss involving damage to Collateral which constitutes goods, Debtor will make or cause to be made the necessary repairs to or replacements of
such Collateral, and any proceeds of insurance maintained by Debtor pursuant to this Section 3.2(g) shall be paid to Debtor by Secured Party as reimbursement for the costs of such repairs or
replacements as such repairs or replacements are made or acquired. 

        Section 3.3.    Covenants for Specified Types of Collateral.    Unless Secured Party shall otherwise consent in
writing, Debtor will at all times comply with the covenants contained in this Section 3.3 from the date hereof and so long as any part of the Secured Obligations or the Commitment is
outstanding. 

        (a)    Receivables.    Debtor will, except as otherwise provided in Sections 4.1(e) and 4.2(a), collect at its own
expense all amounts due or to become due under each Receivable which is included within the Collateral. In connection with such collections, Debtor may (and, at Secured Party's direction, will) take
such action (not otherwise forbidden hereunder) as Debtor or Secured Party may deem necessary or advisable to enforce collection or performance of each such Receivable. Except for those arising in the
ordinary course of Debtor's business and consistent with Debtor's historical credit practices, Debtor will not (whether through failure to duly perform its obligations under any contracts,
instruments, and agreements which are related to any such Receivable, or by any written instrument, or otherwise) take or allow any action or omission which causes any such Receivable to become
subject to any contra-accounts, setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or adjustments by or available to account debtors obligated on such Receivable. 

        (b)    General Intangibles.    Debtor will, except as otherwise provided in Sections 4.1(e) and 4.2(a), collect at its
own expense all amounts due or to become due under each General Intangible included within the Collateral. In connection with such collections, Debtor may (and, at Secured Party's direction, will)
take such action (not otherwise forbidden hereunder) as Debtor or Secured Party may deem necessary or advisable to enforce collection or performance of each such General Intangible. Debtor will duly
perform and cause to be performed all of its obligations under any contracts, instruments, and agreements which are, or which are related to, any General Intangibles of Debtor. Debtor will not
(whether through failure to duly perform its obligations under any contracts, instruments, and agreements which are related to any such General Intangibles, or by any written instrument, or otherwise)
take or allow any action or omission which causes any such General Intangibles to become subject to any contra-accounts, setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to account debtors obligated on such General Intangibles, except for those which do not materially impair the value or enforcement of such General Intangibles. 

        (c)    Intellectual Property.    Debtor will maintain and protect the validity and enforceability of all Intellectual
Property included within the Collateral which is material to Debtor's business. 

10

 

Debtor will defend and protect such Intellectual Property and its rights thereunder against any infringement, dilution, or misappropriation and will defend any claim or administrative or arbitral
challenge that questions the validity or enforceability of such Intellectual Property, Debtor's purported rights therein and thereunder, or Debtor's rights to register or patent the same or to use and
practice the same in its business. Debtor will give Secured Party notice of any proceeding in which such defense is being carried on. Debtor will diligently prosecute and maintain all applications and
registrations for any such Intellectual Property, and Debtor will notify Secured Party whenever it learns that any application or registration relating to any such Intellectual Property has been (or
is alleged to have been) abandoned, dedicated or otherwise terminated. At least thirty days prior to filing any application for registration of any Intellectual Property (or any similar request) with
the United States Copyright
Office, the United States Patent and Trademark Office, or any similar office or agency of the United States, any State thereof or other country, or any political subdivision thereof, Debtor will give
Secured Party notice of such intended filing and will, upon Secured Party's request, execute, deliver and file any agreements, instruments, registrations and filings which Secured Party may request to
confirm Secured Party's security interest therein and to put such security interest of record in such office. Debtor hereby appoints Secured Party as its attorney in fact to do the same, and hereby
ratifies and confirms all actions of Secured Party as such attorney in fact, and hereby acknowledges that such power of attorney is irrevocable and coupled with an interest. 

        (d)    Documents and Instruments.    Debtor will at all times cause any Documents or Instruments which are included
within the Collateral to be valid and genuine. Debtor will cause all Instruments included within the Collateral to have only one original counterpart. Debtor will promptly deliver to Secured Party all
originals of Documents or Instruments which are included within the Collateral. Debtor will not (whether through failure to duly perform its obligations under any contracts, instruments, and
agreements which are related to any Documents or Instruments which are included within the Collateral, or by any written instrument, or otherwise) take or allow any action or omission which causes any
Documents or Instruments which are included within the Collateral to become subject to any contra-accounts, setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or adjustments by
or available to the Persons obligated thereon. Upon request by Secured Party, Debtor will mark each chattel paper which is included within the Collateral with a legend indicating that such chattel
paper is subject to the security interest granted by this Agreement. 

        (e)    Inventory.    Debtor will maintain, preserve, protect and store all Inventory included within the Collateral in
good condition, repair and working order and in a manner which will not make void or cancelable any insurance with respect to such Collateral. Except for Documents delivered into the possession of
Secured Party, Debtor will not allow any Inventory included within the Collateral to be covered by any Document. Debtor will not cause or permit the removal of any item of Inventory from Debtor's
possession, control and risk of loss, and Debtor will not sell, assign (by operation of law or otherwise), transfer, exchange, lease or otherwise dispose of any Inventory, other than in connection
with the following: 

        (i)    Sales
or leases, other than during the continuance of an Event of Default, of Inventory in the ordinary course of business, and 

        (ii)  Possession
of Inventory by Secured Party or by a bailee selected by Secured Party who is holding such Inventory for the benefit of Secured Party. 

        (f)    Equipment.    Debtor will maintain, preserve, protect and keep all Equipment included within the Collateral in
good condition, repair and working order and will cause such Equipment to be used and operated in a good and workmanlike manner, in accordance with applicable law and in a manner which will not make
void or cancelable any insurance with respect to such 

11

 

Equipment. Debtor will promptly make or cause to be made all repairs, replacements and other improvements to or in connection with such Equipment which are necessary or desirable or that Secured
Party may request to such end. Debtor will not cause or permit the removal of any item of Equipment from Debtor's possession, control and risk of loss, and Debtor will not sell, assign (by operation
of law or otherwise), transfer, exchange, lease or otherwise dispose of any Equipment, other than in connection with the following: 

        (i)    Sale
or other disposal, other than during the continuance of an Event of Default, of any item of Equipment which is worn out or obsolete and which has been replaced by
an item of equal suitability and value, owned by Debtor and made subject to the security interest under this Agreement, but which is otherwise free and clear of any Liens, encumbrances or adverse
claims, and 

        (ii)  Possession
of Equipment by Secured Party or by a bailee selected by Secured Party who is holding such Equipment for the benefit of Secured Party. 

