Document:

Ex 10.8 Pledge Agreement

Ex. 10.8
EXECUTION VERSION

TERM LOAN PLEDGE AGREEMENT
among
CIENA CORPORATION,
EACH OTHER PLEDGOR  
FROM TIME TO TIME PARTY HERETO
and
BANK OF AMERICA, N.A.,
as PLEDGEE
________________________________
Dated as of July 15, 2014
________________________________

	
			
	 
	 
	 

 
    

 

TERM LOAN PLEDGE AGREEMENT
TERM LOAN PLEDGE AGREEMENT, dated as of July 15, 2014 (as the same may be amended, restated, modified and/or supplemented from time to time, this “Agreement”), among each of the undersigned pledgors (each, a “Pledgor” and, together with any other entity that becomes a pledgor hereunder pursuant to Section 32 hereof, the “Pledgors”) and BANK OF AMERICA, N.A., as collateral agent (in such capacity, together with any successor collateral agent, the “Pledgee”), for the benefit of the Secured Parties (as defined below).  Certain capitalized terms as used herein are defined in Section 2 hereof.
W I T N E S S E T H :
WHEREAS, Ciena Corporation, a Delaware corporation (the “Company”), each lender from time to time party thereto (collectively, the “Lenders”) and Bank of America, N.A., as administrative agent (in such capacity, together with any successor administrative agent, the “Administrative Agent”) have entered into a Credit Agreement, dated as of July 15, 2014 (as amended, modified, restated and/or supplemented from time to time, the “Credit Agreement”), pursuant to which the Lenders have agreed, on a several basis, to make Loans to the Company upon the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Guaranty, each Pledgor (other than the Company) has jointly and severally guaranteed to the Secured Parties the payment when due of all Guaranteed Obligations as described (and defined) therein;
WHEREAS, it is a condition precedent to the making of Loans to the Company that each Pledgor shall have executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor will benefit from the incurrence of Loans by the Company;
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Pledgor, the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby makes the following representations and warranties to the Pledgee for the benefit of the Secured Parties and hereby covenants and agrees with the Pledgee for the benefit of the Secured Parties as follows:
1.  SECURITY FOR OBLIGATIONS.  This Agreement is made by each Pledgor for the benefit of the Secured Parties to secure the prompt and complete payment and performance when due of the Obligations.
2.  DEFINITIONS.  (a)  Unless otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement shall be used herein as therein defined.  Reference to singular terms shall include the plural and vice versa.
(b)    The following capitalized terms used herein shall have the definitions specified below:
“ABL Agent” shall have the meaning given such term in the Intercreditor Agreement.
“Administrative Agent” shall have the meaning set forth in the recitals hereto.
“Adverse Claim” shall have the meaning given such term in Section 8-102(a)(1) of the UCC.

    
 

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“Agreement” shall have the meaning set forth in the first paragraph hereto.
“Canadian Subsidiary” shall mean any Subsidiary of the Company incorporated, organized or established or resident for the purposes of the Income Tax Act (Canada) as amended, in Canada or any province or territory thereof.
“Certificated Security” shall have the meaning given such term in Section 8‐102(a)(4) of the UCC.
“Clearing Corporation” shall have the meaning given such term in Section 8‐102(a)(5) of the UCC.
“Collateral” shall have the meaning set forth in Section 3.1 hereof.
“Collateral Accounts” shall mean any and all accounts established and maintained by the Pledgee in the name of any Pledgor to which Collateral may be credited.
“Company” shall have the meaning set forth in the recitals hereto.
“Credit Agreement” shall have the meaning set forth in the recitals hereto.
“Discharge of ABL Obligations” shall have the meaning given such term in the Intercreditor Agreement.
“Domestic Corporation” shall have the meaning set forth in the definition of “Stock”.
“Event of Default” shall mean any Event of Default under, and as defined in, the Credit Agreement.

“Financial Asset” shall have the meaning given such term in Section 8-102(a)(9) of the UCC.
 “Foreign Corporation” shall have the meaning set forth in the definition of “Stock”.
“Instrument” shall have the meaning given such term in Section 9-102(a)(47) of the UCC.
“Intercreditor Agreement” shall have the meaning given such term in the Credit Agreement.
“Investment Property” shall have the meaning given such term in Section 9‐102(a)(49) of the UCC.
“Lenders” shall have the meaning set forth in the recitals hereto.
“Limited Liability Company Assets” shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all limited liability company capital and interest in other limited liability companies), at any time owned by any limited liability company.
“Limited Liability Company Interests” shall mean the entire limited liability company membership interest at any time owned by any Pledgor in any limited liability company.

    

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“Location” of any Pledgor shall mean such Pledgor’s “location” as determined pursuant to Section 9-307 of the UCC.
“Margin Stock” shall have the meaning provided in Regulation U.
“Material Subsidiary” shall mean any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation S-X as in effect from time to time. 
“Non-Voting Equity Interests” shall mean all Equity Interests of any Person which are not Voting Equity Interests.
“Notes” shall mean (x) all intercompany notes at any time issued to each Pledgor and (y) all other promissory notes from time to time issued to, or held by, each Pledgor (other than promissory notes issued in connection with the extensions of trade credit by any Pledgor in the ordinary course of business).
“Obligations” shall have the meaning given to such term in the Credit Agreement.
 “Partnership Assets” shall mean all assets, whether tangible or intangible and whether real, personal or mixed (including, without limitation, all partnership capital and interest in other partnerships), at any time owned by any general partnership or limited partnership.
“Partnership Interest” shall mean the entire general partnership interest or limited partnership interest at any time owned by any Pledgor in any general partnership or limited partnership.
“Pledge Agreement Supplement” shall mean a pledge agreement supplement, in a form reasonably satisfactory to the Pledgee and attached hereto as Exhibit A, signed and delivered to the Pledgee for the purpose of adding a Subsidiary as a party hereto pursuant to Section 32 and/or adding additional property to the Collateral.
“Pledged Limited Liability Company Interests” shall mean all Limited Liability Company Interests at any time pledged or required to be pledged hereunder.
“Pledged Notes” shall mean all Notes at any time pledged or required to be pledged hereunder.
“Pledgee” shall have the meaning set forth in the first paragraph of this Agreement.
“Pledgor” shall have the meaning set forth in the first paragraph hereof.
“Proceeds” shall have the meaning given such term in Section 9-102(a)(64) of the UCC.
“Registered Organization” shall have the meaning given such term in Section 9‐102(a)(70) of the UCC.
“Regulation U” shall mean Regulation U of the Board of Governors of the Federal Reserve System of the United States as from time to time in effect and any successor to all or a portion thereof.
“Securities Account” shall have the meaning given to such term in 8-501 of the UCC.

    

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“Securities Act” shall mean the Securities Act of 1933, as amended, as in effect from time to time.
“Securities Intermediary” shall have the meaning given such term in Section 8‐102(14) of the UCC.
“Security” and “Securities” shall have the meaning given such term in Section 8‐102(a)(15) of the UCC and shall in any event include all Stock and all Notes.
 “Security Entitlement” shall have the meaning given such term in Section 8‐102(a)(17) of the UCC.
“State” shall mean any state of the United States.
“Stock” shall mean (x) with respect to corporations incorporated under the laws of the United States or any State thereof or the District of Columbia (each, a “Domestic Corporation”), all of the issued and outstanding shares of capital stock of any Domestic Corporation at any time owned by any Pledgor and (y) with respect to corporations which are not Domestic Corporations (each, a “Foreign Corporation”), all of the issued and outstanding shares of capital stock or other Equity Interests of any Foreign Corporation at any time owned by any Pledgor.
“Termination Date” shall have the meaning set forth in the Security Agreement.
“Transmitting Utility” has the meaning given such term in Section 9-102(a)(80) of the UCC.
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any Lien on any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
“ULC” means an unlimited company, an unlimited liability company or an unlimited liability corporation incorporated pursuant to, or otherwise governed by, the laws of any of the provinces or territories of Canada.
“ULC Shares” shall mean shares in any ULC at any time owned or otherwise held by any Pledgor.
“Uncertificated Security” shall have the meaning given such term in Section 8‐102(a)(18) of the UCC.
“Voting Equity Interests” of any Person shall mean all classes of Equity Interests of such Person entitled to vote.
3.  PLEDGE OF SECURITIES, ETC.
3.1    Pledge.  To secure the Obligations now or hereafter owed or to be performed by such Pledgor (but subject to the proviso at the end of this Section 3.1), each Pledgor does hereby grant and pledge to the Pledgee for the benefit of the Secured Parties, and does hereby create a continuing security 

    

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interest in favor of the Pledgee for the benefit of the Secured Parties in, all of its right, title and interest in and to the following, whether now existing or hereafter from time to time acquired (collectively, the “Collateral”):
(a)    each of the Collateral Accounts, including any and all assets of whatever type or kind deposited by such Pledgor in any such Collateral Account, whether now owned or hereafter acquired, existing or arising, including, without limitation, all Financial Assets, Investment Property, monies, checks, drafts, Instruments, Securities or interests therein of any type or nature deposited or required by the Credit Agreement or any other Loan Document to be deposited in such Collateral Account, and all investments and all certificates and other Instruments (including depository receipts, if any) from time to time representing or evidencing the same, and all dividends, interest, distributions, cash and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing; 
(b)    all Securities owned or held by such Pledgor from time to time and all options and warrants owned by such Pledgor from time to time to purchase Securities, together with all rights, privileges, authority and powers of such Pledgor relating to such Securities in each such issuer or under any organizational document of each such issuer, and the certificates, instruments and agreements representing such Securities and any and all interest of such Pledgor in the entries on the books of any financial intermediary pertaining to such Securities;
(c)    all Limited Liability Company Interests owned by such Pledgor from time to time and all of its right, title and interest in each limited liability company to which each such Limited Liability Company Interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Limited Liability Company Interests and applicable law:
(A)    all its capital therein and its interest in all profits, income, surpluses, losses, Limited Liability Company Assets of such limited liability company and other distributions to which such Pledgor shall at any time be entitled in respect of such Limited Liability Company Interests;
(B)    all other payments due or to become due to such Pledgor in respect of Limited Liability Company Interests, whether under any limited liability company agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(C)    all of its claims, rights, powers, privileges, authority, options, security interests, Liens and remedies, if any, under any limited liability company agreement or operating agreement, or at law or otherwise in respect of such Limited Liability Company Interests;
(D)    all present and future claims, if any, of such Pledgor against any such limited liability company for monies loaned or advanced, for services rendered or otherwise;
(E)    all of such Pledgor’s rights under any limited liability company agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Limited Liability Company Interests, including any power to terminate, cancel or modify any such limited liability company agreement or operating agreement, to execute any instruments and to take any and 

    

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all other action on behalf of and in the name of such Pledgor in respect of such Limited Liability Company Interests and any such limited liability company, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Limited Liability Company Asset of such limited liability company, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and
(F)    all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing;
(d)    all Partnership Interests owned by such Pledgor from time to time and all of its right, title and interest in each partnership to which each such Partnership Interest relates, whether now existing or hereafter acquired, including, without limitation, to the fullest extent permitted under the terms and provisions of the documents and agreements governing such Partnership Interests and applicable law:
(A)    all its capital therein and its interest in all profits, income, surpluses, losses, Partnership Assets of any such partnership and other distributions to which such Pledgor shall at any time be entitled in respect of such Partnership Interests;
(B)    all other payments due or to become due to such Pledgor in respect of Partnership Interests, whether under any partnership agreement or otherwise, whether as contractual obligations, damages, insurance proceeds or otherwise;
(C)    all of its claims, rights, powers, privileges, authority, options, security interests, Liens and remedies, if any, under any partnership agreement or operating agreement, or at law or otherwise in respect of such Partnership Interests;
(D)    all present and future claims, if any, of such Pledgor against any such partnership for monies loaned or advanced, for services rendered or otherwise;
(E)    all of such Pledgor’s rights under any partnership agreement or operating agreement or at law to exercise and enforce every right, power, remedy, authority, option and privilege of such Pledgor relating to such Partnership Interests, including any power to terminate, cancel or modify any partnership agreement or operating agreement, to execute any instruments and to take any and all other action on behalf of and in the name of such Pledgor in respect of such Partnership Interests and any such partnership, to make determinations, to exercise any election (including, but not limited to, election of remedies) or option or to give or receive any notice, consent, amendment, waiver or approval, together with full power and authority to demand, receive, enforce, collect or receipt for any of the foregoing or for any Partnership Asset, to enforce or execute any checks, or other instruments or orders, to file any claims and to take any action in connection with any of the foregoing; and

    

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(F)    all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing;
(e)    all Securities Accounts, Financial Assets and Investment Property owned by such Pledgor from time to time;
(f)    all Security Entitlements owned by such Pledgor from time to time in any and all of the foregoing; and
(g)    all Proceeds of any and all of the foregoing;
provided that (i)(x) no Voting Equity Interests of any Foreign Subsidiary which represents more than 66% of the total combined voting power of all classes of Voting Equity Interests of the respective Foreign Subsidiary shall be pledged hereunder, provided, however, that immediately upon the amendment of the Code to allow the pledge of a greater percentage of Stock in a Foreign Subsidiary without causing a repatriation (or deemed repatriation) of earnings or adverse tax consequences, the Equity Interests shall include, and the security interest granted by each Pledgor shall attach to, such greater percentage of Voting Equity Interests of each directly owned Foreign Subsidiary that is a Subsidiary of such Pledgor to secure all other Obligations and (y) each Pledgor shall be required to pledge hereunder 100% of the Non-Voting Equity Interests of each Foreign Subsidiary at any time and from time to time acquired by such Pledgor, which Non-Voting Equity Interests shall not be subject to the limitations described in the preceding clause (x) and (ii) notwithstanding anything herein to the contrary, in no event shall the security interest and lien granted under Section 3.1 hereof attach to, and the term “Collateral” (and the component terms thereof) shall not include, (x) any Equity Interests owned by any Pledgor in any Person for so long as the grant of such security interest shall constitute or result in (A) other than in the case of a Wholly-Owned Subsidiary of the Company, a breach or termination pursuant to the terms of, or a default under, any Indebtedness assumed by the Company or any of its Subsidiaries pursuant to Section 7.02(j) of the Credit Agreement or any organizational document of such Person (although the Company will use its commercially reasonable efforts to endeavor that the organizational documents of a Subsidiary do not contain a restriction on the pledge thereof), (B) if such Person is organized under the laws of any foreign jurisdiction (other than Canada or any province or territory thereof), a breach of any law or regulation which prohibits the creation of a security interest thereunder (other than to the extent that any such term specified in clause (A) or (B) above is rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other then-applicable law (including the Bankruptcy Code) or principles of equity) or (C) if such Person is organized under the laws of any foreign jurisdiction (other than Canada or any province or territory thereof), require the consent of a Governmental Authority to permit the grant of a security interest therein (and such consent has not been obtained); provided however, that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation, unenforceability, breach or termination shall no longer be effective and to the extent severable, shall attach immediately to any portion of such property or other rights that does not result in any of the consequences specified in clause (A), (B) or (C) above and (y) any Margin Stock unless the Secured Parties have made any necessary filings with the FRB in connection therewith and the Pledgors have provided the Pledgee with an executed Form FR U-1; provided further, that each applicable Pledgor shall provide to the Secured Parties notice of the existence of any Margin Stock (other than treasury stock) that would constitute Collateral absent this proviso at the time of delivery of any financial statements required to be delivered pursuant to Section 6.01(a) and 6.01(b) of the Credit Agreement and, thereafter, such Margin  Stock shall constitute Collateral to the extent the Secured Parties 

    

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have made such necessary filings with the FRB in connection therewith and the Pledgors have provided the Pledgee with an executed Form FR U-1.