Debtor
will not permit any of the Collateral which constitutes Equipment to at any time become so related to attached to, or used in connection with any particular real property so as to become a
fixture upon such real property, or to be installed in or affixed to other goods so as to become an accession to such other goods unless such other goods are also included in the Collateral. 

        (g)    Deposit Accounts.    For each Deposit Account that Debtor at any time opens and maintains, Debtor shall, at
Secured Party's request and option, pursuant to an agreement in form and substance satisfactory to Secured Party, either (i) cause the depository bank which maintains such Deposit Account to
agree to comply at any time with instructions from Secured Party to such depository bank directing the disposition of funds from time to time credited to such Deposit Account, without further consent
of Debtor, or (ii) arrange for Secured Party to become the customer of such depository bank with respect to the Deposit Account, with Debtor being permitted, only with the consent of Secured
Party, to exercise rights to withdraw funds from such Deposit Account. Secured Party agrees with Debtor that Secured Party shall not give any such instructions or withhold any withdrawal rights from
Debtor unless an Event of Default has occurred and is continuing. The provisions of this Section 3.3(g) shall not apply to (x) any Deposit Account for which Debtor, the applicable
depository bank, and Secured Party have entered into a cash collateral agreement specially negotiated among Debtor, such depository bank, and Secured Party for the specific purpose set forth therein,
(y) Deposit Accounts for which Secured Party is the depository bank, and (z) Deposit Accounts specially and exclusively used for payroll, payroll taxes, and other employee wage and
benefit payments to or for the benefit of Debtor's salaried employees. 

        (h)    Investment Property.    If Debtor shall at any time hold or acquire any certificated securities, Debtor shall
forthwith endorse, assign, and deliver the same to Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as Secured Party may from time to time specify. If
any securities now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or its nominee directly by the issuer thereof, Debtor shall immediately notify Secured Party of such
issuance and, at Secured Party's request and option, pursuant to an agreement in form and substance satisfactory to Secured Party, either (i) cause the issuer thereof to agree to comply with
instructions from Secured Party as to such securities, without further consent of Debtor or such
nominee, or (ii) arrange for Secured Party to become the registered owner of such securities. If any securities, whether certificated or uncertificated, or other Investment Property now or
hereafter acquired by Debtor, are held by Debtor or its nominee through a securities intermediary or commodity intermediary, Debtor shall immediately notify Secured Party thereof, and, at Secured
Party's request and option, pursuant to an agreement in form and substance satisfactory to Secured Party, either (i) cause such securities intermediary or 

12

 

(as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from Secured Party to such securities intermediary as to such securities or other
Investment Property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by Secured Party to such commodity intermediary, in each case without
further consent of Debtor or such nominee, or (ii) in the case of financial assets or other Investment Property held through a securities intermediary, arrange for Secured Party to become the
entitlement holder with respect to such Investment Property, with Debtor being permitted, only with the consent of Secured Party, to exercise rights to withdraw or otherwise deal with such Investment
Property. Secured Party agrees with Debtor that Secured Party shall not give any such entitlement orders or instructions or directions to any of Investment Property, issuer, securities intermediary,
or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by Debtor, unless an Event of Default has occurred and is continuing. The provisions
of this Section 3.3(h) shall not apply to any financial assets credited to a securities account for which Secured Party or an Affiliate of Secured Party is the securities intermediary. 

        (i)    Letter of Credit Rights.    If Debtor is at any time a beneficiary under a letter of credit now or hereafter
issued in favor of Debtor, Debtor shall promptly notify Secured Party thereof and, at the request and option of Secured Party, Debtor shall, pursuant to an agreement in form and substance satisfactory
to Secured Party, either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to Secured Party of the proceeds of any drawing under such letter of
credit or (ii) arrange for Secured Party to become the transferee beneficiary of such letter of credit, with Secured Party agreeing, in each case, that the proceeds of any drawing under such
letter of credit are to be applied as specified in Section 4.3. 

        (j)    Commercial Tort Claims.    If Debtor shall at any time hold or acquire a Commercial Tort Claim, Debtor shall
immediately notify Secured Party in writing of the details thereof and grant to Secured Party 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 acceptable to Secured Party. 

ARTICLE IV.  

 Remedies, Powers and Authorizations  

        Section 4.1.    Normal Provisions Concerning the Collateral.    

        (a)    Authorization to File Financing Statements.    Debtor hereby irrevocably authorizes Secured Party at any time
and from time to time to file, without the signature of Debtor, in any jurisdiction any amendments to existing financing statements and any initial financing statements and amendments thereto that
(a) indicate the Collateral (i) as "all assets of Debtor and all proceeds thereof, and all rights and privileges with respect thereto" or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of Division 9 of the UCC, or (ii) as being of an equal or lesser scope or with greater detail; (b) contain any
other information required by Chapter 5 of Division 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including whether Debtor is an organization,
the type of organization and any organization identification number issued to Debtor; and (c) are necessary to properly effectuate the transactions described in the Loan Documents, as
determined by Secured Party in its discretion. Debtor agrees to furnish any such information to Secured Party promptly upon request. Debtor further agrees that a carbon, photographic or other
reproduction of this Agreement or any financing statement describing any Collateral is sufficient as a financing statement and may be filed in any jurisdiction by Secured Party. 

13

  

        (b)    Power of Attorney.    Debtor hereby appoints Secured Party as Debtor's attorney-in-fact
and proxy, with full authority in the place and stead of Debtor and in the name of Debtor or otherwise, from time to time in Secured Party's discretion, to take any action and to execute any
instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement including any action or instrument: (i) to obtain and adjust any insurance required
to be paid to Secured Party pursuant hereto; (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral; (iii) to receive, indorse and collect any drafts or other Instruments or Documents; (iv) to enforce any obligations included among the Collateral; and
(v) to file any claims or take any action or institute any proceedings which Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Debtor or Secured Party with respect to any of the Collateral. Debtor hereby acknowledges that such power of attorney and proxy are coupled with an interest, are irrevocable, and are to
be used by Secured Party for the sole benefit of Lenders. 

        (c)    Performance by Secured Party.    If Debtor fails to perform any agreement or obligation contained herein,
Secured Party may itself perform, or cause performance of, such agreement or obligation, and the expenses of Secured Party incurred in connection therewith shall be payable by Debtor under
Section 4.5. 

        (d)    Bailees.    If any Collateral is at any time in the possession or control of any warehouseman, bailee or any of
Debtor's agents or processors, Debtor shall, upon the request of Secured Party, notify such warehouseman, bailee, agent or processor of Secured Party's rights hereunder and instruct such Person to
hold all such Collateral for Secured Party's account subject to Secured Party's instructions. (No such request by Secured Party shall be deemed a waiver of any provision hereof which was otherwise
violated by such Collateral being held by such Person prior to such instructions by Debtor.) 

        (e)    Collection.    Secured Party shall have the right at any time, upon the occurrence and during the continuance
of a Default or an Event of Default, to notify (or to require Debtor to notify) any and all obligors under any Receivables, General Intangibles, Instruments, or other rights to payment included among
the Collateral of the assignment thereof to Secured Party under this Agreement and to direct such obligors to make payment of all amounts due or to become due to Debtor thereunder directly to Secured
Party and, upon such notification and at the expense of Debtor and to the extent permitted by law, to enforce collection of any such Receivables, General Intangibles, Instruments, or other rights to
payment and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as Debtor could have done. After Debtor receives notice that Secured Party has
given (and after Secured Party has required Debtor to give) any notice referred to above in this subsection: 

        (i)    all
amounts and proceeds (including instruments and writings) received by Debtor in respect of such Receivables, General Intangibles, Instruments, or other rights to
payment shall be received in trust for the benefit of Secured Party hereunder, shall be segregated from other funds of Debtor and shall be forthwith paid over to Secured Party in the same form as so
received (with any necessary indorsement) to be, at Secured Party's discretion, either (A) held as cash collateral and released to Debtor upon the remedy of all Defaults and Events of Default,
or (B) while any Event of Default is continuing, applied as specified in Section 4.3, and 

        (ii)  Debtor
will not adjust, settle or compromise the amount or payment of any such Receivable, General Intangible, Instrument, or other right to payment or release wholly
or partly any account debtor or obligor thereof or allow any credit or discount thereon. 

14

 

        Section 4.2.    Event of Default Remedies.    If an Event of Default shall have occurred and be continuing,
Secured Party may from time to time in its discretion, without limitation and without notice except as expressly provided below: 

        (a)  exercise
in respect of the Collateral, in addition to any other rights and remedies provided for herein, under the other Obligation Documents, or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral); 

        (b)  require
Debtor to, and Debtor hereby agrees that it will at its expense and upon request of Secured Party forthwith, assemble all or part of the Collateral as directed
by Secured Party and make it (together with all books, records and information of Debtor relating thereto) available to Secured Party at a place to be designated by Secured Party which is reasonably
convenient to both parties; 

        (c)  prior
to the disposition of any Collateral, (i) to the extent permitted by applicable law, enter, with or without process of law and without breach of the peace,
any premises where any of the Collateral is or may be located, and without charge or liability to Secured Party seize and remove such Collateral from such premises, (ii) have access to and use
the Company's books, records, and information relating to the Collateral, and (iii) store or transfer any of the Collateral without charge in or by means of any storage or transportation
facility owned or leased by Debtor, process, repair or recondition any of the Collateral or otherwise prepare it for disposition in any manner and to the extent Secured Party deems appropriate and, in
connection with such preparation and disposition, use without charge any copyright, trademark, trade name, patent or technical process used by Debtor; 

        (d)  reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part, the security interest created hereby by any available judicial procedure; 

        (e)  dispose
of, at its office, on the premises of Debtor or elsewhere, all or any part of the Collateral, as a unit or in parcels, by public or private proceedings, and by
way of one or more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust Secured Party's power of sale, but sales may be made from time to time, and at any time,
until all of the Collateral has been sold or until the Secured Obligations have been paid and performed in full), and at any such sale it shall not be necessary to exhibit any of the Collateral; 

        (f)    buy
(or allow one or more of the Lenders to buy) the Collateral, or any part thereof, at any public sale; 

        (g)  buy
(or allow one or more of the Lenders to buy) the Collateral, or any part thereof, at any private sale if the Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed standard price quotations; and 

        (h)  apply
by appropriate judicial proceedings for appointment of a receiver for the Collateral, or any part thereof, and Debtor hereby consents to any such appointment. 

Debtor
agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Debtor of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party 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. 

15

 

        In
addition to the foregoing, if any Event of Default has occurred and is continuing: 

          (i)  Secured
Party may license, or sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any Copyrights, Patents
or Trademarks included in the Collateral throughout the world for such term or terms, on such conditions and in such manner as Secured Party shall in its sole discretion determine; 

        (ii)  Secured
Party may (without assuming any obligations or liability thereunder), at any time and from time to time, in its sole discretion, enforce (and shall have the
exclusive right to enforce) against any licensee or sublicensee all rights and remedies of Debtor in, to and under any Copyright Licenses, Patent Licenses or Trademark Licenses and take or refrain
from taking any action under any thereof, and DEBTOR HEREBY RELEASES SECURED PARTY AND THE LENDERS FROM, AND AGREES TO HOLD SECURED PARTY AND THE LENDERS FREE AND HARMLESS FROM AND AGAINST, ANY CLAIMS
AND EXPENSES ARISING OUT OF ANY LAWFUL ACTION SO TAKEN OR OMITTED TO BE TAKEN WITH RESPECT THERETO; and 

        (iii)  upon
request by Secured Party, Debtor will execute and deliver to Secured Party a power of attorney, in form and substance satisfactory to Secured Party, for the
implementation of any lease, assignment, license, sublicense, grant of option, sale or other disposition of a Copyright, Patent or Trademark or any action related thereto. In the event of any such
disposition pursuant to this Section, Debtor shall supply its know-how and expertise relating to the manufacture and sale of the products bearing Trademarks or the products or services
made or rendered in connection with Patents, and its customer lists and other records relating to such Patents or Trademarks and to the distribution of said products, to Secured Party. 

        Section 4.3.    Application of Proceeds.    If any Event of Default shall have occurred and be continuing,
Secured Party may in its discretion apply any cash held by Secured Party as Collateral, and any cash proceeds received by Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, to any or all of the following in such order as Secured Party may (subject to the rights of Lenders under the Credit Agreement) elect: 

        (a)  To
the repayment of the reasonable costs and expenses, including reasonable attorneys' fees and legal expenses, incurred by Secured Party in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of Secured Party hereunder, or (iv) the failure of Debtor to perform or observe any of the provisions hereof; 

        (b)  To
the payment or other satisfaction of any Liens, encumbrances, or adverse claims upon or against any of the Collateral; 

        (c)  To
the reimbursement of Secured Party for the amount of any obligations of Debtor or any Other Liable Party paid or discharged by Secured Party pursuant to the
provisions of this Agreement or the other Obligation Documents, and of any expenses of Secured Party payable by Debtor hereunder or under the other Obligation Documents; 

        (d)  To
the satisfaction of any other Secured Obligations; 

        (e)  By
holding the same as Collateral; 

        (f)    To
the payment of any other amounts required by applicable law (including any provision of the UCC); and 

        (g)  By
delivery to Debtor or to whoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct. 