3.2    Procedures.  (a)  To the extent that any Pledgor at any time or from time to time owns, acquires or obtains any right, title or interest in any Collateral, such Collateral shall automatically (and without the taking of any action by such Pledgor) be pledged pursuant to Section 3.1 of this Agreement and, in addition thereto, subject to the Intercreditor Agreement, such Pledgor shall (to the extent provided below) take the following actions as set forth below (as promptly as practicable and, in any event, within 30 days after it obtains such Collateral) for the benefit of the Pledgee and the other Secured Parties:
(i)        with respect to a Certificated Security (other than (x) a Certificated Security credited on the books of a Clearing Corporation or Securities Intermediary or (y) a Certificated Security issued by (A) any Foreign Subsidiary (other than a Canadian Subsidiary or a Subsidiary organized under the laws of Luxembourg or the United Kingdom) of the Company that is not a Material Subsidiary or (B) a Person that is not a Subsidiary and  is organized under the laws of a foreign jurisdiction), such Pledgor shall physically deliver such Certificated Security to the Pledgee, endorsed to the Pledgee or endorsed in blank;
(ii)    with respect to an Uncertificated Security (other than an Uncertificated Security credited on the books of a Clearing Corporation or Securities Intermediary) issued by a Subsidiary of the Company (other than any Foreign Subsidiary (other than a Canadian Subsidiary or a Subsidiary organized under the laws of Luxembourg or the United Kingdom) of the Company that is not a Material Subsidiary), such Pledgor shall cause the issuer of such Uncertificated Security to duly authorize, execute, and deliver to the Pledgee, an agreement for the benefit of the Pledgee and the other Secured Parties substantially in the form of Annex H hereto (appropriately completed to the reasonable satisfaction of the Pledgee and with such modifications, if any, as shall be reasonably satisfactory to the Pledgee) pursuant to which such issuer agrees to comply with any and all instructions originated by the Pledgee without further consent by the registered owner and not to comply with instructions regarding such Uncertificated Security originated by any other Person other than a court of competent jurisdiction (it being understood that the Pledgee shall not deliver any such instructions until after the occurrence and during the continuance of an Event of Default);
(iii)    with respect to a Certificated Security, Uncertificated Security, Partnership Interest or Limited Liability Company Interest issued by a Subsidiary of the Company (other than any Foreign Subsidiary (other than a Canadian Subsidiary or a Subsidiary organized under the laws of Luxembourg or the United Kingdom) of the Company that is not a Material Subsidiary) in a Security Account or credited on the books of a Clearing Corporation or Securities Intermediary (including a Federal Reserve Bank, Participants Trust Company or The Depository Trust Company), such Pledgor shall promptly notify the Pledgee thereof and shall promptly use commercially reasonable efforts to take (x) all actions required (i) to comply with the applicable rules of such Clearing Corporation or Securities Intermediary and (ii) to perfect the security interest of the Pledgee under applicable law (including, in any event, under Sections 9-314(a), (b) and (c), 9-106 and 8‐106(d) of the UCC) and (y) such other actions as the Pledgee deems necessary or reasonably desirable to effect the foregoing;
(iv)    with respect to a Partnership Interest or a Limited Liability Company Interest (other than a Partnership Interest or Limited Liability Company Interest (x) credited to a Security Account or on the books of a Clearing Corporation or Securities Intermediary or 

    

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(y) issued by a (A) Foreign Subsidiary (other than a Canadian Subsidiary or a Subsidiary organized under the laws of Luxembourg or the United Kingdom) of the Company that is not a Material Subsidiary or (B) a Person that is not a Subsidiary and  is organized under the laws of a foreign jurisdiction), (1) if such Partnership Interest or Limited Liability Company Interest is represented by a certificate and is a Security for purposes of the UCC, the procedure set forth in Section 3.2(a)(i) hereof, and (2) if such Partnership Interest or Limited Liability Company Interest is not represented by a certificate and is an Uncertificated Security for purposes of the UCC, the procedure set forth in Section 3.2(a)(ii) hereof;
(v)    with respect to any Note with a value equal to $3,000,000 or more, physical delivery of each such Note to the Pledgee, endorsed in blank, or, at the request of the Pledgee, endorsed to the Pledgee; and
(vi)    with respect to cash proceeds from any of the Collateral described in Section 3.1 hereof upon the occurrence and continuance of an Event of Default, upon the Pledgee’s written request, (i) establishment by the Pledgee of a cash account in the name of such Pledgor over which the Pledgee shall have “control” within the meaning of the UCC and at any time any Default or Event of Default is in existence no withdrawals or transfers may be made therefrom by any Person except with the prior written consent of the Pledgee and (ii) deposit of such cash in such cash account.
(b)    In addition to the actions required to be taken pursuant to Section 3.2(a) hereof, each Pledgor shall take the following additional actions, subject to the Intercreditor Agreement, with respect to the Collateral:
(i)    with respect to all Collateral of such Pledgor whereby or with respect to which the Pledgee may obtain “control” thereof within the meaning of Section 8‐106 of the UCC (or under any provision of the UCC as same may be amended or supplemented from time to time, or under the laws of any relevant State other than the State of New York), such Pledgor shall take all actions requested from time to time by the Pledgee as may be necessary or reasonably advisable in the reasonable judgment of the Pledgee so that “control” of such Collateral is obtained and held by the Pledgee in accordance with Section 3.2(a) hereof; provided that within 60 days after the date hereof (or such longer period as may be agreed by the Pledgee in its sole discretion), each applicable Pledgor agrees to use commercially reasonable efforts to enter into control agreements with the relevant account bank with respect to each Securities Account that is subject to a control agreement pursuant to the ABL Credit Agreement which control agreements shall (i) name each of the Pledgee and Deutsche Bank AG New York Branch as secured parties and (ii) replace the existing control agreement with respect to such Securities Account; 
(ii)    each Pledgor shall cause, and hereby authorizes the Pledgee to cause, appropriate financing statements (on appropriate forms) under the Uniform Commercial Code as in effect in the various relevant States, covering all Collateral hereunder (with the form of such financing statements to be reasonably satisfactory to the Pledgee), to be filed in the relevant filing offices so that at all times the Pledgee’s security interest in all Investment Property and other Collateral which can be perfected by the filing of such financing statements (in each case to the maximum extent perfection by filing may be obtained under the laws of the relevant States, including, without limitation, Section 9-312(a) of the UCC) is so perfected. Notwithstanding the foregoing, if reasonably requested by any Pledgor, the Pledgee shall, at such Pledgor’s expense, make such filings as may be reasonably 

    

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requested to evidence that the security interests hereunder do not attach to any property that is excluded from the Collateral pursuant to the proviso in Section 3.1 hereof; and
(iii)    Following the Discharge of ABL Obligations, each Pledgor agrees within 60 days (or such longer period as may be agreed by the Plegee in its sole discretion) with respect to any Securities Account (other than an Excluded Account (as defined in the Security Agreement)) with an average daily balance greater than $1,000,000, to take all actions requested from time to time by the Pledgee (including, without limitation, the execution and delivery of control agreements to the extent any such Pledgor has not entered into control agreements naming the Pledgee as a secured party in accordance with clause (i) of this subsection (b)) as may be necessary or reasonably advisable in the reasonable judgment of the Pledgee so that “control” of such Securities Accounts are obtained following the termination of the ABL Credit Agreement and thereafter, held by the Pledgee . 

3.3    Subsequently Acquired Collateral.  If any Pledgor shall acquire (by purchase, stock dividend, distribution or otherwise) any additional Collateral at any time or from time to time after the date hereof, such Collateral shall automatically (and without any further action being required to be taken) be subject to the pledge and security interests created pursuant to Section 3.1 hereof and, furthermore, such Pledgor will thereafter take (or cause to be taken) all action (as promptly as practicable and, in any event, within 30 days after it obtains such Collateral) with respect to such Collateral in accordance with the procedures set forth in Section 3.2 hereof, and will (i) with respect to any Collateral other than Equity Interests issued by (A) a Foreign Subsidiary (other than a Canadian Subsidiary or a Subsidiary organized under the laws of Luxembourg or the United Kingdom) of the Company that is not a Material Subsidiary or (B) a Person that is not a Subsidiary and  is organized under the laws of a foreign jurisdiction, promptly thereafter deliver to the Pledgee a certificate executed by an authorized officer of such Pledgor describing such Collateral and certifying that the same has been duly pledged in favor of the Pledgee (for the benefit of the Secured Parties) hereunder and (ii) promptly thereafter (or in the case of any Equity Interests issued by (A) a Foreign Subsidiary (other than a Canadian Subsidiary or a Subsidiary organized under the laws of Luxembourg or the United Kingdom) of the Company that is not a Material Subsidiary or (B) a Person that is not a Subsidiary and  is organized under the laws of a foreign jurisdiction, at the time of delivery of any financial statements required to be delivered pursuant to Section 6.01(a) or 6.01(b) of the Credit Agreement) deliver to the Pledgee supplements to Annexes A through G hereto as are necessary to cause such Annexes to be complete and accurate at such time.  Without limiting the foregoing, each Pledgor shall be required to pledge hereunder in accordance with the terms hereof the Equity Interests of any Foreign Subsidiary at any time and from time to time after the date hereof acquired by such Pledgor, provided that (x) any such pledge of Voting Equity Interests of any Foreign Subsidiary shall be subject to the provisions of clause (x) of the proviso to Section 3.1 hereof and (y) each Pledgor shall be required to pledge hereunder 100% of the Non-Voting Equity Interests of each Foreign Subsidiary at any time and from time to time acquired by such Pledgor.  Notwithstanding the foregoing, (i) if, prior to the Discharge of the ABL Obligations, any Pledgor acquires any Securities Account that is required to be subject to a control agreement pursuant to the terms of the ABL Credit Agreement, such Pledgor shall use commercially reasonable efforts to ensure that such control agreement names each of the Pledgee and Deutsche Bank AG New York Branch as secured parties and (ii) if, following the Discharge of the ABL Obligations, any Pledgor acquires any Securities Account (other than an Excluded Account (as defined in the Security Agreement)) with an average daily balance greater than $1,000,000, the Pledgor shall comply with the provisions of Section 3.2(b)(iii) within 60 days (or such longer period as may be agreed by the Plegee in its sole discretion) of acquiring such Securities Account.
3.4    Transfer Taxes.  Each pledge of Collateral under Section 3.1 or Section 3.3 hereof shall be accompanied by any transfer tax stamps required in connection with the pledge of such Collateral.

    

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3.5    Certain Representations and Warranties Regarding the Collateral.  Each Pledgor represents and warrants that on the date hereof:  (i) each Subsidiary of such Pledgor, and the direct ownership thereof, is listed in Annex B hereto; (ii) the Stock (and any warrants or options to purchase Stock) of each Subsidiary held by such Pledgor consists of the number and type of shares of the stock (or warrants or options to purchase any stock) of the corporations as described in Annex C hereto; (iii) such Stock referenced in clause (ii) of this paragraph constitutes that percentage of the issued and outstanding capital stock of the issuing corporation as is set forth in Annex C hereto; (iv) the Notes with a value equal to $1,000,000 or more held by such Pledgor consist of the promissory notes described in Annex D hereto where such Pledgor is listed as the lender; (v) the Limited Liability Company Interests of each Subsidiary held by such Pledgor consist of the number and type of interests of the Persons described in Annex E hereto; (vi) each such Limited Liability Company Interest referenced in clause (v) of this paragraph constitutes that percentage of the issued and outstanding equity interest of the issuing Person as set forth in Annex E hereto; (vii) the Partnership Interests of each Subsidiary held by such Pledgor consist of the number and type of interests of the Persons described in Annex F hereto; (viii) each such Partnership Interest referenced in clause (vii) of this paragraph constitutes that percentage or portion of the entire partnership interest of the issuing Person as set forth in Annex F hereto; (ix) the exact address of each chief executive office of such Pledgor is listed on Annex G hereto; and (x) such Pledgor has complied with the respective procedure set forth in Section 3.2(a) hereof with respect to each item of Collateral described in Annexes C through F hereto.
3.6    Conflicts with Foreign Pledge Agreements.  To the extent that there is any overlap between, or conflict with, the provisions of this Agreement and any Foreign Pledge Agreement, such Foreign Pledge Agreement shall prevail with respect only to (i) any provision relating to the pledged collateral described in and covered under such Foreign Pledge Agreement and (ii) any provision where adherence to the law governing such Foreign Pledge Agreement is required for such Foreign Pledge Agreement to be enforceable in accordance with its terms.
4.    APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.  The Pledgee shall have the right to appoint one or more sub-agents for the purpose of retaining physical possession of the Collateral, which may be held (in the discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or assigned in blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a sub-agent appointed by the Pledgee.
5.    VOTING, ETC., WHILE NO EVENT OF DEFAULT OR SPECIFIED DEFAULT.  Unless and until there shall have occurred and be continuing an Event of Default, each Pledgor shall be entitled to exercise any and all voting and other rights pertaining to the Collateral owned by it, and to give consents, waivers or ratifications in respect thereof; provided that, in each case, no vote shall be cast or any consent, waiver or ratification given or any action taken or omitted to be taken which would violate, or result in a breach of any covenant contained in, any of the terms of any Loan Document, or in a manner adverse to the interests of the Pledgee or any other Secured Party in the Collateral in any material respect, unless permitted by the terms of the Loan Documents.  All such rights of each Pledgor to vote and to give consents, waivers and ratifications shall cease following written notice from the Pledgee in case an Event of Default has occurred and is continuing (provided that no such notice shall be required if any Event of Default under Section 8.01(f) of the Credit Agreement has occurred and is continuing), and Section 7 hereof shall become applicable.
6.    DIVIDENDS AND OTHER DISTRIBUTIONS.  Unless and until there shall have occurred and be continuing an Event of Default and following written notice from the Pledgee (provided that no such notice shall be required if any Event of Default under Section 8.01(f) of the Credit Agreement has occurred and is continuing), all cash dividends, cash distributions, cash Proceeds and other cash amounts 