16

 

        Section 4.4.    Deficiency.    In the event that the proceeds of any sale, collection or realization of or upon
Collateral by Secured Party are insufficient to pay all Secured Obligations and any other amounts to which Secured Party is legally entitled, Debtor shall be liable for the deficiency, together with
interest thereon as provided in the governing Obligation Documents or (if no interest is so provided) at such other rate as shall be fixed by applicable law, together with the costs of collection and
the reasonable fees of any attorneys employed by Secured Party or Lenders to collect such deficiency. 

        Section 4.5.    Indemnity and Expenses.    In addition to, but not in qualification or limitation of, any
similar obligations under other Obligation Documents: 

        (a)  Debtor will indemnify Secured Party and each Lender from and against any and all claims, losses and liabilities growing out of or resulting from
this Agreement (including enforcement of this Agreement), WHETHER OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT CAUSED BY OR ARISE OUT OF SUCH INDEMNIFIED PARTY'S OWN
NEGLIGENCE OR ANY CLAIM OR THEORY OF STRICT LIABILITY, except to the extent such claims, losses or liabilities are proximately caused by such indemnified party's individual gross negligence or willful
misconduct.

        (b)  Debtor
will upon demand pay to Secured Party the amount of any and all costs and expenses, including the fees and disbursements of Secured Party's counsel and of any
experts and agents, which Secured Party may incur in connection with (i) the transactions which give rise to this Agreement, (ii) the preparation of this Agreement and the perfection and
preservation of this security interest created under this Agreement, (iii) the administration of this Agreement; (iv) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Collateral; (v) the exercise or enforcement of any of the rights of Secured Party hereunder; or (vi) the failure by Debtor to perform or
observe any of the provisions hereof, except expenses resulting from Secured Party's individual gross negligence or willful misconduct. 

        Section 4.6.    Non-Judicial Remedies.    In granting to Secured Party the power to enforce its
rights hereunder without prior judicial process or judicial hearing, Debtor expressly waives, renounces and knowingly relinquishes any legal right which might otherwise require Secured Party to
enforce its rights by judicial process. In so providing for non-judicial remedies, Debtor recognizes and concedes that such remedies are consistent with the usage of trade, are responsive
to commercial necessity, and are the result of a bargain at arm's length. Nothing herein is intended, however, to prevent Secured Party from resorting to judicial process at its option. 

        Section 4.7.    Other Recourse.    Debtor waives any right to require Secured Party or any Lender to proceed
against any other Person, to exhaust any Collateral or other security for the Secured Obligations, to have any Other Liable Party joined with Debtor in any suit arising out of the Secured Obligations
or this Agreement, or to pursue any other remedy in Secured Party's power. Debtor further waives any and all notice of acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension for any period of any of the Secured Obligations of any Other Liable Party from time to time. Debtor further waives any defense arising by reason of any disability or other
defense of any Other Liable Party or by reason of the cessation from any cause whatsoever of the liability of any Other Liable Party. This Agreement shall continue irrespective of the fact that the
liability of any Other Liable Party may have ceased and irrespective of the validity or enforceability of any other Obligation Document to which Debtor or any Other Liable Party may be a party, and
notwithstanding any death, incapacity, reorganization, or bankruptcy of any Other Liable Party or any other event or proceeding affecting any Other Liable Party. Until all of the Secured Obligations
shall have been paid in full, Debtor shall have no right to subrogation and Debtor waives the right to enforce any remedy which Secured Party or any Lender has or may hereafter have against any Other
Liable Party, and waives any benefit of and any right to participate in any other security whatsoever now or hereafter held by Secured Party. Debtor authorizes Secured Party and each Lender, without 

17

 

notice or demand, without any reservation of rights against Debtor, and without in any way affecting Debtor's liability hereunder or on the Secured Obligations, from time to time to (a) take
or hold any other property of any type from any other Person as security for the Secured Obligations, and exchange, enforce, waive and release any or all of such other property, (b) apply the
Collateral or such other property and direct the order or manner of sale thereof as Secured Party may in its discretion determine, (c) renew, extend for any period, accelerate, modify,
compromise, settle or release any of the obligations of any Other Liable Party in respect to any or all of the Secured Obligations or other security for the Secured Obligations, (d) waive,
enforce, modify, amend or supplement any of the provisions of any Obligation Document with any Person other than Debtor, and (e) release or substitute any Other Liable Party. 

        Section 4.8.    Limitation on Duty of Secured Party in Respect of Collateral.    Beyond the exercise of
reasonable care in the custody thereof, Secured Party shall have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or as to the
preservation of rights against prior parties or any other rights pertaining thereto. Secured Party shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession
if the Collateral is accorded treatment substantially equal to that which it accords its own property, and shall not be liable or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of
the act or omission of any warehouseman, carrier, forwarding agency, consignee or other agent or bailee selected by Secured Party in good faith. 

        Section 4.9.    Appointment of Collateral Agents.    At any time or times, in order to comply with any legal
requirement in any jurisdiction, Secured Party may appoint any bank or trust company or one or more other Persons, either to act as co-agent or co-agents, jointly with Secured
Party, or to act as separate agent or agents on behalf of the Lenders, with such power and authority as may be necessary for the effectual operation of the provisions hereof and may be specified in
the instrument of appointment. In so doing Secured Party may, in the name and on behalf of Debtor, give to such co-agent or separate agent indemnities and other protections similar to
those provided in Section 4.5. 

        Section 4.10.    Operative Documents.    Prior to any exercise of remedies by Secured Party, Secured Party
shall give notice to BNPPLC of its intention to exercise such remedies. BNPPLC shall promptly notify Secured Party in the event BNPPLC elects to release any security interest that BNPPLC has in the
Collateral; provided that any such release shall be effective only insofar as such security interest secures the Operative Documents. 

ARTICLE V.  

 Miscellaneous  

        Section 5.1.    Notices.    Any notice or communication required or permitted hereunder shall be given as
provided in the Credit Agreement. 

        Section 5.2.    Amendments.    No amendment of any provision of this Agreement shall be effective unless it is
in writing and signed by Debtor and Secured Party, and no waiver of any provision of this Agreement, and no consent to any departure by Debtor therefrom, shall be effective unless it is in writing and
signed by Secured Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given and to the extent specified in such writing. In
addition, all such amendments and waivers shall be effective only if given with the necessary approvals of Lenders as required in the Credit Agreement. 

        Section 5.3.    Preservation of Rights.    No failure on the part of Secured Party or any Lender to exercise,
and no delay in exercising, any right hereunder or under any other Obligation Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right. Neither the execution nor the delivery of 

18

 

this Agreement shall in any manner impair or affect any other security for the Secured Obligations. The rights and remedies of Secured Party provided herein and in the other Obligation Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law or otherwise. The rights of Secured Party under any Obligation Document against any party thereto are
not conditional or contingent on any attempt by Secured Party to exercise any of its rights under any other Obligation Document against such party or against any other Person. 

        Section 5.4.    Unenforceability.    Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction. 

        Section 5.5.    Survival of Agreements.    All representations and warranties of Debtor herein, and all
covenants and agreements herein shall survive the execution and delivery of this Agreement, the execution and delivery of any other Obligation Documents and the creation of the Secured Obligations. 

        Section 5.6.    Other Liable Parties.    Neither this Agreement nor the exercise by Secured Party or the
failure of Secured Party to exercise any right, power or remedy conferred herein or by law shall be construed as relieving any Other Liable Party from liability on the Secured Obligations or any
deficiency thereon. 

        Section 5.7.    Binding Effect and Assignment.    This Agreement creates a continuing security interest in the
Collateral and (a) shall be binding on Debtor and its successors and permitted assigns and (b) shall inure, together with all rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and Lenders and their respective successors, transferees and assigns. Without limiting the generality of the foregoing, Secured Party and any Lender may (except as otherwise
provided in the Credit Agreement) pledge, assign or otherwise transfer any or all of their respective rights under any or all of the Obligation Documents to any other Person, and such other Person
shall thereupon become vested with all of the benefits in respect thereof granted herein or otherwise. None of the rights or duties of Debtor hereunder may be assigned or otherwise transferred without
the prior written consent of Secured Party. 

        Section 5.8.    Termination.    It is contemplated by the parties hereto that there may be times when no
Secured Obligations are outstanding, but notwithstanding such occurrences, this Agreement shall remain valid and shall be in full force and effect as to subsequent outstanding Secured Obligations.
Upon the satisfaction in full of the Secured Obligations and the termination or expiration of the Credit Agreement and any other commitment of Lenders to extend credit to Debtor, then upon written
request for the termination hereof delivered by Debtor to Secured Party this Agreement and the security interest created hereby shall terminate and all rights to the Collateral shall revert to Debtor.
Secured Party will thereafter, upon Debtor's request and at Debtor's expense, (a) return to Debtor such of the Collateral in Secured Party's possession as shall not have been sold or otherwise
disposed of or
applied pursuant to the terms hereof, and (b) execute and deliver to Debtor such documents as Debtor shall reasonably request to evidence such termination. 

        Section 5.9.    Governing Law.    This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made and to be performed entirely within such state, except as required by mandatory provisions of law and except to the
extent that the perfection and the effect of perfection or non-perfection of the security interest created hereby hereunder, in respect of any particular Collateral, are governed by the
laws of a jurisdiction other than the State of California

        Section 5.10.    Final Agreement.    This written Agreement and the other Loan
Documents represent the final agreement between the parties hereto and may not be contradicted by evidence of prior,  

19

 

 contemporaneous, or subsequent oral agreements of the parties hereto. There are no unwritten oral agreements between the parties hereto.

        Section 5.11.    Counterparts; Fax.    This Agreement may be separately executed in any number of counterparts,
all of which when so executed shall be deemed to constitute one and the same Agreement. This Agreement may be validly executed and delivered by facsimile or other electronic transmission. 

        Section 5.12.    "Loan Document".    This Agreement is a "Loan Document", as defined in the Credit Agreement,
and, except as expressly provided herein to the contrary, this Agreement is subject to all provisions of the Credit Agreement governing such Loan Documents. 

        [THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 

20

 

        IN
WITNESS WHEREOF, Debtor has executed and delivered this Agreement as of the date first above written. 

	

 	
 	

SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	

/s/ Frank J. Spina

	 	 	 	Name:	Frank J. Spina

	 	 	 	Title:	Chief Financial Officer

21

  

 
 

EXHIBIT A    
    
    to    
    
    SECURITY AGREEMENT    
  

PATENT SECURITY AGREEMENT  

 (PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)  

        WHEREAS, Specialty Laboratories, Inc., a California corporation (herein called "Grantor") owns certain
"Patents" (as defined below) and is a party to certain "Patent Licenses" (as defined below); and 

        WHEREAS,
Grantor, BNP Paribas, as agent (herein in such capacity, and together with its successors and assigns, called "Grantee"), and
certain lenders (herein called "Lenders") are parties to a Credit Agreement of even date herewith (herein, as from time to time amended, supplemented,
or restated, called the "Credit Agreement"); and 

        WHEREAS,
pursuant to the terms of the Security Agreement of even date herewith between Grantor and Grantee (herein, as from time to time amended, supplemented, or restated, called the
"Security Agreement"), Grantor has granted to Grantee for the benefit of Grantee and Lenders a continuing security interest in various assets of
Grantor, including all right, title and interest of Grantor in, to and under the Patent Collateral (as defined herein) whether now owned or existing or hereafter acquired or arising, to secure the
"Secured Obligations" (as defined in the Security Agreement); 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to additionally secure such Secured Obligations, Grantor does
hereby grant to Grantee a continuing security interest in all of Grantor's right, title and interest in, to and under the following (all of the following items or types of property being herein
collectively referred to as the "Patent Collateral"), whether now owned or existing or hereafter acquired or arising: 

        (a)  each
Patent (including each design patent and patent application) in which Grantor has any interest; 

        (b)  each
Patent License; and 

        (c)  all
proceeds of and revenues from the foregoing, including without limitation all proceeds of and revenues from any claim by Grantor against third parties for past,
present or future infringement of any Patent (including without limitation any design patent and any Patent issuing from any application referred to in Schedule 1 hereto) and all rights and
benefits of Grantor under any Patent License. 

        As
used herein: 

        "Patent License" means any license or other agreement, whether now or hereafter in existence, under which is granted or authorized any
right with respect to any Patent or any invention now or hereafter in existence, whether patentable or not, whether a patent or application for patent is in existence on such invention or not, and
whether a patent or application for patent on such invention may come into existence, including without limitation the agreements identified in Schedule 1 hereto. 

        "Patents" means all the following: (a) all letters patent and design letters patent of the United States or any other country and
all applications for letters patent and design letters patent of the United States or any other country, including applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or other country, or any political subdivision thereof, including without limitation those described in Schedule 1 hereto,
(b) all reissues, divisions, continuations, continuations-in-part, renewals and extensions thereof, (c) all claims for, and rights to sue for, past or future
infringements of any of the foregoing, and (d) all 

22

 

income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages and payments for past or future infringements thereof. 