    

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payable in respect of the Collateral shall be paid to the respective Pledgor.  The Pledgor shall be entitled to receive directly, subject to the other terms of this Agreement:
(i)    all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash dividends other than as set forth above) paid or distributed by way of dividend or otherwise in respect of the Collateral;
(ii)    all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash subject to the first sentence of this Section 6) paid or distributed in respect of the Collateral by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar rearrangement; and
(iii)    all other or additional stock, notes, certificates, limited liability company interests, partnership interests, instruments or other securities or property (including, but not limited to, cash) which may be paid in respect of the Collateral by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate or other reorganization.
All cash dividends, cash distributions or other cash payments which are received by any Pledgor contrary to the provisions of this Section 6 or Section 7 hereof shall be received in trust for the benefit of the Pledgee, shall be segregated from other property or funds of such Pledgor and shall be promptly paid over to the Pledgee as Collateral in the same form as so received (with any necessary endorsement).
7.    REMEDIES IN CASE OF AN EVENT OF DEFAULT.  If there shall have occurred and be continuing an Event of Default, then and in every such case, subject to the Intercreditor Agreement, the Pledgee shall be entitled to exercise all of the rights, powers and remedies (whether vested in it by this Agreement, any other Loan Document or by law) for the protection and enforcement of its rights in respect of the Collateral, and the Pledgee shall be entitled to exercise all the rights and remedies of a secured party under the UCC as in effect in any relevant jurisdiction and also shall be entitled, without limitation, to exercise the following rights, which each Pledgor hereby agrees to be commercially reasonable:
(i)        Following written notice to such Pledgor (provided that no such notice shall be required if any Event of Default under Section 8.01(f) of Credit Agreement has occurred and is continuing), to receive all amounts payable in respect of the Collateral otherwise payable under Section 6 hereof to such Pledgor;
(ii)    to transfer all or any part of the Collateral into the Pledgee’s name or the name of its nominee or nominees;
(iii)    to accelerate any Pledged Note which may be accelerated in accordance with its terms, and take any other lawful action to collect upon any Pledged Note (including, without limitation, to make any demand for payment thereon);
(iv)    to appoint by instrument in writing a receiver (which term as used in this Agreement includes a receiver and manager) or agent of all or any part of the Collateral and remove or replace from time to time any receiver or agent;

    

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(v)    to institute proceedings in any court of competent jurisdiction for the appointment of a receiver of all or any part of the Collateral;
(vi)    to vote (and exercise all rights and powers in respect of voting) all or any part of the Collateral (whether or not transferred into the name of the Pledgee) and give all consents, waivers and ratifications in respect of the Collateral and otherwise act with respect thereto as though it were the outright owner thereof (each Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of substitution to do so);
(vii)    at any time and from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Collateral, or any interest therein, at any public or private sale, without demand of performance, advertisement or, notice of intention to sell or of the time or place of sale or adjournment thereof or to redeem or otherwise purchase or dispose (all of which are hereby waived by each Pledgor), for cash, on credit or for other property, for immediate or future delivery without any assumption of credit risk, and for such price or prices and on such terms as the Pledgee in its absolute discretion may determine, provided at least 10 days’ written notice of the time and place of any such sale shall be given to the respective Pledgor.  The Pledgee shall not be obligated to make any such sale of Collateral regardless of whether any such notice of sale has theretofore been given.  Each Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security or the Obligations or otherwise.  At any such sale, unless prohibited by applicable law, the Pledgee on behalf of the Secured Parties may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption.  Neither the Pledgee nor any other Secured Party shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall any of them be under any obligation to take any action whatsoever with regard thereto; and
(viii)    to set off any and all Collateral against any and all Obligations, and to withdraw any and all cash or other Collateral from any and all Collateral Accounts and to apply such cash and other Collateral to the payment of any and all Obligations. 
8.    REMEDIES, CUMULATIVE, ETC.  Each and every right, power and remedy of the Pledgee provided for in this Agreement or in any other Loan Agreement, or now or hereafter existing at law or in equity or by statute shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy.  The exercise or beginning of the exercise by the Pledgee or any other Secured Party of any one or more of the rights, powers or remedies provided for in this Agreement or any other Loan Document or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee or any other Secured Party of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee or any other Secured Party to exercise any such right, power or remedy shall operate as a waiver thereof.  No notice to or demand on any Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee or any other Secured Party to any other or further action in any circumstances without notice or demand.  The Secured Parties agree that this Agreement may be enforced only by the action of the Pledgee, acting upon the instructions of the Required Lenders, and that no other Secured Party shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby, it being understood and agreed that such rights and remedies may 

    

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be exercised by the Pledgee for the benefit of the Secured Parties upon the terms of this Agreement and the other Collateral Documents.
9.    RECEIVER’S POWERS.  (a)  Any receiver appointed by the Pledgee pursuant to Section 7 hereof is vested with the rights and remedies which could have been exercised by the Pledgee in respect of any Pledgor or the Collateral and such other powers and discretions as are granted in the instrument of appointment and any supplemental instruments.  The identity of the receiver, its replacement and its remuneration are within the sole and unfettered discretion of the Pledgee.
(b)    Any receiver appointed by the Pledgee pursuant to Section 7 hereof will act as agent for the Pledgee for the purposes of taking possession of the Collateral, but otherwise and for all other purposes (except as provided below), as agent for the Pledgors.  The receiver may sell, lease, or otherwise dispose of Collateral in accordance with the terms hereof as agent for the Pledgors or as agent for the Pledgee as the Pledgee may determine in its discretion.  Each Pledgor agrees to ratify and confirm all actions of the receiver acting as agent for such Pledgor so long as such actions are taken in accordance with the terms hereof.
(c)    The Pledgee, in appointing or refraining from appointing any receiver, does not incur liability to the receiver, the Pledgors or otherwise and is not responsible for any misconduct or negligence of such receiver except to the extent resulting from the gross negligence or willful misconduct of the Pledgee (as determined by a court of competent jurisdiction in a final and non-appealable decision) (it being agreed that appointing or refraining to appoint any receiver in the reasonable judgment of the Pledgee’s or based on the advice of advisors or counsel shall not constitute gross negligence or willful misconduct).
10.    ULC SHARES.  (a)  Notwithstanding anything else contained in this Agreement or any other document or agreement among all or some of the parties hereto, each Pledgor is the sole registered and beneficial owner of all its Collateral that is ULC Shares and will remain so until such time as such ULC Shares are effectively transferred into the name of the Pledgee, any of the Secured Parties, or any nominee of the foregoing or any other Person on the books and records of such ULC.  Accordingly, such Pledgor shall be entitled to receive and retain for its own account any dividend on or other distribution, if any, in respect of ULC Shares that are Collateral and shall have the right to vote such ULC Shares and to control the direction, management and policies of any ULC to the same extent as such Pledgor would if such ULC Shares were not pledged to the Pledgee for the benefit of the Secured Parties pursuant hereto. Nothing in this Agreement or any other document or agreement among all or some of the parties hereto is intended to, and nothing in this Agreement or any other document or agreement among all or some of the parties hereto shall, constitute the Pledgee, any of the Secured Parties or any Person other than a Pledgor, a member of any ULC for the purposes of Companies Act (Nova Scotia), the Business Corporations Act (British Columbia), the Business Corporations Act (Alberta) or any other applicable legislation until such time as notice is given to such Pledgor and further steps are taken hereunder or thereunder so as to register the Pledgee, any of the Secured Parties or any nominee of the foregoing, as specified in such notice, as the holder of shares of such ULC.  To the extent any provision hereof would have the effect of constituting the Pledgee or any of the Secured Parties a member of a ULC prior to such time, such provision shall be severed herefrom and ineffective with respect to Collateral that is shares of such ULC without otherwise invalidating or rendering unenforceable this Agreement or invalidating or rendering unenforceable such provision insofar as it relates to Collateral that is not shares of such ULC.
(b)    Except upon the exercise of rights to sell or otherwise dispose of Collateral that is ULC Shares if there shall have occurred and be continuing an Event of Default, no Pledgor shall cause or permit, or enable any ULC in which it holds ULC Shares that are Collateral to cause or permit, the Pledgee or any other Secured Party to: (a) be registered as a shareholder or member of a ULC; (b) have any notation 

    

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entered in its favour in the share register of a ULC; (c) be held out as a shareholder or member of a ULC; (d) receive, directly or indirectly, any dividends, property or other distributions from a ULC by reason of the Pledgee or any other Secured Party holding a security interest in a ULC or ULC Shares; or (e) act as a shareholder or member of a ULC, or exercise any rights of a shareholder or member including the right to attend a meeting of, or to vote the shares of, a ULC.
11.    APPLICATION OF PROCEEDS.  (a)  Subject to the Intercreditor Agreement, all monies collected by the Pledgee upon any sale or other disposition of, any collection from, or other realization upon all or any part of, the Collateral (whether or not expressly characterized as such) in connection with the exercise of its rights and remedies in accordance with this Agreement, together with all other monies received by the Pledgee hereunder, shall be applied in the manner provided in Section 5.4 of the Security Agreement.
(b)    It is understood and agreed that each Pledgor shall remain jointly and severally liable with respect to the Obligations to the extent of any deficiency between the amount of the proceeds of the Collateral pledged by it hereunder and the aggregate amount of the Obligations.
(c)    It is understood and agreed by each Pledgor and each Secured Party that the Pledgee shall have no liability for any determinations made by it in this Section 11, in each case except to the extent resulting from the gross negligence or willful misconduct of the Pledgee (as determined by a court of competent jurisdiction in a final and non-appealable decision).  Each Pledgor and each Secured Party also agrees that the Pledgee may (but shall not be required to), at any time and in its sole discretion, and with no liability resulting therefrom, petition a court of competent jurisdiction regarding any application of Collateral in accordance with the requirements hereof, and the Pledgee shall be entitled to wait for, and may conclusively rely on, any such determination.
12.    PURCHASERS OF COLLATERAL.  Upon any sale of the Collateral by the Pledgee hereunder (whether by virtue of the power of sale herein granted, pursuant to judicial process or otherwise), the receipt of the Pledgee or the officer making such sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold, and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Pledgee or such officer or be answerable in any way for the misapplication or nonapplication thereof.
13.    INDEMNITY.  The parties hereto agree that the terms of Section 10.04 of the Credit Agreement are incorporated herein by reference, mutatis mutandis.  If and to the extent that the obligations of any Pledgor under this Section 13 are unenforceable for any reason, such Pledgor hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under applicable law.  The indemnity obligations of the each Pledgor contained in this Section 13 shall continue in full force and effect notwithstanding the Payment in Full of the Obligations.
14.    PLEDGEE NOT A PARTNER OR LIMITED LIABILITY COMPANY MEMBER.  (a)  Nothing herein shall be construed to make the Pledgee or any other Secured Party liable as a member of any limited liability company or as a partner of any partnership and neither the Pledgee nor any other Secured Party by virtue of this Agreement or otherwise (except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited liability company or as a partner in any partnership.  The parties hereto expressly agree that, unless the Pledgee shall become the absolute owner of Collateral consisting of a Limited Liability Company Interest or a Partnership Interest pursuant hereto, this Agreement shall not be construed as creating a partnership or joint venture among the Pledgee, any other Secured Party, any Pledgor and/or any other Person.

    

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(b)    Except as provided in the last sentence of paragraph (a) of this Section 14, the Pledgee, by accepting this Agreement, did not intend to become a member of any limited liability company or a partner of any partnership or otherwise be deemed to be a co-venturer with respect to any Pledgor, any limited liability company, partnership and/or any other Person either before or after an Event of Default shall have occurred.  The Pledgee shall have only those powers set forth herein and the Secured Parties shall assume none of the duties, obligations or liabilities of a member of any limited liability company or as a partner of any partnership or any Pledgor except as provided in the last sentence of paragraph (a) of this Section 14.
(c)    The Pledgee and the other Secured Parties shall not be obligated to perform or discharge any obligation of any Pledgor as a result of the pledge hereby effected.
(d)    The acceptance by the Pledgee of this Agreement, with all the rights, powers, privileges and authority so created, shall not at any time or in any event obligate the Pledgee or any other Secured Party to appear in or defend any action or proceeding relating to the Collateral to which it is not a party, or to take any action hereunder or thereunder, or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Collateral.
15.    FURTHER ASSURANCES; POWER-OF-ATTORNEY.  (a)  Each Pledgor agrees that it will, at such Pledgor’s own expense, file and refile, or cause to be filed or refiled, under the UCC or other applicable law such financing statements, continuation statements and other documents, in form reasonably acceptable to the Pledgee, in such offices as the Pledgee (acting on its own or on the instructions of the Required Lenders) may reasonably deem necessary or appropriate and wherever required or permitted by law in order to perfect and preserve the Pledgee’s security interest in the Collateral hereunder and hereby authorizes the Pledgee to file financing statements and amendments thereto relative to all or any part of the Collateral (including, without limitation, financing statements which list the Collateral specifically and/or “all assets” as collateral) without the signature of such Pledgor where permitted by law, in such offices as the Pledgee may reasonably deem necessary or advisable or wherever required or permitted by law in order to perfect and preserve the Pledgee’s security interest in the Collateral hereunder and agrees to do such further acts and things and to execute and deliver to the Pledgee such additional conveyances, assignments, agreements and instruments as the Pledgee may reasonably require or deem advisable to carry into effect the purposes of this Agreement or to further assure and confirm unto the Pledgee its rights, powers and remedies hereunder or thereunder.
(b)    Each Pledgor hereby constitutes and appoints the Pledgee its true and lawful attorney-in-fact, irrevocably, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time after the occurrence and during the continuance of an Event of Default, in the Pledgee’s discretion, to act, require, demand, receive and give acquittance for any and all monies and claims for monies due or to become due to such Pledgor under or arising out of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement, which appointment as attorney is coupled with an interest.
16.    THE PLEDGEE AS COLLATERAL AGENT.  The Pledgee will hold in accordance with this Agreement all items of the Collateral at any time received under this Agreement.  It is expressly understood, acknowledged and agreed by each Secured Party that by accepting the benefits of this Agreement each such Secured Party acknowledges and agrees that the obligations of the Pledgee as holder of the Collateral and interests therein and with respect to the disposition thereof, and otherwise under this 

    

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Agreement, are only those expressly set forth in this Agreement and in Section 9 of the Credit Agreement.  The Pledgee shall act hereunder on the terms and conditions set forth herein and in Section 9 of the Credit Agreement. Notwithstanding the foregoing, the ABL Collateral Agent (as defined in the Intercreditor Agreement) has agreed pursuant to Section 5.04 of the Intercreditor Agreement to hold that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees), including, without limitation, any Securities Accounts, as collateral agent and as bailee for the Pledgee.
17.    TRANSFER BY THE PLEDGORS.  Subject to the Intercreditor Agreement, except as permitted by the terms of the Loan Documents prior to the Termination Date, no Pledgor will sell or otherwise dispose of, grant any option with respect to, or mortgage, pledge or otherwise encumber any of the Collateral or any interest therein.
18.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.  (a)  Each Pledgor represents, warrants and covenants as to itself and each of its Subsidiaries that:
(i)    it is the legal, beneficial and record owner of, and has good and marketable title to, all of its Collateral consisting of one or more Securities, Partnership Interests and Limited Liability Company Interests and that it has sufficient interest in all of its Collateral in which a security interest is purported to be created hereunder for such security interest to attach (subject, in each case, to no pledge, Lien, mortgage, hypothecation, security interest, charge, option, Adverse Claim or other encumbrance whatsoever, except the Liens and security interests created by this Agreement or permitted under the Loan Documents); 
(ii)    it has full power, authority and legal right to pledge all the Collateral pledged by it pursuant to this Agreement; 
(iii)    this Agreement has been duly authorized, executed and delivered by such Pledgor and constitutes a legal, valid and binding obligation of such Pledgor enforceable against such Pledgor in accordance with its terms, except to the extent that the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in equity or at law); 
(iv)    except to the extent already obtained or made, no consent of any other party (including, without limitation, any stockholder, partner, member or creditor of such Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority is required to be obtained by such Pledgor (which has not been obtained or made) in connection with (a) the execution, delivery or performance of this Agreement by such Pledgor, (b) the validity or enforceability of this Agreement against such Pledgor, (c) the perfection of the Pledgee’s security interest in such Pledgor’s Collateral or (d) except for compliance with or as may be required by applicable securities laws, the exercise by the Pledgee of any of its rights or remedies provided herein; 
(v)    neither the execution, delivery or performance by such Pledgor of this Agreement, nor compliance by it with the terms and provisions hereof nor the consummation of the transactions contemplated hereby:  (i) will contravene any provision of any applicable law, statute, rule or regulation, or any applicable order, writ, injunction or decree of any court, arbitrator or governmental instrumentality, domestic or foreign, applicable to such Pledgor; (ii) will conflict or be inconsistent 

    

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with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Collateral Documents) upon any of the properties or assets of such Pledgor or any of its Subsidiaries pursuant to the terms of any indenture, lease, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or other instrument to which such Pledgor or any of its Subsidiaries is a party or is otherwise bound, or by which it or any of its properties or assets is bound or to which it may be subject; or (iii) will violate any provision of the certificate of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of formation or limited liability company agreement (or equivalent organizational documents), as the case may be, of such Pledgor or any of its Subsidiaries;
(vi)    all of such Pledgor’s Collateral (consisting of Securities, Limited Liability Company Interests and Partnership Interests) of any Subsidiary has been duly and validly issued, and in the case of any Stock of a Domestic Corporation is fully paid and non-assessable and is subject to no options to purchase or similar rights;
(vii)    each of such Pledgor’s Pledged Notes constitutes, or when executed by the obligor that is a Subsidiary thereof will constitute, the legal, valid and binding obligation of such obligor, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in equity or at law); and
(viii)    the security interests created under this Agreement (when executed and delivered by all parties hereto) are effective to create in favor of the Pledgee, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in all right, title and interest of the Pledgors in all of the Collateral, and when proper UCC financing statements have been filed in the appropriate filing offices against each Pledgor and the Pledgee has obtained “control” (within the meaning of the UCC) of the Collateral, the Pledgee, for the benefit of the Secured Parties, shall have a perfected security interest in all Collateral to the extent such security interest can be perfected by filing a UCC financing statement under the UCC or by the Pledgee having “control” of the Collateral, subject to no security interests of any other Person (other than Permitted Liens), subject to the terms of the Intercreditor Agreement.
(b)    Each Pledgor covenants and agrees that it will defend the Pledgee’s right, title and security interest in and to such Pledgor’s Collateral and the proceeds thereof against the claims and demands of all persons whomsoever (other than Permitted Liens); and each Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee by such Pledgor as Collateral hereunder as provided herein and will likewise defend the right thereto and security interest therein of the Pledgee and the other Secured Parties.
19.    LEGAL NAMES; TYPE OF ORGANIZATION (AND WHETHER A REGISTERED ORGANIZATION AND/OR A TRANSMITTING UTILITY); JURISDICTION OF ORGANIZATION; LOCATION; ORGANIZATIONAL IDENTIFICATION NUMBERS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS; CHANGES THERETO; ETC. As of the date hereof, the exact legal name of each Pledgor, the type of organization of such Pledgor, whether or not such Pledgor is a Registered Organization, the jurisdiction of organization of such Pledgor, such Pledgor’s Location, the organizational identification number (if any) of each Pledgor, the Federal Employer Identification Number (if any) and whether or not such Pledgor is a Transmitting Utility, is listed on Annex A hereto for such Pledgor.  

    

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No Pledgor shall change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its status as a Transmitting Utility or as a Person which is not a Transmitting Utility, as the case may be, its jurisdiction of organization, its Location, or its organizational identification number (if any) or its Federal Employer Identification Number (if any), except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Loan Documents and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) any Pledgor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, outside the United States or a State thereof) if (i) it shall have given to the Pledgee not less than 10 days’ prior written notice of each change to the information listed on Annex A (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Annex A which shall correct all information contained therein for such Pledgor, and (ii) in connection with the respective change or changes, it shall have taken all action reasonably requested by the Pledgee to maintain the security interests of the Pledgee in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.  In addition, to the extent that any Pledgor does not have an organizational identification number on the date hereof and later obtains one, such Pledgor shall promptly thereafter deliver a notification to the Pledgee of such organizational identification number and shall take all actions reasonably satisfactory to the Pledgee to the extent necessary to maintain the security interest of the Pledgee in the Collateral intended to be granted hereby fully perfected and in full force and effect.
20.    PLEDGORS’ OBLIGATIONS ABSOLUTE, ETC.  The obligations of each Pledgor under this Agreement shall be absolute and unconditional and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever (other than termination of this Agreement pursuant to Section 22 hereof), including, without limitation:
(i)    any renewal, extension, amendment or modification of, or addition or supplement to or deletion from any Loan Document (other than this Agreement in accordance with its terms), or any other instrument or agreement referred to therein, or any assignment or transfer thereof; 
(ii)    any waiver, consent, extension, indulgence or other action or inaction under or in respect of any such agreement or instrument including, without limitation, this Agreement (other than a waiver consent or extension with respect to this Agreement in accordance with its terms);
(iii)    any furnishing of any additional security to the Pledgee or its assignee or any acceptance thereof or any release of any security by the Pledgee or its assignee;
(iv)    any limitation on any party’s liability or obligations under any such instrument or agreement or any invalidity or unenforceability, in whole or in part, of any such instrument or agreement or any term thereof; or 
(v)    any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any action taken with respect to this Agreement by any trustee or receiver, or by any court, in any such proceeding, whether or not such Pledgor shall have notice or knowledge of any of the foregoing.

    

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21.    SALE OF COLLATERAL WITHOUT REGISTRATION.  (a)  If an Event of Default shall have occurred and be continuing and any Pledgor shall have received from the Pledgee a written request or requests that such Pledgor cause any registration, qualification or compliance under any federal or state securities law or laws to be effected with respect to all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests, such Pledgor as soon as practicable and at its expense will use its best efforts to cause such registration to be effected (and be kept effective) and will use its best efforts to cause such qualification and compliance to be effected (and be kept effective) as may be so requested and as would permit or facilitate the sale and distribution of such Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests, including, without limitation, registration under the Securities Act, as then in effect (or any similar statute then in effect), appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with any other governmental requirements; provided, that the Pledgee shall furnish to such Pledgor such information regarding the Pledgee as such Pledgor may request in writing and as shall be required in connection with any such registration, qualification or compliance.  Each Pledgor will cause the Pledgee to be kept reasonably advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, will furnish to the Pledgee such number of prospectuses, offering circulars and other documents incident thereto as the Pledgee from time to time may reasonably request, and will indemnify, to the extent permitted by law, the Pledgee and all other Secured Parties participating in the distribution of such Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests against all claims, losses, damages and liabilities caused by any untrue statement (or alleged untrue statement) of a material fact contained therein (or in any related registration statement, notification or the like) or by any omission (or alleged omission) to state therein (or in any related registration statement, notification or the like) a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to such Pledgor by the Pledgee or such other Secured Party expressly for use therein.
(b)    If at any time when the Pledgee shall determine to exercise its right to sell all or any part of the Collateral consisting of Securities, Limited Liability Company Interests or Partnership Interests pursuant to Section 7 hereof, and such Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act, as then in effect, the Pledgee may, in its sole and absolute discretion, sell such Collateral or part thereof by private sale in such manner and under such circumstances as the Pledgee may deem necessary or advisable in order that such sale may legally be effected without such registration.  Without limiting the generality of the foregoing, in any such event the Pledgee, in its sole and absolute discretion (i) may proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Collateral or part thereof shall have been filed under such Securities Act, (ii) may approach and negotiate with a single possible purchaser to effect such sale, and (iii) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Collateral or part thereof.  In the event of any such sale, the Pledgee shall incur no responsibility or liability for selling all or any part of the Collateral at a price which the Pledgee, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until the registration as aforesaid.
22.    TERMINATION; RELEASE.  (a)  On the Termination Date, this Agreement shall terminate (provided that all indemnities set forth herein including, without limitation, in Section 13 hereof shall survive any such termination) and the Pledgee, at the request and expense of such Pledgor, will execute and deliver to such Pledgor a proper instrument or instruments (including UCC termination statements) acknowledging the satisfaction and termination of this Agreement (including, without limitation, UCC termination statements and instruments of satisfaction, discharge and/or reconveyance), and will duly release 

    

Page 21

        

from the security interest created hereby and assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Pledgee or any of its sub‐agents hereunder and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement, together with any moneys at the time held by the Pledgee or any of its sub-agents hereunder and, with respect to any Collateral consisting of an Uncertificated Security issued by a Subsidiary of the Company (other than an Uncertificated Security credited on the books of a Clearing Corporation or Securities Intermediary), a termination of the agreement relating thereto executed and 

    

Page 22

        

delivered by the issuer of such Uncertificated Security pursuant to Section 3.2(a)(ii) or by the respective partnership or limited liability company pursuant to Section 3.2(a)(iv)(2).
(b)    In the event that any part of the Collateral is sold or otherwise disposed of (to a Person other than a Loan Party) at any time prior to the Termination Date, in connection with a sale or disposition permitted by Section 7.05 of the Credit Agreement, or is otherwise released pursuant to the Credit Agreement, and the proceeds of such sale or disposition (or from such release) are applied in accordance with the terms of the Credit Agreement to the extent required to be so applied, the Pledgee, at the request and expense of such Pledgor, will duly release from the security interest created hereby (and will execute and deliver such documentation, including termination or partial release statements and the like in connection therewith) and assign, transfer and deliver to such Pledgor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold or otherwise disposed of, or released, and as may be in the possession of the Pledgee (or, in the case of Collateral held by any sub-agent designated pursuant to Section 4 hereof, such sub‐agent) and has not theretofore been released pursuant to this Agreement.  Furthermore, upon the release of any Guarantor from the Guaranty in accordance with the provisions thereof, such Pledgor (and the Collateral at such time assigned or pledged by the respective Pledgor pursuant hereto) shall be released from this Agreement.  In the case of any such sale or disposition of any property constituting Collateral in a transaction permitted pursuant to Section 7.05 of the Credit Agreement, the Liens created by this Agreement on such Collateral shall be automatically released without need for further action by any Person.
(c)    At any time that any Pledgor desires that the Pledgee deliver any release or such other documentation as provided in the foregoing Section 22(a) or (b), such Pledgor shall deliver to the Pledgee (and the relevant sub-agent, if any, designated pursuant to Section 4 hereof) a certificate signed by a Responsible Officer of such Pledgor stating that the release of the respective Collateral is permitted pursuant to Section 22(a) or (b) hereof.  At any time that the Company or the respective Pledgor desires that a Guarantor which has been released from the Guaranty be released hereunder as provided in the penultimate sentence of Section 22(b), it shall deliver to the Pledgee a certificate signed by a Responsible Officer of the Company and the respective Pledgor stating that the release of the respective Pledgor (and its Collateral) is permitted pursuant to such Section 22(b).  
(d)    The Pledgee shall have no liability whatsoever to any other Secured Party as the result of any release of Collateral by it in accordance with, or which the Pledgee in good faith believes to be in accordance with, this Section 22.
23.    NOTICES, ETC.  Except as otherwise specified herein, all notices, requests, demands or other communications to or upon the respective parties hereto shall be sent or delivered by mail, telecopy or courier service and all such notices and communications shall, when mailed, telecopied or sent by courier, be effective when deposited in the mails, delivered to the overnight courier, or sent by telecopier, except that notices and communications to the Pledgee or any Pledgor shall not be effective until received by the Pledgee or such Pledgor, as the case may be.  All notices and other communications shall be in writing and addressed as follows:

		
	(a)
	if to any Pledgor, at:

c/o Ciena Corporation 
7035 Ridge Road 
Hanover, Maryland 21076 

    

Page 23

        

Attention:  Treasurer’s Office  
Facsimile: (410) 865-8001
with a copy to:

7035 Ridge Road
Hanover, Maryland 21076
Attention:  General Counsel’s Office
Facsimile: (410) 865-8901 

(b)    if to the Pledgee, at:
Bank of America, N.A. 
Agency Management
900 West Trade Street
Mail Code: NC1-026-06-03 
Charlotte, NC 28255-0001
Attention:  Priscilla Baker
Telephone:  980-386-3475
Facsimile:  704-409-0918
Electronic Mail:  priscilla.l.baker@baml.com

or at such other address or addressed to such other individual as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.
24.    WAIVER; AMENDMENT.  Except as provided in Sections 32 and 34 hereof and Section 10.01 of the Credit Agreement, none of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever.
25.    SUCCESSORS AND ASSIGNS.  This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to release and/or termination as set forth in Section 22 hereof, (ii) be binding upon each Pledgor, its successors and assigns; provided, however, that no Pledgor shall assign any of its rights or obligations hereunder without the prior written consent of the Pledgee, and (iii) inure, together with the rights and remedies of the Pledgee hereunder, to the benefit of the Pledgee, the other Secured Parties and their respective successors, transferees and assigns.  All agreements, statements, representations and warranties made by each Pledgor herein or in any certificate or other instrument delivered by such Pledgor or on its behalf under this Agreement shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of this Agreement and the other Loan Documents regardless of any investigation made by the Secured Parties or on their behalf.
26.    HEADINGS DESCRIPTIVE.  The headings of the several Sections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.
27.    GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.  (a)  THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY 

    

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SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b)    EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE PLEDGEE, ANY SECURED PARTY OR ANY RELATED PARTY THEREOF IN ANY WAY RELATING TO THIS AGREEMENT, ANY OTHER COLLATERAL DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT SHALL AFFECT ANY RIGHT THAT THE PLEDGEE OR ANY SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c)    EACH PLEDGOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d)    EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 23.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(e)    EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER COLLATERAL DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS 

    

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AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
28.    PLEDGOR’S DUTIES.  It is expressly agreed, anything herein contained to the contrary notwithstanding, that each Pledgor shall remain liable to perform all of the obligations, if any, assumed by it with respect to the Collateral and the Pledgee shall not have any obligations or liabilities with respect to any Collateral by reason of or arising out of this Agreement, except for the safekeeping of Collateral actually in Pledgee’s possession, nor shall the Pledgee be required or obligated in any manner to perform or fulfill any of the obligations of any Pledgor under or with respect to any Collateral.
29.    COUNTERPARTS.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  A set of counterparts executed by all the parties hereto shall be lodged with the Company and the Pledgee.
30.    SEVERABILITY.  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 unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
31.    RECOURSE.  This Agreement is made with full recourse to each Pledgor and pursuant to and upon all the representations, warranties, covenants and agreements on the part of such Pledgor contained herein and in the other Loan Documents and otherwise in writing in connection herewith or therewith.
32.    ADDITIONAL PLEDGORS.  It is understood and agreed that any Wholly-Owned Domestic Subsidiary of the Company that is required to become a party to this Agreement after the date hereof pursuant to the requirements of the Credit Agreement shall become a Pledgor hereunder by (x) executing a counterpart hereof, or a Pledge Agreement Supplement in the form attached hereto as Exhibit A, and delivering the same to the Pledgee (provided such Pledge Agreement Supplement shall not require the consent of any Pledgor), (y) delivering supplements to Annexes A through G hereto as are necessary to cause such annexes to be complete and accurate with respect to such additional Pledgor on such date and (z) taking all actions as specified in this Agreement as would have been taken by such Pledgor had it been an original party to this Agreement, in each case with all documents required above to be delivered to the Pledgee and with all documents and actions required above to be taken to the reasonable satisfaction of the Pledgee and upon such execution and delivery, such Subsidiary shall constitute a Pledgor hereunder.
33.    LIMITED OBLIGATIONS.  It is the desire and intent of each Pledgor and the Secured Parties that this Agreement shall be enforced against each Pledgor to the fullest extent permissible under the laws applied in each jurisdiction in which enforcement is sought.  Notwithstanding anything to the contrary contained herein, in furtherance of the foregoing, it is noted that the obligations of each Pledgor constituting a Guarantor have been limited as (and to the extent) provided in the Guaranty.
34.    ABL PRIORITY COLLATERAL.  Notwithstanding anything herein to the contrary, prior to the Discharge of ABL Obligations, the requirements under this Agreement to deliver or grant control over ABL Priority Collateral to the Pledgee, or to give any notice to any Person or in respect of the provision of voting rights or the obtaining of any consent of any Person, in each case in connection with any ABL Priority Collateral, shall be deemed satisfied if the Pledgors comply with the requirements of the similar 

    

Page 26

        

provision of the applicable ABL Credit Document (as defined in the Intercreditor Agreement).  Until the Discharge of ABL Obligations, the delivery of any ABL Priority Collateral to the ABL Collateral Agent (as defined in the Intercreditor Agreement) pursuant to the ABL Credit Documents as bailee for the Pledgee shall satisfy any delivery requirement hereunder or under any other Loan Document.
35.    INTERCREDITOR AGREEMENT.  This Agreement and the other Loan Documents are subject to the terms and conditions set forth in the Intercreditor Agreement in all respects and, in the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern.  Notwithstanding anything herein to the contrary, the Lien and security interest granted to the Pledgee pursuant to any Loan Document and the exercise of any right or remedy in respect of the Collateral by the Pledgee (or any Secured Party) hereunder or under any other Loan Document are subject to the provisions of the Intercreditor Agreement and in the event of any conflict between the terms of the Intercreditor Agreement, this Agreement and any other Loan Document, the terms of the Intercreditor Agreement shall govern and control with respect to the exercise of any such right or remedy.  Without limiting the generality of the foregoing, and notwithstanding anything herein to the contrary, no Loan Party shall be required hereunder or under any Loan Document to take any action with respect to the Collateral that is inconsistent with the provisions of the Intercreditor Agreement.
36.    RELEASE OF PLEDGORS
.  At any time all of the Equity Interests of any Pledgor owned by the Company or any other Pledgor are sold (to a Person other than the Company or any of its Subsidiaries) in a transaction permitted pursuant to the Credit Agreement, then such Pledgor shall be released as a Pledgor pursuant to this Agreement without any further action hereunder (it being understood that the sale of all of the Equity Interests in any Person that owns, directly or indirectly, all of the Equity Interests in any Pledgor shall be deemed to be a sale of all of the Equity Interests in such Pledgor for purposes of this Section), and upon the reasonable request of the Company and at the expense of the Pledgors, the Pledgee is authorized and directed, and hereby agrees, to execute and deliver such instruments of release as are reasonably requested by the Pledgor to evidence the release of such Pledgor. At any time that the Company desires that a Pledgor be released from this Agreement as provided in this Section 36, the Company shall deliver to the Pledgee a certificate signed by a Responsible Officer of the Company stating that (i) the transaction is permitted pursuant to the Credit Agreement and (ii) the release of the respective Pledgor is permitted pursuant to this Section 36.  The Pledgee shall have no liability whatsoever to any other Secured Party as a result of the release of any Pledgor by it in accordance with, or which it believes to be in accordance with, this Section 36.

* * * *

    

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
	
		
	 
	PLEDGORS:

	 
	CIENA CORPORATION

	 
	 

	 
	

By: /s/ Elizabeth A. Dolce              
Name:  Elizabeth A. Dolce
Title:  Vice President and Treasurer

	 
	 

	 
	CIENA COMMUNICATIONS, INC.

	 
	 

	 
	

By: /s/ Elizabeth A. Dolce              
Name:  Elizabeth A. Dolce
Title:  Vice President and Treasurer

	 
	 

	 
	CIENA GOVERNMENT SOLUTIONS, INC.

	 
	 

	 
	

By: /s/ Elizabeth A. Dolce              
Name:  Elizabeth A. Dolce
Title:  Vice President and Treasurer

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

Signature Page to Term Loan Pledge Agreement
	
			
	 
	 
	 

 
    

        

Accepted and Agreed to: 
 
BANK OF AMERICA, N.A., 
as Collateral Agent and Pledgee

By:  /s/ Dan Kelly                              
         Name: Dan Kelly 
         Title:  Managing Director

Signature Page to Term Loan Pledge AgreementEXHIBIT
10.1 

QUANTUM CORPORATION

2012 LONG-TERM INCENTIVE
PLAN 

(September 9, 2014
Amendment and Restatement) 

     1. Background and Purposes of
the Plan. This amended and
restated Plan is effective as of September 9, 2014, subject to approval by an
affirmative vote of the holders of a majority of Shares that are present in
person or by proxy and entitled to vote at the 2014 Annual Meeting of
Stockholders of the Company. The Plan was formerly known as the 1993 Long-Term
Incentive Plan. 

          The
purposes of this Plan are:

	to attract and retain the best
  available Employees, Directors and Consultants for positions of substantial
  responsibility,
 
  
	to provide incentive to Employees,
  Directors and Consultants, and
 
  
	to promote the success of the
  Company’s business. 

          The Plan
permits the grant of Incentive Stock Options, Nonstatutory Stock Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance
Units and Performance Shares. 

     2. Definitions. As used
herein, the following definitions will apply: 

         
(a) “Administrator” means the
Board or any of its Committees as will be administering the Plan, in accordance
with Section 4 of the Plan. 

         
(b) “Applicable Laws” means the
requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction where Awards are,
or will be, granted under the Plan. 

         
(c) “Award” means, individually
or collectively, a grant under the Plan of Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Units or Performance
Shares. 

         
(d) “Award Agreement” means the
written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan. The Award Agreement is subject
to the terms and conditions of the Plan. 

          (e) “Award Transfer Program” means any program instituted by the Administrator that would
permit Participants the opportunity to transfer for value any outstanding Awards
to a financial institution or other person or entity approved by the
Administrator. A transfer for “value” shall not be deemed to occur under this
Plan where an Award is transferred by a Participant not for consideration and
for bona fide estate planning purposes to a trust or other entity approved by
the Administrator and for the benefit of the Participant’s family. 

          (f) “Board” means the Board of Directors of
the Company. 

          (g) “Change in Control” means the
occurrence of any of the following events: 

               (i) A change in the ownership of
the Company that occurs on the date that any one person, or more than one person
acting as a group (“Person”), acquires ownership of the stock of the Company that,
together with the stock held by such Person, constitutes more than fifty percent
(50%) of the total voting power of the stock of the Company; provided, however,
that for purposes of this subsection, the acquisition of additional stock by any
one Person, who is considered to own more than fifty percent (50%) of the total
voting power of the stock of the Company at the time of the acquisition of the
additional stock will not be considered a Change in Control; or

               (ii) A change in the effective
control of the Company which occurs on the date that a majority of members of
the Board is replaced during any twelve (12) month period by Directors whose
appointment or election is not endorsed by a majority of the members of the
Board prior to the date of the appointment or election. For purposes of this
clause (ii), if any Person is considered to be in effective control of the
Company, the acquisition of additional control of the Company by the same Person
will not be considered a Change in Control; or 

               (iii) A change in the ownership of a
substantial portion of the Company’s assets which occurs on the date that any
Person acquires (or has acquired during the twelve (12) month period ending on
the date of the most recent acquisition by such person or persons) assets from
the Company that have a total gross fair market value equal to or more than
fifty percent (50%) of the total gross fair market value of all of the assets of
the Company immediately prior to such acquisition or acquisitions; provided,
however, that for purposes of this subsection (iii), the following will not
constitute a change in the ownership of a substantial portion of the Company’s
assets: (A) a transfer to an entity that is controlled by the Company’s
stockholders immediately after the transfer, or (B) a transfer of assets by the
Company to: (1) a stockholder of the Company (immediately before the asset
transfer) in exchange for or with respect to the Company’s stock, (2) an entity,
fifty percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the Company, (3) a Person, that owns, directly
or indirectly, fifty percent (50%) or more of the total value or voting power of
all the outstanding stock of the Company, or (4) an entity, at least fifty
percent (50%) of the total value or voting power of which is owned, directly or
indirectly, by a Person described in this subsection (iii)(B)(3). For purposes
of this subsection (iii), gross fair market value means the value of the assets
of the Company, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets. 

               For
purposes of this definition, persons will be considered to be acting as a group
if they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction with the
Company. 

-2-

               Notwithstanding
the foregoing, a transaction will not be deemed a Change in Control unless the
transaction qualifies as a change in control event within the meaning of Section
409A. 

               Further
and for the avoidance of doubt, a transaction will not constitute a Change in
Control if: (i) its sole purpose is to change the state of the Company’s
incorporation, or (ii) its sole purpose is to create a holding company that will
be owned in substantially the same proportions by the persons who held the
Company’s securities immediately before such transaction. 

          (h) “Code” means the Internal Revenue Code
of 1986, as amended. Reference to a specific section of the Code or regulation
thereunder shall include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such section or
regulation. 

          (i) “Committee” means a committee of
Directors or of other individuals satisfying Applicable Laws appointed by the
Board, or a duly authorized committee of the Board, in accordance with Section 4
hereof. 

          (j) “Common Stock” means the common stock
of the Company. 

          (k) “Company” means Quantum Corporation, a
Delaware corporation, or any successor thereto. 

          (l) “Consultant” means any natural person,
including an advisor, engaged by the Company or a Parent or Subsidiary to render
services to such entity in a capacity other than as an Employee or Director;
provided, however, that a Consultant will include only those persons to whom the
issuance of Shares may be registered under Form S-8 under the Securities Act of
1933, as amended.