        Grantor
hereby irrevocably constitutes and appoints Grantee and any officer or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Grantor or in its name, from time to time, in Grantee's discretion, so long as any "Default" or "Event
of Default" (as defined in the Credit Agreement) has occurred and is continuing, to take with respect to the Patent Collateral any and all appropriate action which Grantor might take with respect to
the Patent Collateral and to execute any and all documents and instruments which may be necessary or desirable to carry out the terms of this Patent Security Agreement and to accomplish the purposes
hereof. 

        Except
to the extent expressly allowed in the Security Agreement, Grantor agrees not to sell, license, exchange, assign or otherwise transfer or dispose of, or grant any rights with
respect to, or mortgage or otherwise encumber, any of the foregoing Patent Collateral. 

        This
security interest is granted in conjunction with the security interests granted to Grantee pursuant to the Security Agreement. Grantor does hereby further acknowledge and affirm
that the rights and remedies of Grantee with respect to the security interest in the Patent Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth herein. 

23

 

        IN
WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to be duly executed by its officer thereunto duly authorized as of the            day
of                        , 2002.
 

	

 	
 	

SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Acknowledged:

BNP
PARIBAS, AS AGENT 

	By:	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Name:	 	 	 	 
	 	 	Title:	 	 	 	 
	

STATE OF CALIFORNIA	
 	

)	
 	

 
	 	 	 	 	)	 	ACKNOWLEDGMENT
	COUNTY OF	 	)	 	 

        I                        ,
Notary Public for the State of California, do hereby certify that                        personally came before me this day and
acknowledged that he is the                        
(title) of Specialty Laboratories, Inc. and that he as the                        , being authorized to do so, executed the
foregoing on behalf of the corporation. 

        Witness
my hand and official seal this the            day of March, 2002. 

	 	 	

	 	 	(Signature of notary taking acknowledgment)
	

 	
 	

My commission expires:	
 	

 
	 	 	 	 	

24

 

	

STATE OF TEXAS	
 	

)	
 	

 
	 	 	 	 	)	 	ACKNOWLEDGMENT
	COUNTY OF DALLAS	 	)	 	 

        I                        ,
Notary Public for the State of Texas, do hereby certify that                        personally came before me this day and
acknowledged that he is the                        (title)
of BNP. Paribas and that he as the                        , being authorized to do so, executed the foregoing on behalf of the
corporation. 

        Witness
my hand and official seal this the            day of March, 2002. 

	 	 	

	 	 	(Signature of notary taking acknowledgment)
	

 	
 	

My commission expires:	
 	

 
	 	 	 	 	

25

   Schedule 1

to Patent

Security Agreement  

PATENTS  

	A.
	U.S.
Patents and Design Patents 

	I.D. No.
	 	Patent No.
	 	Issue Date
	 	Title

	
	 	 	 	 	 	 

	B.
	U.S.
Patent Applications 

	Serial No.
	 	Date Filed
	 	Title

	 	 	 	 	 

	C.
	Foreign
Patents 

	I.D. No.
	 	Patent No.
	 	Issue Date
	 	Title

	 	 	 	 	 	 	 

26

 
EXCLUSIVE PATENT LICENSES  

	Name of Agreement
	 	Parties Licensor/Licensee
	 	Date of Agreement
	 	Subject Matter

	 	 	 	 	 	 	 

27

   EXHIBIT B  

 to  

 SECURITY AGREEMENT  

TRADEMARK SECURITY AGREEMENT  

 (TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK

APPLICATIONS AND TRADEMARK LICENSES)  

        WHEREAS, Specialty Laboratories, Inc., a California corporation (herein called "Grantor") owns certain
"Trademarks" (as defined below) and is a party to certain "Trademark Licenses" (as defined below); and 

        WHEREAS,
Grantor and BNP Paribas (herein, together with its successors and assigns, called "Grantee") are parties to a Credit Agreement of
even date herewith (herein, as from time to time amended, supplemented, or restated, called the "Credit Agreement"); and 

        WHEREAS,
pursuant to the terms of the Security Agreement of even date herewith between Grantor and Grantee (herein, as from time to time amended, supplemented, or restated, called the
"Security Agreement"), Grantor has granted to Grantee for the benefit of Grantee and Lenders a continuing security interest in various assets of
Grantor, including all right, title and interest of Grantor in, to and under the Trademark Collateral (as defined herein) whether now owned or existing or hereafter acquired or arising, to secure the
"Secured Obligations" (as defined in the Security Agreement); 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to additionally secure such Secured Obligations, Grantor does
hereby grant to Grantee a continuing security interest in all of Grantor's right, title and interest in, to and under the following (all of the following items or types of property being herein
collectively referred to as the "Trademark Collateral"), whether now owned or existing or hereafter acquired or arising: 

        (a)  each
Trademark in which Grantor has any interest, and all of the goodwill of the business connected with the use of, or symbolized by, each such Trademark; 

        (b)  each
Trademark License, and all of the goodwill of the business connected with the use of, or symbolized by, each Trademark licensed pursuant thereto; and 

        (c)  all
proceeds of and revenues from the foregoing, including without limitation all proceeds of and revenues from any claim by Grantor against third parties for past,
present or future unfair competition with, or violation of intellectual property rights in connection with or injury to, or infringement or dilution of, any Trademark, and all rights and benefits of
Grantor under any Trademark License, or for injury to the goodwill associated with any of the foregoing. 

        As
used herein: 

        "Trademark License" means any license or agreement, whether now or hereafter in existence, under which is granted or authorized any right
to use any Trademark, including without limitation the agreements identified on Schedule 1 hereto. 

        "Trademarks" means all of the following: (a) all trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, brand names, trade dress, prints and labels on which any of the foregoing have appeared or appear, package and other designs, and any
other source or business identifiers, and general intangibles of like nature, and the rights in any of the foregoing which arise under applicable law, (b) the goodwill of the business
symbolized thereby or associated with each of them, (c) all registrations and applications in connection 

28

 

therewith, including registrations and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or other country, or
any political subdivision thereof, including those described in Schedule 1 hereto, (d) all reissues, extensions and renewals thereof, (e) all claims for, and rights to sue for,
past or future infringements of any of the foregoing, and (f) all income, royalties, damages and payments now or hereafter due or payable with respect to any of the foregoing, including damages
and payments for past or future infringements thereof. 

        Grantor
hereby irrevocably constitutes and appoints Grantee and any officer or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Grantor or in its name, from time to time, in Grantee's discretion, so long as any "Default" or "Event of Default"
(as defined in the Credit Agreement) has occurred and is continuing, to take with respect to the Trademark Collateral any and all appropriate action which Grantor might take with respect to the
Trademark Collateral and to execute any and all documents and instruments which may be necessary or desirable to carry out the terms of this Trademark Security Agreement and to accomplish the purposes
hereof. 