          (m) “Determination Date” means the latest
possible date that will not jeopardize the qualification of an Award granted
under the Plan as “performance-based compensation” under Section 162(m) of the
Code. 

          (n) “Director” means a member of the Board.

          (o) “Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code, provided that in the case
of Awards other than Incentive Stock Options, the Administrator in its
discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the
Administrator from time to time.

          (p) “Employee” means any person, including
Officers and Directors, employed by the Company or any Parent or Subsidiary of
the Company. Neither service as a Director nor payment of a director’s fee by
the Company will be sufficient to constitute “employment” by the Company.

          (q) “Exchange Act” means the Securities
Exchange Act of 1934, as amended. 

-3-

          (r) “Exchange Program” means a program
under which (i) outstanding awards are surrendered or cancelled in exchange for
awards of the same type (which may have higher or lower exercise prices and
different terms), awards of a different type, and/or cash, (ii) Participants
would have the opportunity to participate in an Award Transfer Program, and/or
(iii) the exercise price of an outstanding Award is reduced. The Administrator
will determine the terms and conditions of any Exchange Program in its sole
discretion. 

          (s) “Fair Market Value” means, as of any
date, the value of Common Stock determined as follows: 

               (i) If the Common Stock is listed
on any established stock exchange or a national market system, including without
limitation the New York Stock Exchange, the NASDAQ Global Select Market, the
NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market,
its Fair Market Value will be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The
Wall Street Journal or such other source as
the Administrator deems reliable; 

               (ii) If the Common Stock is
regularly quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a Share will be the mean between the high bid
and low asked prices for the Common Stock on the day of determination (or, if no
bids and asks were reported on that date, as applicable, on the last trading
date such bids and asks were reported), as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; or 

               (iii) In the absence of an
established market for the Common Stock, the Fair Market Value will be
determined in good faith by the Administrator. 

          (t) “Fiscal Year” means the fiscal year of
the Company. 

          (u) “Incentive Stock Option” means an
Option that by its terms qualifies and is otherwise intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder. 

          (v) “Nonstatutory Stock Option” means an
Option that by its terms does not qualify or is not intended to qualify as an
Incentive Stock Option. 

          (w) “Officer” means a person who is an
officer of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder. 

          (x) “Option” means a stock option granted
pursuant to the Plan. 

          (y) “Outside Director” means a Director who
is not an Employee or Consultant. 

          (z) “Parent” means a “parent corporation,”
whether now or hereafter existing, as defined in Section 424(e) of the Code.

          (aa) “Participant” means the holder of an
outstanding Award. 

-4-

          (bb) “Performance-Based Award” means any
Award that is subject to the terms and conditions set forth in Section 10 of the
Plan. All Performance-Based Awards are intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code. 

          (cc) “Performance Goals” means the goal(s)
(or combined goal(s)) determined by the Administrator (in its discretion) to be
applicable to a Participant with respect to an Award. As determined by the
Administrator, the Performance Goals applicable to an Award may provide for a
targeted level or levels of achievement using one or more of the following
measures: (a) cash flow, (b) customer satisfaction, (c) earnings per share, (d)
expense control, (e) margin, (f) market share, (g) operating profit, (h) product
development and/or quality, (i) profit, (j) return on capital, (k) return on
equity, (l) revenue and (m) total shareholder return. Any Performance Goal used
may be measured (1) in absolute terms, (2) in combination with another
Performance Goal or Goals (for example, but not by way of limitation, as a ratio
or matrix), (3) in relative terms (including, but not limited to, as compared to
results for other periods of time, against financial metrics, and/or against
another company, companies or an index or indices), (4) on a per-share or
per-capita basis, (5) against the performance of the Company as a whole or a
specific business unit(s), business segment(s) or product(s) of the Company,
and/or (6) on a pre-tax or after-tax basis. Prior to the Determination Date, the
Committee, in its discretion, will determine whether any significant element(s)
or item(s) will be included in or excluded from the calculation of any
Performance Goal with respect to any Participants (for example, but not by way
of limitation, the effect of mergers and acquisitions). As determined in the
discretion of the Committee prior to the Determination Date, achievement of
Performance Goals for a particular Award may be calculated in accordance with
the Company’s financial statements, prepared in accordance with generally
accepted accounting principles, or as adjusted for certain costs, expenses,
gains and losses to provide non-GAAP measures of operating results. 

          (dd) Performance
Period” means any Fiscal Year (or period of
four (4) consecutive fiscal quarters) or such longer period as determined by the
Administrator in its sole discretion during which the performance objectives
must be met. 

          (ee) “Performance Share” means an Award
denominated in Shares which may be earned in whole or in part upon attainment of
performance goals or other vesting criteria as the Administrator may determine
pursuant to Section 10 of the Plan. 

          (ff) “Performance Unit” means an Award which
may be earned in whole or in part upon attainment of performance goals or other
vesting criteria as the Administrator may determine and which may be settled for
cash, Shares or other securities or a combination of the foregoing pursuant to
Section 10 of the Plan. 

          (gg) “Period of Restriction” means the
period during which Restricted Stock Units, Performance Shares, Performance
Units and/or the transfer of Shares of Restricted Stock are subject to
restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on the passage of time, continued
service, the achievement of target levels of performance, the achievement of
Performance Goals, or the occurrence of other events as determined by the
Administrator. Notwithstanding any contrary provision of the Plan (but subject
to the following sentence), the Period of Restriction for such an Award shall
expire in full no earlier than (a) the third (3rd) annual anniversary of the
grant date if the vesting period expires solely as the result of continued employment or service, and
(b) the first (1st) annual anniversary of the grant date if expiration of the
vesting period is conditioned on achievement of performance objectives and does
not expire solely as the result of continued employment or service. The
preceding minimum vesting periods shall not apply with respect to Awards to
Directors, or to an Award if determined by the Administrator (in its
discretion): (a) due to death, Disability, Retirement, or major capital change,
or (b) with respect to Awards other than Options and SARs covering, in the
aggregate, no more than five percent (5%) of the shares reserved for issuance
under the Plan. 

-5-

          (hh) “Plan” means this 2012 Long-Term Incentive Plan. 

          (ii) “Restricted Stock” means Shares issued
pursuant to a Restricted Stock award under Section 7 of the Plan, or issued
pursuant to the early exercise of an Option. 

          (jj) “Restricted Stock Unit” means a
bookkeeping entry representing an amount equal to the Fair Market Value of one
Share, granted pursuant to Section 8 of the Plan. Each Restricted Stock Unit
represents an unfunded and unsecured obligation of the Company. 

          (kk) “Rule 16b-3” means Rule 16b-3 of the
Exchange Act or any successor to Rule 16b-3, as in effect when discretion is
being exercised with respect to the Plan. 

          (ll) “Section 16(b)” means Section 16(b) of
the Exchange Act. 

          (mm) “Section 409A” means Section 409A of
the Code, and any proposed, temporary or final Treasury Regulations and Internal
Revenue Service guidance thereunder, as each may be amended from time to time.

          (nn) “Service Provider” means an Employee,
Director or Consultant. 

          (oo) “Share” means a share of the Common
Stock, as adjusted in accordance with Section 13 of the Plan. 

          (pp) “Stock Appreciation Right” or
“SAR” means
an Award, granted alone or in connection with an Option, that pursuant to
Section 9 of the Plan is designated as a Stock Appreciation Right. 

          (qq) “Subsidiary” means a “subsidiary
corporation or company,” whether now or hereafter existing, as defined in
Section 424(f) of the Code. 

     3.
Stock Subject to the Plan.

          (a) Stock Subject to the
Plan. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares that may be issued under the
Plan shall equal the sum of (i) 30,500,000 Shares, (ii) any Shares (not to
exceed 2,500,000) that remain available to be issued under the Company’s 1993
Long-Term Incentive Plan or the Company’s Nonemployee Director Equity Incentive
Plan as of August 14, 2012, (iii) any Shares (not to exceed 5,000,000) that,
after August 14, 2012, otherwise would have been returned to the Company’s 1993
Long-Term Incentive Plan or the Company’s Nonemployee Director Equity Incentive
Plan on account of the expiration, cancellation, repurchase or forfeiture of
awards granted under the Company’s 1993 Long-Term Incentive Plan or Nonemployee Director Equity Incentive Plan, and (iv)
any shares (not to exceed 5,000,000 used to pay the exercise price or purchase
of an award or to satisfy the tax withholding obligations related to an award
granted under the Company’s 1993 Long-Term Incentive Plan or the Company’s
Nonemployee Director Equity Incentive Plan on or before August 14, 2012, that
otherwise would have been returned to the Company’s 1993 Long-Term Incentive
Plan or the Company’s Nonemployee Director Equity Incentive Plan after August
14, 2012. The Shares may be authorized, but unissued, or reacquired Common
Stock. 

-6-

          (b) Lapsed Awards. If an Award expires or
becomes unexercisable without having been exercised in full, is surrendered
pursuant to an Exchange Program, or, with respect to Restricted Stock,
Restricted Stock Units, Performance Units or Performance Shares, is forfeited to
or repurchased by the Company due to failure to vest, the unpurchased Shares (or
for Awards other than Options or Stock Appreciation Rights the forfeited or
repurchased Shares), which were subject thereto will become available for future
grant or sale under the Plan (unless the Plan has terminated). Upon exercise of
a Stock Appreciation Right settled in Shares, the gross number of Shares covered
by the portion of the Award so exercised, whether or not actually issued
pursuant to such exercise will cease to be available under the Plan. Shares that
have actually been issued under the Plan under any Award will not be returned to
the Plan and will not become available for future distribution under the Plan;
provided, however, that if Shares issued pursuant to Awards of Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units are repurchased
by the Company or are forfeited to the Company, such Shares will become
available for future grant under the Plan. Shares used to pay the exercise price
or purchase of an Award or to satisfy the tax withholding obligations related to
an Award will become available for future grant or sale under the Plan. To the
extent an Award under the Plan is paid out in cash rather than Shares, such cash
payment will not result in reducing the number of Shares available for issuance
under the Plan. Notwithstanding anything in the Plan or any Award Agreement to
the contrary, Shares actually issued pursuant to Awards transferred under any
Award Transfer Program will not be again available for grant under the Plan.
Notwithstanding the foregoing and, subject to adjustment as provided in Section
13 of the Plan, the maximum number of Shares that may be issued upon the
exercise of Incentive Stock Options will equal the aggregate Share number stated
in Section 3(a) of the Plan, plus, to the extent allowable under Section 422 of
the Code and the Treasury Regulations promulgated thereunder, any Shares that
become available for issuance under the Plan pursuant to this Section
3(b).

          (c) Share
Reserve. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of the Plan. 

     4.
Administration of the Plan.

          (a) Procedure. 

               (i) Multiple Administrative
Bodies. Different Committees with respect to
different groups of Service Providers may administer the Plan. 

               (ii) Section
162(m). To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as
“performance-based compensation” within the meaning of
Section 162(m) of the Code, the Plan will be administered by a Committee of two
(2) or more “outside directors” within the meaning of Section 162(m) of the
Code. 

-7-

               (iii) Rule 16b-3. To the extent
desirable to qualify transactions hereunder as exempt under Rule 16b-3, the
transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3. 

               (iv) Other
Administration. Other than as provided above,
the Plan will be administered by (A) the Board or (B) a Committee, which
committee will be constituted to satisfy Applicable Laws.

               (v) Delegation of Authority for
Day-to-Day Administration. Except to the
extent prohibited by Applicable Law, the Administrator may delegate to one or
more individuals the day-to-day administration of the Plan and any of the
functions assigned to it in this Plan. Such delegation may be revoked at any
time. 

          (b) Powers of the
Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator will have the
authority, in its discretion: 

               (i) to determine the Fair Market
Value; 

               (ii) to select the Service
Providers to whom Awards may be granted hereunder; 

               (iii) to determine the number of
Shares to be covered by each Award granted hereunder; 

               (iv) to approve forms of Award
Agreements for use under the Plan; 

               (v) to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any Award granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Awards may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction, limitation or requirement regarding any Award
or the Shares covered thereby (for example, but not by way of limitation, any
holding period or ownership requirement), based in each case on such factors as
the Administrator (in its discretion) shall determine; 

               (vi) to determine the terms and
conditions of any Exchange Program and/or Award Transfer Program and with the
consent of the Company’s stockholders, to institute an Exchange Program and/or
Award Transfer Program (provided that the Administrator may not implement an
Exchange Program and/or Award Transfer Program without first receiving the
consent of the Company’s stockholders); 

               (vii) to construe and interpret the
terms of the Plan and Awards granted pursuant to the Plan;

-8-

               (viii) to prescribe, amend and
rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of satisfying or
facilitating compliance with applicable foreign laws and/or for qualifying for
favorable tax treatment under applicable foreign laws; 

               (ix) to modify or amend each Award
(subject to Section 18 of the Plan), including but not limited to the
discretionary authority to extend the post-termination exercisability period of
Awards and to extend the maximum term of an Option (subject to Section 6(b) of
the Plan regarding Incentive Stock Options); 

               (x) to allow Participants to
satisfy withholding tax obligations in such manner as prescribed in Section 14
of the Plan; 

               (xi) to authorize any person to
execute on behalf of the Company any instrument required to effect the grant of
an Award previously granted by the Administrator pursuant to such procedures as
the Administrator may determine; 

               (xii) to allow a Participant, in
compliance with all Applicable Laws including, but not limited to, Section 409A,
to defer the receipt of the payment of cash or the delivery of Shares that would
otherwise be due to such Participant under an Award; and 

               (xiii) to determine whether Awards
will be settled in Shares, cash or in any combination thereof; 

               (xiv) to impose such restrictions,
conditions or limitations as it determines appropriate as to the timing and
manner of any resales by a Participant or other subsequent transfers by the
Participant of any Shares issued as a result of or under an Award, including
without limitation, (A) restrictions under an insider trading policy, and (B)
restrictions as to the use of a specified brokerage firm for such resales or
other transfers;

               (xv) to require that the
Participant’s rights, payments and benefits with respect to an Award (including
amounts received upon the settlement or exercise of an Award) shall be subject
to reduction, cancellation, forfeiture or recoupment upon the occurrence of
certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award, as may be specified in an Award Agreement at
the time of the Award, or later if (A) Applicable Laws require the Company to
adopt a policy requiring such reduction, cancellation, forfeiture or recoupment,
or (B) pursuant to an amendment of an outstanding Award; and 

               (xvi) to make all other
determinations deemed necessary or advisable for administering the Plan.