        Except
to the extent expressly allowed in the Security Agreement, Grantor agrees not to sell, license, exchange, assign or otherwise transfer or dispose of, or grant any rights with
respect to, or mortgage or otherwise encumber, any of the foregoing Trademark Collateral. 

        This
security interest is granted in conjunction with the security interests granted to Grantee pursuant to the Security Agreement. Grantor does hereby further acknowledge and affirm
that the rights and remedies of Grantee with respect to the security interest in the Trademark Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth herein. 

29

 

        IN
WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to be duly executed by its officer thereunto duly authorized as of the            day
of                        ,
2002. 

	

 	
 	

SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Acknowledged:

BNP
PARIBAS, AS AGENT 

	By:	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Name:	 	 	 	 
	 	 	Title:	 	 	 	 
	

STATE OF CALIFORNIA	
 	

)	
 	

 
	 	 	 	 	)	 	ACKNOWLEDGMENT
	COUNTY OF	 	)	 	 

        I                        ,
Notary Public for the State of California, do hereby certify that                        personally came before me this day and
acknowledged that he is the                        
(title) of Specialty Laboratories, Inc. and that he as the                        , being authorized to do so, executed the
foregoing on behalf of the corporation. 

        Witness
my hand and official seal this the            day of March, 2002. 

	 	 	

	 	 	(Signature of notary taking acknowledgment)
	

 	
 	

My commission expires:	
 	

 
	 	 	 	 	

30

 

	

STATE OF TEXAS	
 	

)	
 	

 
	 	 	 	 	)	 	ACKNOWLEDGMENT
	COUNTY OF DALLAS	 	)	 	 

        I                        ,
Notary Public for the State of Texas, do hereby certify that                        personally came before me this day and
acknowledged that he is the                        (title)
of BNP Paribas and that he as the                        , being authorized to do so, executed the foregoing on behalf of the
corporation. 

        Witness
my hand and official seal this the            day of March, 2002. 

	 	 	

	 	 	(Signature of notary taking acknowledgment)
	

 	
 	

My commission expires:	
 	

 
	 	 	 	 	

31

   Schedule 1

to Trademark

Security Agreement  

U.S. TRADEMARKS, TRADEMARK REGISTRATIONS

AND TRADEMARK APPLICATIONS  

	A.
	U.S.
Trademarks and Trademark Registrations 

	Trademark
	 	Registration No.
	 	Registration Date

	 	 	 	 	 

	B.
	U.S.
Trademark Applications 

	Trademark
	 	Application No.
	 	Filing Date

	

	
 	

 	
 	

 

EXCLUSIVE TRADEMARK LICENSES  

	Name of Agreement
	 	Parties Licensor/Licensee
	 	Date of Agreement
	 	Subject Matter

	 	 	 	 	 	 	 

32

   EXHIBIT C

to

SECURITY AGREEMENT  

COPYRIGHT SECURITY AGREEMENT  

 (COPYRIGHTS, COPYRIGHT REGISTRATIONS, COPYRIGHT

APPLICATIONS AND COPYRIGHT LICENSES)  

        WHEREAS, Specialty Laboratories, Inc., a California corporation (herein called "Grantor") owns certain
"Copyrights" (as defined below) and is a party to certain "Copyright Licenses" (as defined below); and 

        WHEREAS,
Grantor and BNP. Paribas (herein, together with its successors and assigns, called "Grantee") are parties to a Credit Agreement
of even date herewith (herein, as from time to time amended, supplemented, or restated, called the "Credit Agreement"); and 

        WHEREAS,
pursuant to the terms of the Security Agreement of even date herewith between Grantor and Grantee (herein, as from time to time amended, supplemented, or restated, called the
"Security Agreement"), Grantor has granted to Grantee for the benefit of Grantee and Lenders a continuing security interest in various assets of
Grantor, including all right, title and interest of Grantor in, to and under the Copyright Collateral (as defined herein) whether now owned or existing or hereafter acquired or arising, to secure the
"Secured Obligations" (as defined in the Security Agreement); 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby grant to Grantee a continuing security, interest in
all of Grantor's right, title and interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Copyright Collateral"), whether now owned or existing or hereafter acquired or arising: 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to additionally secure such Secured Obligations, Grantor does
hereby grant to Grantee a continuing security interest in all of Grantor's right, title and interest in, to and under the following (all of the following items or types of property being herein
collectively referred to as the "Copyright Collateral"), whether now owned or existing or hereafter acquired or arising: 

        (a)  each
Copyright in which Grantor has any interest; 

        (b)  each
Copyright License; and 

        (c)  all
proceeds of and revenues from the foregoing, including without limitation all proceeds of and revenues from any claim by Grantor against third parties for past,
present or future infringement of any Copyright, and all rights and benefits of Grantor under any Copyright License. 

        As
used herein: 

        "Copyright License" means any license or other agreement, whether now or hereafter in existence, under which is granted or authorized any
right to use, copy, reproduce, distribute, prepare derivative works, display or publish any records or other materials on which a Copyright is in existence or may come into existence, including
without limitation the agreements identified in Schedule 1 hereto. 

        "Copyrights" means all the following: (a) all copyrights under the laws of the United States or any other country (whether or not
the underlying works of authorship have been published), all registrations and recordings thereof, all intellectual property rights to works of authorship (whether or not published), and all
application for copyrights under the laws of the United States or any other 

33

 

country, including without limitation registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any State thereof or
other country, or any political subdivision thereof, including without limitation those described in Schedule 1 hereto, (b) all reissues, renewals and extensions thereof, (c) all
claims for, and rights to sue for, past or future infringements of any of the foregoing, and (d) all income, royalties, damages and payments now or hereafter due or payable with respect to any
of the foregoing, including without limitation damages and payments for past or future infringements thereof. 

        Grantor
hereby irrevocably constitutes and appoints Grantee and any officer or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Grantor or in its name, from time to time, in Grantee's discretion, so long as any "Default" or "Event of Default"
(as defined in the Credit Agreement) has occurred and is continuing, to take with respect to the Copyright Collateral any and all appropriate action which Grantor might take with respect to the
Copyright Collateral and to execute any and all documents and instruments which may be necessary or desirable to carry out the terms of this Copyright Security Agreement and to accomplish the purposes
hereof. 

        Except
to the extent expressly allowed in the Security Agreement, Grantor agrees not to sell, license, exchange, assign or otherwise transfer or dispose of, or grant any rights with
respect to, or mortgage or otherwise encumber, any of the foregoing Copyright Collateral. 

        This
security interest is granted in conjunction with the security interests granted to Grantee pursuant to the Security Agreement. Grantor does hereby further acknowledge and affirm
that the rights and remedies of Grantee with respect to the security interest in the Copyright Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth herein. 