          (c) Effect of Administrator’s
Decision. The Administrator’s decisions,
determinations and interpretations will be final and binding on all Participants
and any other holders of Awards and shall be given the maximum deference
permitted by law. 

     5.
Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares
and Performance Units may be granted to Service Providers. Incentive Stock
Options may be granted only to Employees. 

-9-

     6. Stock
Options.

         
(a) Limitations.

              
(i) Each Option will be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds one hundred thousand dollars
($100,000), such Options will be treated as Nonstatutory Stock Options. For
purposes of this Section 6(a), Incentive Stock Options will be taken into
account in the order in which they were granted. The Fair Market Value of the
Shares will be determined as of the time the Option with respect to such Shares
is granted. 

              
(ii) The Administrator will have complete discretion to determine the number
of Shares subject to an Option granted to any Participant, provided that,
subject to the provisions of Section 13, during any Fiscal Year, the number of
Shares covered by Options granted to any one Service Provider will not exceed
more than two million five hundred thousand (2,500,000) Shares; provided,
however, that in connection with his or her initial service, a Service Provider
may be granted Options covering up to an additional two million five hundred
thousand (2,500,000) Shares in the Fiscal Year in which his or her service as a
Service Provider first commences. 

         
(b) Term of Option. The term of each
Option will be stated in the Award Agreement; provided, however, that the term
will be no more than seven (7) years from the date of grant hereof. In the case
of an Incentive Stock Option, the term will be ten (10) years from the date of
grant or such shorter term as may be provided in the Award Agreement. Moreover,
in the case of an Incentive Stock Option granted to a Participant who, at the
time the Incentive Stock Option is granted, owns stock representing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the Incentive Stock Option
will be five (5) years from the date of grant or such shorter term as may be
provided in the Award Agreement. 

         
(c) Option Exercise Price and Consideration. 

              
(i) Exercise Price. The per share exercise
price for the Shares to be issued pursuant to exercise of an Option will be
determined by the Administrator, subject to the following: 

                   
(1) In
the case of an Incentive Stock Option 

                        
(A) granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise price will be no less than one hundred ten percent (110%) of the
Fair Market Value per Share on the date of grant.

-10- 

                        
(B) granted to any Employee other than an Employee described in paragraph
(A) immediately above, the per Share exercise price will be no less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

                   
(2) In the case of a Nonstatutory Stock Option, the per Share
exercise price will be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant. 

                   
(3) Notwithstanding the foregoing, Options may be granted with a per Share
exercise price of less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant pursuant to a transaction described in, and in a
manner consistent with, Section 424(a) of the Code. 

              
(ii) Waiting Period and Exercise Dates. At
the time an Option is granted, the Administrator will fix the period within
which the Option may be exercised and will determine any conditions that must be
satisfied before the Option may be exercised. 

              
(iii) Form of Consideration. The
Administrator will determine the acceptable form of consideration for exercising
an Option, including the method of payment. In the case of an Incentive Stock
Option, the Administrator will determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of, without
limitation: (1) cash; (2) check; (3) promissory note, to the extent permitted by
Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which such Option will be exercised and provided that accepting
such Shares will not result in any adverse accounting consequences to the
Company, as the Administrator determines in its sole discretion; (5)
consideration received by the Company under a cashless exercise program (whether
through a broker, net exercise program or otherwise) implemented by the Company
in connection with the Plan; (6) by reduction in the amount of any Company
liability to the Participant, (7) by net exercise; (8) such other consideration
and method of payment for the issuance of Shares to the extent permitted by
Applicable Laws; or (9) any combination of the foregoing methods of payment.

         
(d) Exercise of Option. 

              
(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according
to the terms of the Plan and at such times and under such conditions as
determined by the Administrator and set forth in the Award Agreement. An Option
may not be exercised for a fraction of a Share. 

              
An Option will be deemed exercised when the Company receives: (i) a
notice of exercise (in such form as the Administrator may specify from time to
time) from the person entitled to exercise the Option, and (ii) full payment for
the Shares with respect to which the Option is exercised (together with
applicable withholding taxes). Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Award
Agreement and the Plan. Shares issued upon exercise of an Option will be issued
in the name of the Participant or, if requested by the Participant, in the name
of the Participant and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a stockholder will exist with respect to the Shares
subject to an Option, notwithstanding the exercise of the Option. The Company
will issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 13 of the Plan. 

-11-

              
Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised. 

              
(ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than
upon the Participant’s termination as the result of the Participant’s death or
Disability, the Participant may exercise his or her Option within such period of
time as is specified in the Award Agreement (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain
exercisable for three (3) months following the Participant’s termination. Unless
otherwise provided by the Administrator, if on the date of termination the
Participant is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option will be forfeited and revert to the Plan. If
after termination the Participant does not exercise his or her Option within the
time specified by the Award Agreement, this Plan or the Administrator, the
Option will terminate, and the Shares covered by such Option will revert to the
Plan. 

              
(iii) Disability of Participant. If a
Participant ceases to be a Service Provider as a result of the Participant’s
Disability, the Participant may exercise his or her Option within such period of
time as is specified in the Award Agreement (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve (12) months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination
the Participant is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option will be forfeited and revert to the Plan.
If after termination the Participant does not exercise his or her Option within
the time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan. 

              
(iv) Death of Participant. If a Participant
dies while a Service Provider, the Option may be exercised following the
Participant’s death within such period of time as is specified in the Award
Agreement (but in no event may the option be exercised later than the expiration
of the term of such Option as set forth in the Award Agreement), by the
Participant’s designated beneficiary, provided such designation has been
permitted by the Administrator and provided a beneficiary has been designated
prior to Participant’s death in a form acceptable to the Administrator. If a
beneficiary designation has not been permitted by the Administrator or if no
beneficiary has been designated by the Participant, then such Option may be
exercised by the personal representative of the Participant’s estate or by the
person(s) to whom the Option is transferred pursuant to the Participant’s will
or in accordance with the laws of descent and distribution. In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for
twelve (12) months following Participant’s death. Unless otherwise provided by
the Administrator, if at the time of death Participant is not vested as to his
or her entire Option, the Shares covered by the unvested portion of the Option
will be forfeited and immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option will terminate, and the
Shares covered by such Option will revert to the Plan.

-12-

     7. Restricted
Stock. 

         
(a) Grant of Restricted Stock. Subject to
the terms and provisions of the Plan, the Administrator, at any time and from
time to time, may grant Shares of Restricted Stock to Service Providers in such
amounts as the Administrator, in its sole discretion, will determine; provided,
that, subject to the provisions of Section 13 of the Plan, during any Fiscal
Year, the number of Shares of Restricted Stock granted to any one Service
Provider will not exceed more than one million (1,000,000) Shares; provided,
however, that in connection with his or her initial service, a Service Provider
may be granted an additional one million (1,000,000) Shares of Restricted Stock
in the Fiscal Year in which his or her service as a Service Provider first
commences.

         
(b) Restricted Stock Agreement. Each Award
of Restricted Stock will be evidenced by an Award Agreement that will specify
the Period of Restriction, the number of Shares granted, and such other terms
and conditions as the Administrator, in its sole discretion, will determine.
Unless the Administrator determines otherwise, the Company as escrow agent will
hold Shares of Restricted Stock until the restrictions on such Shares have
lapsed. 

         
(c) Transferability. Except as provided in
this Section 7 or the Award Agreement, Shares of Restricted Stock may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until the end of the applicable Period of Restriction. 

         
(d) Other Restrictions. The Administrator,
in its sole discretion, may impose such other restrictions on Shares of
Restricted Stock as it may deem advisable or appropriate. 

              
(i) General Restrictions. The
Administrator may set restrictions based upon continued employment or service,
the achievement of specific performance objectives (Company-wide, departmental,
divisional, business unit, or individual), applicable federal or state
securities laws, or any other basis determined by the Administrator in its
discretion. 

              
(ii) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock as
“performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set by the
Administrator on or before the Determination Date. In granting Restricted Stock
which is intended to qualify under Section 162(m) of the Code, the Administrator
shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Restricted Stock under Section
162(m) of the Code (e.g., in determining the Performance Goals and certifying in
writing whether the applicable Performance Goals have been achieved after the
completion of the applicable Performance Period). 

         
(e) Removal of Restrictions. Except as
otherwise provided in this Section 7, Shares of Restricted Stock covered by each
Restricted Stock grant made under the Plan will be released from escrow as soon
as practicable after the last day of the Period of Restriction or at such other
time as the Administrator may determine. The Administrator, in its discretion,
may accelerate the time at which any restrictions will lapse or be
removed.

-13-

          (f) Voting Rights. During the
Period of Restriction, Service Providers holding Shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise. 

         
(g) Dividends and Other Distributions.
During the Period of Restriction, Service Providers holding Shares of Restricted
Stock will be entitled to receive all dividends and other distributions paid
with respect to such Shares, unless the Administrator provides otherwise. If any
such dividends or distributions are paid in Shares, the Shares will be subject
to the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid. 

         
(h) Return of Restricted Stock to Company.
On the date set forth in the Award Agreement, the Restricted Stock for which
restrictions have not lapsed will revert to the Company and, subject to Section
3, again will become available for grant under the Plan. 

    
8. Restricted Stock Units. 

         
(a) Grant. Subject to the terms and
provisions of the Plan, the Administrator, at any time and from time to time,
may grant Restricted Stock Units to Service Providers in such amounts as the
Administrator, in its sole discretion, will determine; provided, that subject to
the provisions of Section 13 of the Plan, during any Fiscal Year, the number of
Restricted Stock Units granted to any one Service Provider will not exceed more
than one million (1,000,000); provided, however, that in connection with his or
her initial service, a Service Provider may be granted an additional one million
(1,000,000) Restricted Stock Units in the Fiscal Year in which his or her
service as a Service Provider first commences. After the Administrator
determines that it will grant Restricted Stock Units under the Plan, it will
advise the Participant in an Award Agreement of the terms, conditions, and
restrictions related to the grant, including the number of Restricted Stock
Units.

         
(b) Vesting Criteria and Other Terms. The
Administrator will set vesting criteria in its discretion, which, depending on
the extent to which the criteria are met, will determine the number of
Restricted Stock Units that will be paid out to the Participant.

              
(i) General Restrictions. The
Administrator may set vesting criteria based upon continued employment or
service, the achievement of specific performance objectives (Company-wide,
departmental, divisional, business unit, or individual goals (including, but not
limited to, continued employment or service), applicable federal or state
securities laws or any other basis determined by the Administrator in its
discretion.

              
(ii) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock Units as
“performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set by the
Administrator on or before the Determination Date. In granting Restricted Stock
Units that are intended to qualify under Section 162(m) of the Code, the
Administrator shall follow any procedures determined by it from time to time to
be necessary or appropriate to ensure qualification of the Restricted Stock
Units under Section 162(m) of the Code (e.g., in determining the Performance
Goals and certifying in writing whether the applicable Performance Goals have
been achieved after the completion of the applicable Performance Period).

-14-

         
(c) Earning Restricted Stock Units. Upon
meeting the applicable vesting criteria, the Participant will be entitled to
receive a payout as determined by the Administrator. Notwithstanding the
foregoing, at any time after the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any vesting criteria
that must be met to receive a payout. 

         
(d) Form and Timing of Payment. Payment of
earned Restricted Stock Units will be made as soon as practicable after the
date(s) determined by the Administrator and set forth in the Award Agreement;
provided, however, that the timing of payment shall in all cases comply with
Section 409A to the extent applicable to the Award. The Administrator, in its
sole discretion, may only settle earned Restricted Stock Units in cash, Shares,
or a combination of both. 

         
(e) Cancellation. On the date set forth in
the Award Agreement, all unearned Restricted Stock Units will be forfeited to
the Company and, subject to Section 3 of the Plan, again will become available
for grant under the Plan. 

     9. Stock Appreciation
Rights.

         
(a) Grant of Stock Appreciation Rights.
Subject to the terms and conditions of the Plan, a Stock Appreciation Right may
be granted to Service Providers at any time and from time to time as will be
determined by the Administrator, in its sole discretion.

         
(b) Number of Shares. The Administrator
will have complete discretion to determine the number of Stock Appreciation
Rights granted to any Service Provider, provided that, subject to the provisions
of Section 13, during any Fiscal Year, the number of Shares covered by Stock
Appreciation Rights granted to any one Service Provider will not exceed more
than two million five hundred thousand (2,500,000) Shares; provided, however,
that in connection with his or her initial service, a Service Provider may be
granted SARs covering up to an additional two million five hundred thousand
(2,500,000) Shares in the Fiscal Year in which his or her service as a Service
Provider first commences. 

         
(c) Exercise Price and Other Terms. The
per share exercise price for the Shares to be issued pursuant to exercise of a
Stock Appreciation Right will be determined by the Administrator and will be no
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant. Otherwise, the Administrator, subject to the provisions of the
Plan, will have complete discretion to determine the terms and conditions of
Stock Appreciation Rights granted under the Plan. 

         
(d) Stock Appreciation Right Agreement.
Each Stock Appreciation Right grant will be evidenced by an Award Agreement that
will specify the exercise price, the term of the Stock Appreciation Right, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. 

         
(e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the
date determined by the Administrator, in its sole discretion, and set forth in
the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(b) of
the Plan relating to the maximum term and Section 6(d) of the Plan relating to
exercise also will apply to Stock Appreciation Rights. 

-15-

          (f) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant
will be entitled to receive payment from the Company in an amount determined by
multiplying: 

              
(i) The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times 

              
(ii) The number of Shares with respect to which the Stock Appreciation Right
is exercised. 

    
At the discretion of the Administrator, the payment upon Stock
Appreciation Right exercise may be in cash, in Shares of equivalent value, or in
some combination thereof. 

    
10. Performance Units and Performance Shares.

         
(a) Grant of Performance Units/Shares.
Subject to the terms and conditions of the Plan, Performance Units and
Performance Shares may be granted to Service Providers at any time and from time
to time, as will be determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the number of
Performance Units and Performance Shares granted to each Participant; provided,
that subject to the provisions of Section 13 of the Plan, during any Fiscal
Year, (a) the number of Performance Shares granted to any one Service Provider
will not exceed more than one million (1,000,000); provided, however, that in
connection with his or her initial service, a Service Provider may be granted an
additional one million (1,000,000) Performance Shares in the Fiscal Year in
which his or her service as a Service Provider first commences, and (b) no
Service Provider will receive Performance Units having an initial value greater
than ten million dollars ($10,000,000); provided, however, that in connection
with his or her initial service, a Service Provider may be granted additional
Performance Units in the Fiscal Year in which his or her service as a Service
Provider first commences having an initial value no greater than ten million
dollars ($10,000,000). 

         
(b) Value of Performance Units/Shares.
Each Performance Unit will have an initial value that is established by the
Administrator on or before the date of grant. Each Performance Share will have
an initial value equal to the Fair Market Value of a Share on the date of grant.

         
(c) Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting
provisions (including, without limitation, continued status as a Service
Provider) in its discretion which, depending on the extent to which they are
met, will determine the number or value of Performance Units/Shares that will be
paid out to the Service Providers. The time period during which the performance
objectives or other vesting provisions must be met will be called the
“Performance Period.” Each Award of Performance Units/Shares will be evidenced
by an Award Agreement that will specify the Performance Period, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.

-16-

              
(i) General Restrictions. The
Administrator may set vesting criteria based upon continued employment or
service, the achievement of specific performance objectives (Company-wide,
departmental, divisional, business unit, or individual goals (including, but not
limited to, continued employment or service), applicable federal or state
securities laws or any other basis determined by the Administrator in its
discretion.

              
(ii) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Performance Shares and/or
Performance Units as “performance-based compensation” under Section 162(m) of
the Code, the Administrator, in its discretion, may set restrictions based upon
the achievement of Performance Goals. The Performance Goals shall be set by the
Administrator on or before the Determination Date. In granting Performance
Shares and/or Performance Units that are intended to qualify under Section
162(m) of the Code, the Administrator shall follow any procedures determined by
it from time to time to be necessary or appropriate to ensure qualification of
the Performance Shares and/or Performance Units under Section 162(m) of the Code
(e.g., in determining the Performance Goals and certifying in writing whether
the applicable Performance Goals have been achieved after the completion of the
applicable Performance Period). 

         
(d) Earning of Performance Units/Shares.
After the applicable Performance Period has ended, the holder of Performance
Units/Shares will be entitled to receive a payout of the number of Performance
Units/Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance
objectives or other vesting provisions have been achieved. After the grant of a
Performance Unit/Share, the Administrator, in its sole discretion, may reduce or
waive any performance objectives or other vesting provisions for such
Performance Unit/Share. 

         
(e) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as
soon as practicable after the expiration of the applicable Performance Period or
as otherwise determined by the Administrator; provided, however, that the timing
of payment shall in all cases comply with Section 409A to the extent applicable
to the Award. The Administrator, in its sole discretion, may pay earned
Performance Units/Shares in the form of cash, in Shares (which have an aggregate
Fair Market Value equal to the value of the earned Performance Units/Shares at
the close of the applicable Performance Period) or in a combination thereof. No
right to receive any ordinary cash dividends will exist with respect to any
unvested Shares under the Performance Units/Shares. In the event of any
extraordinary cash dividend payable with respect to Shares, the extraordinary
cash dividends payable with respect to the unvested Shares under the Performance
Units/Shares, if any (as determined in accordance with Section 13 and/or other
applicable provisions of the Plan), will be subject to the same restrictions on
vesting, transferability and forfeitability as the Shares subject to the
Performance Shares/Units with respect to which the dividends are
payable.

         
(f) Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested
Performance Units/Shares will be forfeited to the Company, and, subject to
Section 3 of the Plan, again will be available for grant under the Plan.

-17-

    
11. Leaves
of Absence/Transfer Between Locations. If
determined by the Administrator (in its discretion and on a case-by-case basis)
or as otherwise required by Applicable Law, vesting of Awards granted hereunder will be suspended during any unpaid
leave of absence, such that vesting shall cease on the first day of any unpaid
leave of absence and shall only recommence upon return to active service. A
Participant will not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, or any Subsidiary. For purposes of
Incentive Stock Options, no such leave may exceed three (3) months, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, then six (6) months following the first (1st) day
of such leave any Incentive Stock Option held by the Participant will cease to
be treated as an Incentive Stock Option and will be treated for tax purposes as
a Nonstatutory Stock Option. 

    
12. Transferability of Awards. Unless
determined otherwise by the Administrator, an Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant. If the Administrator makes
an Award transferable, such Award will contain such additional terms and
conditions as the Administrator deems appropriate. Notwithstanding anything to
the contrary in the Plan, in no event will the Administrator have the right to
determine and implement the terms and conditions of any Award Transfer Program
without stockholder approval. 

    
13. Adjustments; Dissolution or Liquidation; Merger or Change in
Control. 

         
(a) Adjustments. In the event that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the Shares occurs,
the Administrator, in order to prevent diminution or enlargement of the benefits
or potential benefits intended to be made available under the Plan, will adjust
the number and class of Shares that may be delivered under the Plan and/or the
number, class, and price of Shares covered by each outstanding Award, the
numerical Share limits in Section 3 of the Plan and the per person numerical
Share limits in Sections 6(a), 7(a), 8(a), 9(b) and 10(a) of the Plan.
Notwithstanding the preceding, the number of Shares subject to any Award always
shall be a whole number.

         
(b) Dissolution or Liquidation. In the
event of the proposed dissolution or liquidation of the Company, the
Administrator will notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. To the extent it has not been
previously exercised (with respect to an Option or SAR) or vested (with respect
to an Award other than an Option or SAR), an Award will terminate immediately
prior to the consummation of such proposed action. 

         
(c) Merger or Change in Control. In the
event of a merger of the Company with or into another corporation or other
entity or a Change in Control, each outstanding Award will be treated as the
Administrator determines, including, without limitation, that each Award be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. The
Administrator will not be required to treat all Awards similarly in the
transaction.

-18-

          In the event that the successor corporation does not assume or
substitute for the Award, the Participant will fully vest in and have the right
to exercise all of his or her outstanding Options and Stock Appreciation Rights,
including Shares as to which such Awards would not otherwise be vested or
exercisable, all restrictions on Restricted Stock and Restricted Stock Units
will lapse, and, with respect to Awards with performance-based vesting, all
performance goals or other vesting criteria will be deemed achieved at one
hundred percent (100%) of target levels and all other terms and conditions met.
In addition, if an Option or Stock Appreciation Right is not assumed or
substituted in the event of a merger or Change in Control, the Administrator
will notify the Participant in writing or electronically that the Option or
Stock Appreciation Right will be exercisable for a period of time determined by
the Administrator in its sole discretion, and the Option or Stock Appreciation
Right will terminate upon the expiration of such period. 

          For the
purposes of this subsection (c), an Award will be considered assumed if,
following the merger or Change in Control, the Award confers the right to
purchase or receive, for each Share subject to the Award immediately prior to
the transaction, the consideration (whether stock, cash, or other securities or
property) received in the transaction by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the transaction is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon the
exercise of an Option or Stock Appreciation Right or upon the payout of a
Restricted Stock Unit, Performance Unit or Performance Share, for each Share
subject to such Award, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the transaction. 

         
Notwithstanding anything in this Section 13(c) to the contrary, an Award
that vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or its successor
modifies any of such performance goals without the Participant’s consent;
provided, however, a modification to such performance goals only to reflect the
successor corporation’s post-transaction corporate structure will not be deemed
to invalidate an otherwise valid Award assumption.

         
(d) Outside Director Awards. With respect
to Awards granted to an Outside Director that are assumed or substituted for, if
on the date of or following such assumption or substitution the Participant’s
status as a Director or a director of the successor corporation, as applicable,
is terminated other than upon a voluntary resignation by the Participant (unless
such resignation is at the request of the acquirer), then the Participant will
fully vest in and have the right to exercise Options and/or Stock Appreciation
Rights as to all of the Shares underlying such Award, including those Shares
which would not otherwise be vested or exercisable, all restrictions on
Restricted Stock and Restricted Stock Units will lapse, and, with respect to
Awards with performance-based vesting, all performance goals or other vesting
criteria will be deemed achieved at one hundred percent (100%) of target levels
and all other terms and conditions met. 

-19-

     14. Tax.

         
(a) Withholding Requirements. Prior to the
delivery of any Shares or cash pursuant to an Award (or exercise thereof) or
such earlier time as any tax withholding obligations are due, the Company will
have the power and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, local,
foreign or other taxes (including the Participant’s FICA obligation) required to
be withheld with respect to such Award (or exercise thereof).

         
(b) Withholding Arrangements. The
Administrator, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part by (without limitation) (a) paying
cash, (b) electing to have the Company withhold otherwise deliverable cash or
Shares having a Fair Market Value equal to the minimum statutory amount required
to be withheld or such other amount as will not result in any adverse accounting
consequences to the Company, as the Administrator determines in its sole
discretion, or (c) delivering to the Company already-owned Shares having a Fair
Market Value equal to the minimum statutory amount required to be withheld or
such other amount as will not result in any adverse accounting consequences to
the Company, as the Administrator determines in its sole discretion. The Fair
Market Value of the Shares to be withheld or delivered will be determined as of
the date that the taxes are required to be withheld. 

         
(c) Compliance With Section 409A. Awards
will be designed and operated in such a manner that they are either exempt from
the application of, or comply with, the requirements of Section 409A such that
the grant, payment, settlement or deferral will not be subject to the additional
tax or interest applicable under Section 409A, except as otherwise determined in
the sole discretion of the Administrator. Each payment or benefit under this
Plan and under each Award Agreement is intended to constitute a separate payment
for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. The Plan,
each Award and each Award Agreement under the Plan is intended to be exempt from
or otherwise meet the requirements of Section 409A and will be construed and
interpreted, including but not limited with respect to ambiguities and/or
ambiguous terms, in accordance with such intent, except as otherwise
specifically determined in the sole discretion of the Administrator. To the
extent that an Award or payment, or the settlement or deferral thereof, is
subject to Section 409A the Award will be granted, paid, settled or deferred in
a manner that will meet the requirements of Section 409A, such that the grant,
payment, settlement or deferral will not be subject to the additional tax or
interest applicable under Section 409A. 

    
15. No Effect on Employment or Service.
Neither the Plan nor any Award will confer upon a Participant any right with
respect to continuing the Participant’s relationship as a Service Provider with
the Company, nor will they interfere in any way with the Participant’s right or
the Company’s right to terminate such relationship at any time, with or without
cause, to the extent permitted by Applicable Laws. 

    
16. Date of Grant. The date of grant of an
Award will be, for all purposes, the date on which the Administrator makes the
determination granting such Award, or such other later date as is determined by
the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.

-20-

     17. Term of Plan. Subject to Section
23 of the
Plan, the Plan will become effective upon its approval by the Company’s
stockholders. It will continue in effect for a term of ten (10) years from the
date of the initial Board action to adopt the Plan unless terminated earlier
under Section 18 of the Plan. 

    
18. Amendment and Termination of the Plan.

         
(a) Amendment and Termination. The
Administrator may at any time amend, alter, suspend or terminate the
Plan.

         
(b) Stockholder Approval. The Company will
obtain stockholder approval of any Plan amendment to the extent necessary and
desirable to comply with Applicable Laws.

         
(c) Effect of Amendment or Termination. No
amendment, alteration, suspension or termination of the Plan will impair the
rights of any Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in writing and signed
by the Participant and the Company. Termination of the Plan will not affect the
Administrator’s ability to exercise the powers granted to it hereunder with
respect to Awards granted under the Plan prior to the date of such termination.

    
19. Compliance with Applicable Laws. The
terms of the Plan are subject to Applicable Laws and shall be interpreted in
such a manner as to comply with Applicable Laws. 

    
20. Conditions Upon Issuance of Shares.

         
(a) Legal Compliance. The granting of
Awards and the issuance and delivery of Shares under the Plan shall be subject
to all Applicable Laws, rule and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
Shares will not be issued pursuant to the exercise or vesting of an Award and
the Company may not permit the exercise or vesting of an Award unless the
exercise or vesting of such Award and the issuance and delivery of such Shares
will comply with Applicable Laws, rules and regulations and will be further
subject to the approval of counsel for the Company with respect to such
compliance.

         
(b) Investment Representations. As a
condition to the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required. 

    
21. Inability to Obtain Authority. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction or to complete or comply with the requirements of any registration
or other qualification of the Awards and/or Shares under any state, federal or
foreign law or under the rules and regulations of the Securities and Exchange
Commission, the stock exchange on which Shares of the same class are then
listed, or any other governmental or regulatory body, which authority,
registration, qualification or rule compliance is deemed by the Company’s
counsel to be necessary or advisable for the grant, exercise or vesting of
Awards or the issuance and sale of any Shares hereunder, will relieve the
Company of any liability in respect of the failure to grant Awards, to allow
exercise or vesting of Awards or to issue or sell such Shares as to which such
requisite authority, registration, qualification or rule compliance will not
have been obtained. 

-21-

    
22. Forfeiture Events. The Administrator
may specify in an Award Agreement that the Participant’s rights, payments, and
benefits with respect to an Award shall be subject to reduction, cancellation,
forfeiture, or recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance conditions of an
Award. Such events may include, but shall not be limited to, fraud, breach of a
fiduciary duty, restatement of financial statements as a result of fraud or
willful errors or omissions, termination of employment for cause, violation of
material Company and/or Subsidiary policies, breach of non-competition,
confidentiality, or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Company and/or its Subsidiaries. The Administrator
may also require the application of this Section with respect to any Award
previously granted to a Participant even without any specified terms being
included in any applicable Award Agreement to the extent required under
Applicable Laws. 

    
23. Stockholder Approval. The Plan will be
subject to approval by the stockholders of the Company within twelve (12) months
after the date the Plan is adopted by the Board. Such stockholder approval will
be obtained in the manner and to the degree required under Applicable
Laws.

-22-

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