34

 

        IN
WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement to be duly executed by its officer thereunto duly authorized as of the            day
of                        ,
2002. 

	

 	
 	

SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	

	 	 	 	 	Name:
	 	 	 	 	Title:

Acknowledged:

BNP
PARIBAS, AS AGENT 

	By:	 	 	 	 	 	 
	 	 	
	 	 
	 	 	Name:	 	 	 	 
	 	 	Title:	 	 	 	 
	

STATE OF CALIFORNIA	
 	

)	
 	

 
	 	 	 	 	)	 	ACKNOWLEDGMENT
	COUNTY OF	 	)	 	 

        I                        ,
Notary Public for the State of California, do hereby certify that                        personally came before me this day and
acknowledged that he is the                        
(title) of Specialty Laboratories, Inc. and that he as the                        , being authorized to do so, executed the
foregoing on behalf of the corporation. 

        Witness
my hand and official seal this the            day of March, 2002. 

	 	 	

	 	 	(Signature of notary taking acknowledgment)
	

 	
 	

My commission expires:	
 	

 
	 	 	 	 	

35

 

	

STATE OF TEXAS	
 	

)	
 	

 
	 	 	 	 	)	 	ACKNOWLEDGMENT
	COUNTY OF DALLAS	 	)	 	 

        I                        ,
Notary Public for the State of Texas, do hereby certify that                        personally came before me this day and
acknowledged that he is the                        (title)
of BNP Paribas and that he as the                        , being authorized to do so, executed the foregoing on behalf of the
corporation. 

        Witness
my hand and official seal this the              day of March, 2002. 

	 	 	

	 	 	(Signature of notary taking acknowledgment)
	

 	
 	

My commission expires:	
 	

 
	 	 	 	 	

36

   Schedule 1

to Copyright

Security Agreement  

*[description of copyrights]  

37

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EXHIBIT A to SECURITY AGREEMENTQuickLinks
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Exhibit 10.8  

 
 

FORM OF PROMISSORY NOTE    
  

	 	 	Santa Monica, California	 	March 26, 2002

        FOR
VALUE RECEIVED, the undersigned, Specialty Laboratories, Inc., a California corporation (herein called "Borrower"), hereby promises to pay to the order
of                        
(herein called "Lender"), the principal sum of                        , or, if greater or less, the aggregate unpaid principal
amount of the Loan made under this Note by Lender to Borrower pursuant to the
terms of the Credit Agreement (as hereinafter defined), together with interest on the unpaid principal balance thereof as hereinafter set forth, both principal and interest payable as herein provided
in lawful money of the United States of America at the offices of Agent under the Credit Agreement, 787 7th Avenue, 32nd Floor, New York, New York 10019 or at such other
place within New York, New York, as from time to time may be designated by the holder of this Note. 

        This
Note (a) is issued and delivered under that certain Credit Agreement dated as of March 26, 2002 among Borrower, BNP Paribas, as Agent, and the lenders (including
Lender) referred to therein (herein, as from time to time supplemented, amended or restated, called the "Credit Agreement"), and is a "Note" as defined therein, (b) is subject to the terms and
provisions of the Credit Agreement, which contains provisions for payments and prepayments hereunder and acceleration of the maturity hereof upon the happening of certain stated events, and
(c) is secured by and entitled to the benefits of certain Security Documents (as identified and defined in the Credit Agreement). Payments on this Note shall be made and applied as provided
herein and in the Credit Agreement. Reference is hereby made to the Credit Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for
the meanings assigned to terms used and not defined herein and to the Security Documents for a description of the nature and extent of the security thereby provided and the rights of the parties
thereto. 

        The
principal amount of this Note, together with all interest accrued hereon, shall be due and payable in full on March 26, 2005. 

        So
long as no Event of Default has occurred and is continuing, all Base Rate Loans (exclusive of any past due principal or interest) from time to time outstanding shall bear interest on
each day outstanding at the Base Rate in effect on such day. If an Event of Default has occurred and is continuing, all Base Rate Loans (exclusive of any past due principal or interest) from time to
time outstanding shall bear interest on each day outstanding at the applicable Default Rate in effect on such day. On each Interest Payment Date Borrower shall pay to the holder hereof all unpaid
interest which has accrued on the Base Rate Loans to but not including such Interest Payment Date. So long as no Event of Default as occurred and is continuing, each Eurodollar Loan (exclusive of any
past due principal or interest) shall bear interest on each day during the related Interest Period at the related Adjusted LIBOR Rate in effect on such day. If an Event of Default has occurred and is
continuing, all Eurodollar Loans (exclusive of any past due principal or interest) from time to time outstanding shall bear interest on each day outstanding at the applicable Default Rate in effect on
such day. One each Interest Payment Date relating to such Eurodollar Loan, Borrower shall pay to the holder hereof all unpaid interest which has accrued on such Eurodollar Loan to but not including
such Interest Payment Date. All past due principal of and past due interest on the Loans shall bear interest on each day outstanding at the Default Rate in effect on such day, and such interest shall
be due and payable daily as it accrues. Notwithstanding the foregoing provisions of this paragraph: (a) this Note shall never bear interest in excess of the Highest Lawful Rate, and
(b) if at any time the rate at which interest is payable on this Note is limited by the Highest Lawful Rate (by the foregoing subsection (a) or by reference to the Highest Lawful Rate in
the definitions of Base Rate, LIBOR Rate, and Default Rate), this Note shall bear interest at the Highest Lawful Rate and shall continue to bear interest at the Highest Lawful Rate until such time as
the total amount of interest accrued hereon equals (but does not exceed) the total amount of interest which would have accrued hereon and there been no Highest Lawful Rate applicable thereto. 

        Notwithstanding
the foregoing paragraph and all provisions of this Note, in no event shall the interest payable hereon, whether before or after maturity, exceed the maximum interest
which, under applicable Law, may be contracted for, charged, or received on this Note, and this Note is expressly made subject to the provisions of the Credit Agreement which more fully set out the
limitations on how interest accrues hereon. 

        If
this Note is placed in the hands of an attorney for collection after default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any
court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, Borrower and all endorsers, sureties and guarantors of this Note jointly and severally agree to pay
reasonable attorneys' fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder. 

        Borrower
and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Note, protest, notice
of protest, notice of intention to accelerate the maturity of this Note, declaration or notice of acceleration of the maturity of this Note, diligence in collecting, the bringing of any suit against
any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any
releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity. 

        This
Note and the rights and duties of the parties hereto shall be governed by the Laws of the State of California (without regard to principles of conflicts of law), except to the
extent the same are governed by applicable federal Law. 

	 	 	SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	

    

	 	 	 	Name:	 
	 	 	 	Title:	 

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FORM OF PROMISSORY NOTE

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